Fake Bottom or True Breakout? TSMC, Foxconn, and Powertech

I. Today's Market Focus

Index Performance

Taiwan's stock market showed a "higher opening, volatile, and rising" pattern, closing with a surge of 3,186 points at 43,119 points.

The index successfully rebounded above the 10-day moving average, with a clear short-term stop-loss signal.

The OTC market index also rebounded strongly, rising by 6.62%, indicating a return of funds to mid and small-cap stocks.

Related Stocks and Fund Flow

The entire AI supply chain surged: semiconductor manufacturing (TSMC (2330-TW), UMC (2303-TW)), ASIC (MediaTek (2454-TW), Novatek (3661-TW), Realtek (3443-TW)), PCB/CCL, ABF substrates, power supplies, memory, and passive components all hit limit up.

This shows that market funds are clearly flowing back into electronics and AI mainstream sectors.

Trading Volume and Funds

Trading volume shrank to 835.5 billion NT dollars, indicating a "volume contraction rebound."

This reflects that the short-term rebound is still a deep decline rebound, and market confidence has not yet fully recovered.

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II. The Nature of This Correction and Rebound

Correction Causes

Overvaluation (high P/E ratio pressure for AI)

Excessive leverage (expansion of margin trading)

Overheated sentiment (theme speculation)

Correction Nature Judgment

Not a fundamental reversal, but a "healthy correction"

Belongs to a technical pullback within a bullish trend

Rebound Power Sources

Deleveraging is near completion (margin trading decreased by 21.8% in one month)

Stop-loss selling pressure released

Valuation returned to a reasonable range

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III. Overall Economic and Fundamental Support

Strong Taiwan Economic Performance

Continuous expansion of exports and overseas orders

AI drives explosive demand for electronics and ICT products

Private investment and consumption are heating up both domestically and internationally

GDP forecasts significantly upgraded

Chung-Hua Institution for Economic Research: approximately 10.38%

Taiwan Institute of Economic Research: approximately 10.35%

Academia Sinica: approximately 10.16%

Goldman Sachs: approximately 10.6%

UBS: approximately 11% (close to the best since 1989)

Conclusion

Divergence between fundamentals and short-term stock market correction

Mid to long-term bullish foundation remains solid

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IV. AI Industry Trends (Core Growth Engine)

Semiconductor Manufacturing

TSMC (2330-TW) upgraded its 2026 revenue growth to over 40%

AI demand continues to be upgraded, with high order visibility

Packaging and Testing Equipment

ASE Technology (3711-TW) increased capital expenditure to $10.5 billion

Shows continuous expansion of AI infrastructure investment

Power Supplies and Infrastructure

Delta Electronics (2308-TW) raised its AI revenue share to 25%

AI data center construction wave continues

Passive Components and Supply Chain

Powertech Technology (2327-TW) pointed out that demand is "very strong," even leading to premium buying

International Technology Verification

Microsoft Azure maintains high growth (approximately 45%)

Samsung's AI chip demand is insufficient until 2028

NVIDIA: AI is a long-term industry paradigm shift

Conclusion

AI is not a short-term cycle but a long-term structural growth

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V. Comparison with Historical Corrections

Past Corrections (2000, 2008, 2015)

Accompanied by earnings decline or economic reversal

This Correction

Revenue, gross margin, and EPS are still growing in sync

Listed company revenue growth is approximately 36%

Judgment

This is a "correction with fundamental support"

Not a bubble burst-type decline

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VI. Funds and International Factors

South Korean Market Lesson

KOSPI fell by 40%, deleveraging completed approximately 90%

Provides a reference for Taiwan's stock market rebound after deleveraging

Taiwan Stock Market Funds

Significant reduction in margin trading → funds become healthier

Favorable for stable development of subsequent market conditions

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VII. Outlook

Short-Term

Rebound target: 45,000 to 46,000 points

May still experience volatility consolidation

Mid-Term (August)

Index range: 42,000 to 46,000

Pattern: Sideways volatility + individual stock rotation

Long-Term

Bullish themes to take over:

Geopolitical easing

U.S. elections

AI industry events (such as IPOs)

Year-end dream rally

Bullish target: Challenge above 50,000 points

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VIII. Stock Selection and Operation Strategy

Core Logic

Return to fundamentals (profits and orders)

Focus on high-competition-barrier industries

Groups to Watch

ASIC design

PCB/CCL

ABF substrates

CPO silicon photonics

Memory

Passive components

Advanced packaging (CoWoS)

Power supplies and equipment

Low Earth orbit satellites

Operation Suggestions

Principle: "Buy low, don't chase high"

Deploy on rebounds in strong groups

Watch for low-base turnaround stocks

Risk Management

Strictly control fund allocation

Avoid chasing prices and excessive leverage

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Conclusion:

This correction in Taiwan's stock market is a "valuation and leverage adjustment," not a fundamental turnaround. Under the unchanged long-term growth trend of AI, the market is gradually showing signs of a bottom. In the future, it will enter a range-bound volatility and individual stock differentiation phase, with stock selection ability becoming the key to victory.

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Article Source: Lun Yuan Securities Chen Xuejin Analyst

The individual securities analyzed and recommended by our company

Have no improper financial interest relationship. Past performance does not guarantee future profits.

Investors should make independent judgments, carefully evaluate, and bear investment risks.