Title Foundry: Buy TSMC, Vanguard; Neutral on UMC
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Title:Foundry: Buy TSMC, Vanguard; Neutral on UMC
Download File:Foundry industry note 161115--sinopac.pdf 
Summary:Foundry: Buy TSMC, Vanguard; Neutral on UMC

OCT foundry sales in line at NT$106.17bn (+1.5% MoM, +10.9% YoY): The small MoM gain in OCT is a bit of a triumph since 4Q is typically foundry¡¦s slow season. Support came from rising demand for entry-level and midrange smartphones in emerging markets and from milder inventory adjustment impact in 4Q due to persistent driver IC restocking. We estimate wafer shipment will remain flattish or even rise QoQ, in light of reasonable inventory levels upstream, expected replenishment of driver IC and other IC inventories during light season, and increasing demand for communication ICs. We thus anticipate flattish 4Q16 sales revenues QoQ for the industry overall.

  • Buy TSMC (2330 TT), TP of NT$215 (3.6x 2017 P/B)
  • Buy Vanguard (5347 TT), TP of NT$71 (3.6x 2017 P/B)
  • Neutral on UMC (2303 TT)
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