Seizing the Panic-Buy Opportunity at the End of the Correction: AU Optronics,中美晶, and ChipMOS

I. Market Trend

Today, the Taiwan stock market declined with reduced volume. The weighted index dropped by 379 points, with trading volume falling to approximately NT$945.7 billion. The OTC market edged up slightly, but the overall market remains under pressure from the 10-day and monthly moving averages.

Short-term correction factors include profit-taking after a rally, margin deleveraging, rising oil prices due to uncertainty around a U.S.-Iran ceasefire, and market concerns over whether AI demand is overheating—leading to conservative investor sentiment.

However, the overall market remains in a high-level consolidation phase. As long as the previous low of 44,454 points and the quarterly line hold, there remains a chance for the market to resume its bullish trend.

II. Medium- to Long-Term Outlook Remains Positive

Taiwan's GDP growth and corporate earnings forecasts continue to be revised upward. Driven by AI, the overall fundamentals, liquidity, and industrial landscape remain strong.

The quarterly, semi-annual, and annual moving averages remain upward, indicating that the medium- to long-term bullish structure remains intact.

Market focus will shift to TSMC's earnings call on July 16 and U.S. tech earnings reports, which could serve as catalysts for the next market upswing. The goal of the Taiwan stock market reaching 50,000 points remains achievable.

III. AI Demand Is Not a Bubble

Although the market worries about cooling AI demand, the industry widely believes AI is still in its early stages of rapid growth.

Liu Yang-wei, Chairman of Hon Hai (2317-TW), stated that only a limited number of entities are currently using AI computing power at scale, and government and enterprise demand has only just begun. AI computing demand is expected to grow rapidly over the next 3–5 years.

Lin Hsien-ming, Chairman of Wistron (3231-TW), also noted that global sovereign AI demand is gradually rising, and AI has already begun creating commercial value—contrary to market fears of a bubble.

IV. Global AI Capital Expenditure Continues to Expand

Major international CSPs—including Microsoft, Google, Meta, Amazon AWS, and Oracle—are continuously raising their AI capital expenditure forecasts, with investment scales expected to grow significantly over the next three years.

The five major North American CSPs are projected to spend $805 billion this year, with spending expected to remain at record highs through 2027. Demand for AI data centers, GPUs, in-house ASICs, and advanced packaging continues to rise.

Taiwan's complete semiconductor supply chain advantage positions it to continue benefiting from the global AI infrastructure wave.

V. Liquidity Remains a Key Support for Taiwan Stocks

Taiwan's excess savings for this year are estimated at NT$8.5–9 trillion, and with the rapid growth of ETFs, domestic liquidity remains strong.

The combined scale of ETFs and mutual funds is approaching NT$8 trillion. The market structure is gradually shifting from foreign-investor dominance to a balance between domestic and foreign investors. As a result, every market pullback tends to attract strong buying interest.

VI. TSMC Remains the Core Market Focus

The market expects TSMC's Q2 gross margin and EPS to exceed forecasts. Institutional investors are optimistic that gross margins can remain at a high level of 67%–70%.

Demand for AI accelerators, advanced processes, CoWoS advanced packaging, and ASICs remains strong. AI-related revenue growth over the next few years is expected to outperform market expectations.

NVIDIA's aggressive push into the CPU market is also expected to boost TSMC's advanced process order intake.

VII. Investment Direction

AI remains the most certain mainstream theme. Investors should focus on foundry, ASIC, advanced packaging, CCL/ABF substrates, silicon wafers, thermal solutions, optical communications, memory, BBU, MOSFETs, passive components, and stocks hitting new revenue highs.

Non-AI sectors may also benefit from economic recovery and show rotational performance. Investors should gradually build positions in fundamentally strong stocks with growth catalysts in the second half.

High-base stocks should not be chased; valuation risks must be monitored.

VIII. Trading Strategy

Short-term, monitor whether support at 44,454 points and the quarterly line holds.

Adopt a 'buy low, don’t chase high' and 'scale in gradually' strategy, avoiding excessive leverage.

Prioritize stocks showing 'volume breakout, institutional or major buyer accumulation, and sustained fundamental growth,' using the 10-day or monthly line as stop-loss and risk management benchmarks.

After short-term consolidation, the bullish trend is expected to continue. Stock selection will remain more important than market timing.

Execution is not about debate, but action.

Market bottoms often appear when most investors are skeptical and hesitant.

The key is whether you are on the right side and have picked the right stocks.

Just like after every market stress test and sharp drop,

those who dare to enter the market

will eventually thank their courageous past selves.

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Source: Analyst Chen Hsueh-chin, Luen Yuan Investment Advisory

The individual securities recommended and analyzed by our company have no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, carefully evaluate, and assume investment risks.