Taipei stocks faced heavy selling pressure on the 29th, with the weighted index closing down 667.25 points at 46,368.33, falling below the quarterly moving average again. The three major institutional investors sold a combined NT$81.666 billion, including NT$68.815 billion by foreign investors, with heavyweight stocks becoming the main cash target. Foundry giant UMC (2303) fell 12.50 to close at 115.50 at limit-down, with the three major institutional investors selling 158,000 lots in a single day and foreign investors selling nearly 129,000 lots. Addressing market panic, analyst Chou Tai-yun said UMC is really not that bad, describing the drop as profit-taking on chips, with below 120 already entering a long-term safe zone.
Compared with Vanguard International Semiconductor, UMC Has Thicker Valuation Cushion
The market recently compared fellow mature-node maker Vanguard International Semiconductor (5347) with UMC, worrying whether UMC's deeper pullback over the past month signals weakening fundamentals. Chou Tai-yun responded with valuation data, noting UMC's P/E ratio is only 19.25 times, far below Vanguard International Semiconductor's 34.96 times, showing a much thicker valuation cushion. In terms of year-to-date return, UMC is up 177.71%, far higher than Vanguard International Semiconductor's 90.72%, accumulating huge unrealized profits, so it became the preferred profit-taking target amid market volatility, not due to operating fundamentals.
Capacity Utilization Above 90%, Automotive AI Orders Stable
Chou Tai-yun noted UMC's capacity utilization remains above 90%, with stable orders for automotive BCD processes, AI server power management ICs and microcontrollers, an unchanged upward trend in mature-node quotes, and the logic of taking specialty-process overflow orders from TSMC (2330) still intact. Vanguard International Semiconductor's recent relative resilience mainly reflects its smaller capital, concentrated chips and lighter prior gains overhang, while UMC's lag is only a short-term chip flexibility difference, not a gap in actual operating strength.
Below 120 in Safe Zone, Trading Time for Space in Short Term
Looking ahead, Chou Tai-yun believes the overall long-term cycle bottom is solid and remains bullish on UMC's subsequent rebound. But large-cap stocks need time to digest huge profit-taking overhang in the short term, making a V-shaped reversal very difficult, with choppy consolidation inevitable, a phase of trading time for space. He reiterated his prior view that UMC below 120 is in a safe zone, with the current price already very close to the bottom and very limited downside room, investors can watch for low-level entry opportunities, while still carefully assessing risks in decision-making.