联华电子公司研究

Edward Hou, CFA+852 2123 2623edward.hou@bernsteinsg.com RatingUnderperform Yipin Cai, CFA+852 2123 2669yipin.cai@bernsteinsg.com Price Target UMC: 2Q26 monthly sales tracking above consensus and guidancemidpoint UMC reported monthly sales this afternoon. Revenue in May increased by 18% YoY and 1%MoM. April + May sales together amounted to ~NT$45.6B. That represented 68.6% of thecompany's guidance midpoint, close to the high-end of the historical range (63-69%). ShouldJune follow seasonality, UMC 2Q26 revenue in NT$ would be c. 3% above guidance midpointand consensus. As FX likely presented a 1.2pts tailwind lately, the possible beat can’t beexplained by FX (Exhibit 1). UMC’s 2Q26 guidance came in above market expectations likely on more resilient enddemand. Wafer shipment was guided to be up by HSD% QoQ, supported by strength inconsumer applications (e.g. power, LCD controller, MCU) and a recovery in communicationsegment (e.g. networking, FPGA, DDIC). That said, ASP increase remained muted, indicatinglittle like-for-like price hikes in 1H26. The company has initiated another round of pricenegotiations which is expected to become effective in 2H26. The scope of price adjustmentsis reportedly constrained to new orders, advanced nodes, and new projects in 2026, withbroader adoption likely in 2027. Our channel checks suggest a successful price increasefor certain products and customers in 2026, but we believe it is insufficient to justify over80% stock rally in May. The company also tries to optimize its revenue structure with siliconphotonics and the Intel collaboration, but both look more like a 2028 story & can hardlysupport near-term growth either, in our view. On April 29, the company announced a share repurchase program of up to 50M commonshares from open market within the price range of NT$52.5–109.5/share during April 30–June 29. We welcome the company’s effort to improve shareholder return and believe thisplan is positive for investor sentiment, but the stock is now trading above the buyback priceceiling and at 4x trailing P/B. We believe it is over-valued. MaintainUnderperform. EXHIBIT 1:UMC April + May sales amounted to ~NT$45.6B. Should June follow seasonality, UMC 2Q26revenue would be c.3% above consensus. INVESTMENT IMPLICATIONS UMC:We rate UMCUnderperformwith TP=NT$47.00. BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture between Société Générale (SG) and AllianceBernstein, L.P. (AB). Unless specifically notedotherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG and AB and their respectiveaffiliates. VALUATION METHODOLOGY United Microelectronics Corp We set a NT$47 1-year target price using a P/B multiple of 1.5x against our forward Q5-Q8 BVPS estimate of NT$31.3. We deriveour PT for secondary ticker (UMC.US) by dividing the primary PT by FX and arrive at US$7.4. RISKS United Microelectronics Corp There are a number of upside risks to our UMC target price: (1) Better-than-expected progress/pricing in 28nm; (2) Better-than-expected end demand recovery; (3) Lighter-than-expected competitive pressure from Chinese rivals. RATINGS DEFINITIONS, BENCHMARKS AND DISTRIBUTION EQUITY RATINGS DEFINITIONS Bernstein brand The Bernstein brand rates stocks based on forecasts of relative performance for the next 12 months versus the S&P 500 forstocks listed on the U.S. and Canadian exchanges, versus the Bloomberg Europe Developed Markets Large and Mid Cap PriceReturn Index EUR (EDME) for stocks listed on the European exchanges and emerging markets exchanges outside of the AsiaPacific region, versus the Bloomberg Japan Large and Mid Cap Price Return Index USD (JPL) for stocks listed on the Japaneseexchanges, and versus the Bloomberg Asia ex-Japan Large and Mid Cap Price Return Index (ASIAX) for stocks listed on the Asian(ex-Japan) exchanges -unless otherwise specified. The Bernstein brand has three categories of ratings: •Outperform: Stock will outpace the market index by more than 15 pp•Market-Perform: Stock will perform in line with the market index to within +/-15 pp•Underperform: Stock will trail the performance of the market index by more than 15 pp Coverage Suspended: Coverage of a comp