GF forecasts UMC for stronger prices and margins next two years as orders mount

GF Securities expects United Microelectronics (UMC) to experience stronger earnings per share over the next two years due to a combination of stronger prices and margins.

This is supported by a rising number of orders from key clients, which are expanding utilization rates, or UTR, at its foundry.

"We expect UTR for: 1) 12" to reach ~93% by end‑2026 on strong DDIC volumes from Novatek and Samsung (SSNLF) LSI at 22/28nm and Apple's (AAPL) Mac at 55/65nm, with upside from Sony's sensors (>10KPM at 22/28nm); 2) 8" to ~90% by end‑2026 and full loading by 2H27 on intact demand (datacenter PMIC, MCU, embedded memory, etc.), Samsung LSI’s scale‑down in 8" driving PMIC order transfer (~70KPM in 2027, ~110KPM in 2028), and additional transfer from Novatek and MTK, with upside from Qualcomm (QCOM) PMIC in 2027," said GF Securities analyst Jeff Pu in an an investor note. "Meanwhile, pricing momentum extends from 2H26 (selective customers) into 1H27 (10–30% across 12" and 8") and 2H27 (ongoing negotiations), suggesting visibility extending into 2H27."

GF Securities increased its EPS forecasts for the entirety of 2026 and 2027 by 2% and 8%, respectively. It maintained its Buy rating on the stock. UMC is expected to begin another growth phase in 2028 when it transitions to asset-light FinFET and optical full solutions.

"We expect UMC's next growth phase, likely beginning 2028, to be driven by Intel (INTC) 2nm as a major inflection—an asset‑light FinFET model with revenue contribution from 2028, plus upside from further 12nm expansion tied to Apple's DDIC migration amid 'Made in U.S.,'" Pu noted.

Interposer and advanced packaging are expected to begin contributing during the second half of 2027. This will be supported by silicon capacitor/DTC, hybrid bonding and controller‑to‑bonding integration.

UMC shares were down 8% during pre-market trading on Monday. However, the stock has surged 32% over the past month and more than 230% year-to-date.