Taiwan stock chips fluctuate and adjust, MCU concept stocks face order visibility test

Recently, the Taiwanese chip industry has experienced a comprehensive correction, driven by the ongoing decline in the Asian manufacturing sector’s prosperity. According to the latest data, China’s official manufacturing PMI has fallen below the expansion/contraction line for two consecutive months, dropping to 48.7 in December, hitting a new low for 2025. Neighboring South Korea and Taiwan’s manufacturing indices have also weakened simultaneously, reaching 49.2 and 49.8 respectively, with manufacturing activity in the three major economies fully entering contraction territory. This PMI decline has directly impacted the global chip supply chain, as a combination of shrinking export orders and rising costs is eroding profit margins across wafer foundries, packaging and testing, and IC design sectors.

Market Immediate Reaction: Chip Stocks Volatility Intensifies, MCU and Other Consumer ICs Hit Hardest

TSMC’s stock price recently declined slightly by 1.5%, with export-oriented chip stocks such as UMC, Silicon Power-KY, and Macron also weakening. Institutional investors note that this adjustment reflects a reassessment of the risk of slowing global order momentum. More notably, inquiries for consumer and industrial-grade chips like automotive MCUs, power management ICs (PMIC), and NOR Flash have become noticeably more conservative, with MCU concept stocks facing a significant decline in medium- to long-term demand visibility.

The US stock market is also unsettled. Major international chip giants like Nvidia, Intel, and AMD have experienced increased volatility recently. Analysts point out that uncertainties in AI chip demand, along with weak orders for automotive electronics and industrial control chips, are creating short-term adjustment pressures. Signals from the supply chain are more cautious—several Taiwanese IC design and packaging/testing firms have revealed that orders for 2025 are still under control, but visibility for 2026 has clearly diminished, with the pace of procurement for mid-range chips like MCUs and power management becoming more conservative.

Why Are Chip Stocks and Export-Oriented Semiconductor Groups Under Such Pressure?

The characteristics of the chip industry determine its sensitivity to economic fluctuations:

High Export Dependence: Products such as memory, logic chips, industrial control ICs, and automotive MCUs rely heavily on overseas orders. When global demand cools, shipment volumes immediately reflect the downturn.

Global Supply Chain Dispersion: Raw materials, design, manufacturing, and packaging processes span multiple regions. Weakness in Asian manufacturing directly causes delivery delays and increased costs.

Order and Inventory Multiplier Effect: When customer procurement slows, wafer foundries and packaging/testing plants cut production first. Inventory buildup then suppresses product prices and gross margins, creating a chain reaction.

MCU concept stocks are especially vulnerable because downstream customers like automotive and industrial control sectors are highly sensitive to costs, and order reductions tend to be the fastest.

Three Major Risk Focuses for 2026 Investment Layout

Analysts highlight key variables investors should closely monitor:

Supply Chain Concentration Risk: Mature process chips (40–180nm) are highly concentrated among a few manufacturers and regions. Any disruption could trigger larger market volatility. Products like MCUs and PMICs, which are mature process, face particular risks.

Geopolitical and Trade Variables: Escalating US-China trade tensions and regional tensions will directly impact order allocation and capacity scheduling adjustments.

Global Demand Recovery Timeline: If chip orders in the first half of 2026 do not meet expectations, not only will consumer-grade chips like MCUs remain under pressure, but the overall industry’s stock price recovery timeline will also be delayed accordingly.

Short-term Volatility and Long-term Trends Coexist

The current supply chain pressures reflect the reality of global demand weakness and order tightening. The market has entered a high-volatility phase, and investors should not assume that “a short-term correction will pass quickly,” but rather prepare for a period of instability. The strategy at this stage should be cautious positioning, closely monitoring order dynamics and visibility changes in segments like MCUs.

However, from a macro perspective, the ongoing growth in AI and data center demand, along with the global supply chain restructuring trend, still exists. For chip stocks that can withstand short-term fluctuations and have solid fundamentals, the next 2–3 years could still present significant growth opportunities. The key for investors is to have sufficient patience and disciplined stock selection, focusing on companies with strong order visibility, supply chain resilience, and cost structures, to find opportunities amid volatility.