Deutsche Bank Upgrades United Microelectronics (UMC) to Buy; Sales May Grow 18-21% QoQ in Q3
September 29, 2009 2:22 PM EDT

Deutsche Bank upgrades United Microelectronics (NYSE: UMC) from Hold to Buy. Price target increased from NT$17 to NT$19

Deutsche analyst says, "We raise our EPS forecast by 13% to NT$1.30 for 2010 and 8% to NT$1.56 for 2011 to factor in faster-than-expected improvement in low-power 40nm ramp-up and the assumption of order momentum led by low inventory and new PC/handset product cycles...Our latest channel checks suggest the company could start shipping low-power 40nm products for Broadcom by end-4Q09, which is two quarters ahead of our expectation. We remain concerned about its high-performance 40nm yield rate for graphics chips, embedded CPU, and LCD TV controller. However, the breakthrough in low-power 40nm yield rate improvement for handset chips leads us to raise our forecast for the 40nm sales portion from 5% to 9% for 2010. We expect more handset chip customers to adopt UMC’s 40nm in 2010, thanks to a higher yield rate."