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Investing.com - United Microelectronics (NYSE:UMC), currently trading at $7.59 and maintaining a "GREAT" financial health score according to InvestingPro, received a reiterated Underperform rating and $4.80 price target from Bernstein SocGen Group on Monday. The company appears undervalued based on InvestingPro’s Fair Value analysis.
The Taiwan-based semiconductor foundry reported June monthly sales of NT$19 billion, representing a 3% month-over-month decrease but a 7% year-over-year increase. For the second quarter of 2025, UMC posted revenue of NT$59 billion, up 2% from the first quarter and 3% higher than the same period last year. The company maintains healthy profitability with a gross margin of 31.5% and trades at a P/E ratio of 12.2.
The quarterly revenue fell 4.9% below consensus estimates and 2.7% below the company’s guidance midpoint, primarily due to approximately 5% foreign exchange headwinds. The Taiwan dollar appreciated against the U.S. dollar by over 10% during the second quarter of 2025.
Bernstein noted that UMC’s second-quarter guidance had exceeded expectations partly due to favorable foreign exchange assumptions at the time and makeup shipments following an earthquake that affected first-quarter production. The firm estimates that actual foreign exchange rates for the second quarter likely created a low-single-digit drag on gross margin.
While Bernstein observed some potential pull-forward demand, especially in mature nodes with available idle capacity, the firm remains cautious about long-term competitive pressure from China, particularly regarding mature nodes. Despite these concerns, UMC has maintained dividend payments for 16 consecutive years and currently offers a significant 4.7% dividend yield. For deeper insights into UMC’s financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, United Microelectronics Corporation (UMC) experienced a downgrade from Goldman Sachs, which shifted its stock rating from Neutral to Sell and adjusted the price target to NT$40.50. This decision was influenced by revised foreign exchange forecasts that could affect UMC’s profitability due to a currency mismatch, as the company earns in U.S. dollars but incurs costs in Taiwanese dollars. Goldman Sachs also expressed concerns about increased competition from Chinese semiconductor firms and rising costs, which could impact UMC’s market position and profitability. Additionally, the firm revised its 2025 revenue expectations for UMC, now anticipating a 1.8% decline in New Taiwan Dollar terms, contrasting with a previously expected 3.5% increase.
In compliance-related developments, UMC has filed a Form 6-K with the U.S. Securities and Exchange Commission (SEC). This filing, signed by CFO Chitung Liu, confirms UMC’s adherence to SEC reporting requirements for foreign issuers. The document is part of UMC’s routine disclosures to inform investors of significant events and maintain transparency. The Form 6-K, which does not contain specific financial data, is accessible via the SEC’s EDGAR database and is crucial for stakeholders monitoring UMC’s regulatory compliance and corporate governance. UMC’s consistent filings underscore its commitment to transparency and provide essential information to the investment community.
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