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Taiwan Semiconductor vs. United Microelectronics: Which Chip Stock is a Better Choice?

Stock Markets Sep 01, 2021 04:30PM ET
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© Reuters. Taiwan Semiconductor vs. United Microelectronics: Which Chip Stock is a Better Choice?

The demand for semiconductor chips is rising rapidly, driven by rapid tech integration and sustainability goals. Therefore, industry leaders Taiwan Semiconductor (TSM) and United Microelectronics (UMC) are expected to achieve significant growth in the near term. But which of these stocks is a better buy now? Read more to find out.Based in Taiwan, Taiwan Semiconductor Manufacturing Company Limited (TSM) manufactures and sells integrated circuits and semiconductors. It also offers customer service, account management, and engineering services. Also based in Taiwan, United Microelectronics Corporation (UMC) operates semiconductor wafer foundries in Taiwan, Singapore, China, Hong Kong, Japan, the United States, and Europe. It operates through Wafer Fabrication and New Business segments.

The semiconductor industry has struggled with production bottlenecks in the first half of 2021 amid growing demand. However, with increased focus and initiatives by governments and industry giants, the industry is making a comeback. According to a Semiconductor Industry Association (SIA) report, the worldwide sales of semiconductors stood at $44.50 billion in June 2021, reflecting a 29.2% improvement year-over-year. Also, sales during the second quarter of 2021 were up 8.3% sequentially. The demand for chips is expected to increase over an extended period as the world races toward technological advancements and sustainability goals. Both TSM and UMC are prominent players and should benefit from the industry tailwinds.

UMC has gained 8% in price over the past month, while TSM has returned 2%. Also, UMC’s 34.9% gain year-to-date compares with TSM’s 9.1% returns. In terms of their past year’s performance, UMC is the clear winner with 221.2% in price gains versus TSM’s 50.2%.

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Taiwan Semiconductor vs. United Microelectronics: Which Chip Stock is a Better Choice?
 

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