Hot Stock: Indium Phosphide Demand Remains Strong, United Microelectronics Soars 41.41% Above All Moving Averages

United Microelectronics (3081-TW), a III-V compound semiconductor player in optical communications, has benefited from surging demand for AI and data center optical communications. Boosted by supply constraints in indium phosphide (InP) substrates and strong July revenue, the stock posted four consecutive trading days of涨停 (daily trading limits), rising 41.41% for the week. It closed above all moving averages and reclaimed the NT$2,000 price level, marking a one-month high.

Driven by rising data center demand, increased shipments of optical communication products, and market expectations for supply chain restructuring, United Microelectronics reported July revenue of NT$501 million, up 19.19% month-on-month and 176.54% year-on-year. Cumulative revenue for the first seven months reached NT$2.627 billion, up 120.9% year-on-year.

In addition to strong July results, the company gained momentum last week amid market speculation. Foreign reports indicate that the U.S. Federal Communications Commission (FCC) is considering restricting the use of optical transceiver modules made by Chinese companies in U.S. AI data centers for national security reasons. The policy could be implemented as early as 2026, reducing the risk of Chinese equipment infiltration. This has been interpreted as a potential shift in orders from Chinese suppliers to Taiwan’s supply chain.

Moreover, Lumentum, a major player in optical communications, recently warned that demand for InP lasers in AI data centers has surged, creating a supply gap of over 30%. This has further spotlighted United Microelectronics as a key beneficiary.

Data communications products account for approximately 80–85% of United Microelectronics’ revenue, primarily consisting of continuous-wave (CW) lasers used in silicon photonics modules. These are manufactured through downstream optical module partners and shipped to major U.S. hyperscale cloud service providers. The company is set to hold its earnings call on August 12, offering further insights into its future product strategy.