Taiwan Semi, UMC Slide on UBS Downgrade

UBS analyst Jonah Cheng today cut his ratings on the contract chip manufacturers Taiwan Semiconductor (TSM) and United Microelectronics (UMC) to Neutral from Buy.

Cheng writes that an order pick up ahead of the launch of Microsoft Windows 7 and the National Day holiday period in China are “coming to an end.” He says it is “time to review the real demand outlook.” And he isn’t that impressed. “We think it unlikely we shall see further upside surprise as the market expectation is already high for PC and handset demand,” he writes. Cheng writes that he expects Q1 2010 sequential revenue declines of 10%-20% as fabless Asian chip companies, weaker than the typical seasonal drop of under 1%.

TSM today is down 24 cents, or 2.3%, to $10.13; UMC is down 12 cents, or 3.2%, to $3.62.