- Pure-play semiconductor foundries were a great investment last year as a decline in production and a surge in consumer demand led to an immense global chip shortage.
- Despite frothy predictions, most evidence suggests the global chip shortage is reaching its peak as producers ramp up capacity and the retail spending spree fades.
- The semiconductor industry often cycles between shortages and gluts, so investors should discount the value of recent profit margin spikes in many producers.
- United Microelectronics is not necessarily undervalued compared to Taiwan Semiconductor since UMC has much greater earnings volatility than TSMC.
- While UMC may not be overvalued, I am moderately bearish on the stock since its price has risen at a much faster pace than its fundamentals.
For further details see:
United Microelectronics Has Limited Upside As Semiconductor Shortage Becomes Another Glut