We recently compiled a list of the 15 Semiconductor Stocks Making Impressive Comeback From DeepSeek AI Dip. In this article, we are going to take a look at where United Microelectronics Corporation (NYSE:UMC) stands against the other semiconductor stocks.
The semiconductor industry has always been a battleground for technological development, though lately, it has turned into a full-scale battle. The US and China are not only vying to outpace each other in the race to achieve AI superiority but are also actively trying to slow each other down.
The US for instance has placed a number of export restrictions on global firms selling semiconductor technologies to China. Many leading US companies have had to deal with declining China sales as a result of these restrictions. On the other hand, China is trying its best to come up with technologies that compete with those in the US, despite restrictions.
The emergence of DeepSeek AI at the end of January was a wake-up call for the Americans, with China building its latest AI model for a fraction of the cost that the US counterparts spend on their models. While the validity of these claims is debatable, it does show how far China has come when it comes to competing with the US.
As a result of the DeepSeek AI announcement, many semiconductor stocks took a big hit. Two weeks later, some of the stocks started recovering and investors started feeling comfortable with the thought of continued technological dominance by the US. We therefore decided to look at the semi-stocks that were making a comeback from the DeepSeek dip.
To come up with the list of 15 semiconductor stocks making a comeback from DeepSeek AI dip, we only considered stocks with a market cap of at least $10 billion that beat the S&P 500 in the last 5 days of trading.
A close-up of a state-of-the-art semiconductor wafer foundry.
United Microelectronics Corporation (NYSE:UMC)
United Microelectronics Corporation (NYSE:UMC) is an independent semiconductor wafer foundry. The company offers wafer fabrication, circuit design, assembly & testing services, and mask tooling. It provides its products and services to integrated device manufacturers and fabless design companies. The stock is up 2.96% in the last week against the S&P 500’s 1.13% gains. However, it is trading at the same level it was 4 years ago, which is why investors aren’t as keen on the company as other chip stocks.
The recent rally could be because of a 4.17% jump in sales in January. However, there are issues with the company that investors need to know before they jump in based on the current optimism. Last month, the company missed its Q4 estimates and the revenue guidance didn’t excite anyone either. Citi downgraded the stock as a result citing the lack of positive catalysts for the company.
United Microelectronics Corporation (NYSE:UMC)’s guidance for the first quarter includes flat QoQ wafer shipments with a 4-6% decline in gross margins. This suggests the company will report declining QoQ revenues despite an uptick in consumer electronics demand. Similarly, depreciation cost is likely to go up in 2025 and 2026 even though the company expects to reduce its CAPEX by over one-third in 2025. Even though the chart shows a recovering stock price, it may not be a great idea to start taking a position in the stock until more clarity emerges on the company’s growth prospects.
Overall UMC ranks 12th on our list of the semiconductor stocks that are making impressive comeback from DeepSeek AI Dip. While we acknowledge the potential of UMC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as UMC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
