UMC Stock Drops 70 Dollars – Is It Still a Buy? Expert Reveals 'Bottom Price': Short-Term Rebound Could Outperform TSMC

Taiwan's stock market rebounded today (20th) on reduced volume, closing up 214 points. UMC previously surged amid the AI boom but has since corrected sharply in July, dropping to 115.5 NT dollars.

Chen Chong-ming, a financial writer known as the 'Invincible Master,' stated that while TSMC remains the top choice for long-term investment, UMC could offer a larger rebound in the short term, making it a viable option for tactical trading.

In a Facebook post, Chen noted that UMC's stock price was still at 185 NT dollars by the end of June but has now dropped to 115, erasing 70 NT dollars in value. "The volatility of UMC is relatively high. It's not that you can't trade it—it's just that you shouldn't chase highs. But the upside from a low point might outperform TSMC," he explained.

### UMC’s Gross Margin Is Half of TSMC’s—So What’s Its Advantage?

Chen pointed out that TSMC and UMC are known as the 'two giants of wafer manufacturing.' TSMC reported stellar Q2 profits with a gross margin as high as 67%, while UMC’s stood at 32%—just half.

"For long-term investment, TSMC is clearly the better pick. But UMC isn’t without merit. When TSMC gets too expensive, investors start looking toward UMC, creating catch-up potential," Chen said.

He added that UMC’s Q2 financial report was impressive, with earnings per share (EPS) reaching NT$3.39 and a first-half total of NT$4.68. "But note: NT$2 of that came from non-operating income. After excluding that, I estimate UMC earned about NT$5 from core operations and NT$7 from non-core activities," he cautioned.

### Where Is UMC’s Bottom? Expert Shares a Bottom-Fishing Strategy

Chen analyzed that based on current prices and core earnings, UMC’s P/E ratio stands at around 22 to 23 times—reasonable compared to TSMC. "So, is adding more UMC shares feasible? Yes, I believe there’s still opportunity here."

The key indicator to watch is capacity utilization. UMC’s utilization was about 85% in Q2 and could reach 90% in Q3—an encouraging sign.

Although UMC’s recent low was around NT$102, Chen believes "there’s solid support at the NT$100 level." Investors who bought at higher levels could consider averaging down near this price.

"Still, for long-term holdings, TSMC is superior. For UMC, buy deeper on dips, take profits once the rebound is sufficient, and exit early. Trade UMC short-term, hold TSMC long-term," he concluded.