Goldman Sachs Downgrades United Microelectronics (UMC) to Sell; Returns Deteriorating

Goldman Sachs downgraded United Microelectronics (NYSE: UMC) from Neutral to Sell, price target lowered from $2.80 to $2.00.

Analyst, Donald Lu, said, "...we expect UMC to suffer from a steeper correction in 4Q12-1Q13 due to its relatively lower exposure to advanced technology (40nm and 28nm). UMC’s 40nm market share was only 6% in 1Q12, 12 quarters after TSMC started 40nm volume production. In contrast, at the previous 65nm node, UMC has achieved 14% market share at a similar stage in 4Q09. UMC management guided mass production of 28nm in 4Q12; however, we expect UMC to struggle with its initial 28nm mass production yield according to its historical pattern. In the longer term, we are concerned about UMC’s muted ROE outlook in light of increasing capex and R&D intensity at 20nm and beyond."

"We cut our 2012E/2013E/2014E EPS by 8%/14%/9% due to the slowing
end-demand and inventory correction."

For an analyst ratings summary and ratings history on United Microelectronics click here. For more ratings news on United Microelectronics click here.

Shares of United Microelectronics closed at $2.27 yesterday.

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