United Microelectronics Seems Able to Defend Prices Better Than Previous Downturns; FVE to TWD 65

We raise our fair value estimate on no-moat United Microelectronics Corp, or UMC, to TWD 65 per share as we assumed stronger average selling price, or ASP, and moved the next semiconductor boom-bust cycle one year earlier featuring a recovery in 2024. Our fair value estimate corresponds to almost 2.5 times price to book. While earnings may bottom a half year later, we are upbeat on UMC benefiting from structural growth in Internet of Things, increased OLED adoption, and image-related chips. We think with a clear bottom in sight, the stock is more likely to move up once more customers report lower inventory data.