United Microelectronics Corp (UMC, 聯電) yesterday saw its share price soar to close at a two-week high on reports that Washington is looking to ban Semiconductor Manufacturing International Corp (SMIC, 中芯) amid an escalating US-China trade dispute.
UMC shares jumped 9.79 percent to NT$23.55, after Reuters on Friday last week reported that the US Ministry of Defense has proposed working with other agencies to determine whether to place SMIC on a trade blacklist because of its relationship with the Chinese military.
US firms would require a license before shipping to SMIC if US President Donald Trump’s administration imposed export restrictions on the Chinese chipmaker.
Photo: Hung Yu-fang, Taipei Times
Turnover of UMC shares hit 97.93 million yesterday, the biggest since Monday last week.
SMIC shares tumbled 22.88 percent to end at H$18.24 on the Hong Kong Stock Exchange.
“In our view, the US curbs will have a positive impact on Taiwan’s semiconductor industry,” if Washington were to put SMIC on the blacklist, Yuanta Securities Investment Consulting Co (元大投顧) said in a note yesterday.
Yuanta expects “UMC to be a major beneficiary from the US’ potential ban,” given the similarities in revenue scale and foundry technology offerings of the two companies, the note said.
UMC ranked as the world’s fourth-biggest foundry last quarter, with revenue of US$1.44 billion, while SMIC had US$941 million in revenue, according to the statistics compiled by market researcher TrendForce Corp (集邦科技).
Both companies offer 14 nanometers as their most advanced process technology, but SMIC generates a large part of its revenue from less advanced chips, TrendForce said.
With Beijing’s support, SMIC is striving to move to next-generation process technologies to catch up with bigger rivals Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co. However, the US restrictions would be an obstacle to SMIC’s ambition due to a scant supply of key manufacturing equipment, Yuanta said.
Novatek Microelectronics Corp (聯詠科技), which supplies chips that control flat-panel displays, would be another beneficiary and could see a rebound in its share price, as the US ban would make it difficult for SMIC to tap into the driver IC market, Yuanta said.
Novatek shares have plunged about 15 percent since media reports last month that Huawei Technologies Co (華為) planned to team up with SMIC to make inroads into the driver IC market.
UMC, Vanguard International Semiconductor Corp (世界先進) and GlobalFoundries Inc are likely to receive orders transferred from SMIC if the Trump administration further tightened its grip on SMIC and other Chinese semiconductor companies, Jih Sun Securities Investment Consulting Co (日盛投顧) said in a research note.
Since UMC and Vanguard are running their 8-inch fabs at almost full capacity, they could see an uptick in chip prices amid supply constraints, while UMC and TSMC could see an increase in demand for less advanced chips made by their 12-inch fabs, Jih Sun said.
TSMC and Novatek shares dropped 0.7 percent and 0.82 percent to NT$426 and NT$241 respectively in Taipei trading yesterday. Vanguard shares climbed 2.88 percent to NT$96.50.
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