Purchasing United Microelectronics Corp.

Posted on November 11, 2005 , filed under Stocks | Print This Post

Today, I purchased 5000 shares of UMC, United Microelectronics Corp. at $3.20. UMC, like TSM, Taiwan Semiconductor Manufacturing Co. Ltd., is an outsourced Taiwanese semiconductor foundry. UMC is the world’s second largest outsourced manufacturer of chips. Shares of UMC have been down over political instability and a downturn in demand for semiconductors in recent years. I believe the semiconductor industry has seen a strong rebound in the last year, but shares of UMC have not followed in suit. It appears to me that both UMC and TSM are set to jump up in the next 6-12 months. Utilization at UMC is up and a new round of consumer electronics, including game consoles, low cost HDTV’s, and high definition DVD players, will be launched in 2006. These new electronics will replace the aging current cycle of game consoles, SDTV’s, EDTV’s, and standard definition DVD players. The new electronics cycle will drive strong demand at outsourced semiconductor foundries, like UMC, for the next 4-5 years.

Symbol: UMC, United Microelectronics Corp.

Intelligent Investor Strength: 7
Chart Strength: 7
Speculation and Greed Strength: 9

RawGreed Strength Rating: 8

Target Buy Price: $3.20
Target Sell price: $3.60 within 3-6 months, $4.50 in 6 months-1 year.

Notes: If UMC drops under $3 I will purchase an additional 5000 shares.

*Disclaimer: I own 4598 shares of TSM at an average purchase price of $9.02

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