Contents
Upgrade on foundries with upward trends ..................................................................... 3
Trend 1: Financial turmoil triggers outsourcing 3
Trend 2: Demand is picking up at advanced process 4
Trend 3: Improvement in order flow until 2010 4
Inventory is at a low level, especially for IDM makers 5
TSMC and UMC – our pick among foundries 5
UMC: Short-term outperformer, driven by turnaround 7
CHRT: Still not self-sustaining; below-book justified 7
Vanguard: Time to leave before party ends 7
SMIC: Gloomy outlook keeps REDUCE call in place 7
Company updates........................................................................................................ 13
TSMC – BUY (from HOLD); CP: TWD60.00; TP: TWD73.00 (from TWD53.00) 14
UMC – BUY (from HOLD); CP: TWD15.25; TP: TWD17.00 (from TWD13.90) 18
Vanguard – HOLD (from BUY); CP: TWD14.50; TP: TWD14.80 (from TWD13.50) 22
SMIC – REDUCE; CP: HKD0.39; TP: HKD0.36 26
Chartered Semiconductor – HOLD; CP: SGD2.66; TP: SGD2.00 30