GF Securities Sees Stronger Prices and Margins for UMC

GF Securities has upgraded its earnings forecast for United Microelectronics (UMC), projecting stronger prices and margins for the next two years. The firm cites a surge in orders from major clients, which is driving up utilization rates at UMC's foundry. Analyst Jeff Pu highlighted that the 12-inch fabrication lines are expected to reach 93% utilization by the end of 2026, fueled by demand for display driver ICs (DDIC) from Novatek and Samsung SSNLF LSI, as well as Apple's Mac production. The 8-inch lines are also anticipated to hit 90% utilization by late 2026, with full loading projected for the second half of 2027.

Pricing momentum is expected to continue, with selective customer price increases in the second half of 2026, followed by broader hikes of 10-30% in the first half of 2027. Ongoing negotiations suggest visibility extending into the second half of 2027. GF Securities has raised its earnings per share (EPS) forecasts for UMC by 2% for 2026 and 8% for 2027, maintaining a Buy rating on the stock.

Looking ahead, UMC is poised for another growth phase starting in 2028, driven by Intel's 2nm technology and Apple's DDIC migration. Advanced packaging solutions, including interposer technology, are expected to contribute significantly from the second half of 2027. Despite a recent 8% dip in pre-market trading, UMC's stock has surged 32% over the past month and over 230% year-to-date.