UMC Earnings: Short-Term Headwinds Are Fully Priced in but Benefits From Intel Partnership Aren’t

We lift our fair value estimate on no-moat United Microelectronics, or UMC, to TWD 70 from TWD 62 per share, factoring in higher midcycle gross margin arising from its partnership with Intel and higher confidence in UMC’s ability to mitigate cycle downturns, which was demonstrated in the past two years. Trading at 8.7 times 2025 P/E, we see UMC’s shares as undervalued, as investors are focusing on short-term headwinds in automotive and industrial demand rather than structural demand growth for supporting chips used in less-powerful devices that emphasize cost and low power consumption.