UMC Should I Buy
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United Microelectronics Corp (UMC) is not a strong buy for a beginner investor with a long-term strategy at this moment. While the company has shown positive financial performance in its latest quarter, the technical indicators, options data, and analyst sentiment suggest caution. The stock's recent rally and potential for a downturn in the coming weeks make it less favorable for immediate investment.
The MACD is below 0 and negatively contracting, indicating bearish momentum. RSI is neutral at 54.86, and moving averages are converging without a clear trend. The stock is trading near its resistance level (R1: 10.359), which may limit further upside in the short term.
Hedge funds have significantly increased their buying activity, with a 653.09% increase over the last quarter. The company's financial performance in Q4 2025 showed strong YoY growth in revenue (6.66%), net income (23.32%), and EPS (50%).
Analyst sentiment is mostly negative, with multiple downgrades citing concerns over weaker demand in key segments like PC and smartphones. The stock's recent 50% rally is unlikely to be supported by strong EPS upgrades or utilization improvements. Technical indicators and candlestick analysis suggest a potential downturn in the next week (-8.5%) and month (-28.15%).
In Q4 2025, UMC reported revenue growth of 6.66% YoY, net income growth of 23.32% YoY, and EPS growth of 50% YoY. Gross margin also improved slightly to 30.67%. These figures indicate strong financial performance.
Recent analyst ratings are mixed to negative. Daiwa downgraded the stock to Neutral with a higher price target of NT$59.50. KGI Securities upgraded it to Neutral with a NT$70 price target. However, BNP Paribas and JPMorgan downgraded the stock, citing concerns over weaker demand and limited upside after a significant rally.
