JPMorgan analyst Gokul Hariharan said he has been relatively cautious on Asian semis since July, but recent negative datapoints, including ongoing weakness in China smartphones and the accumulation of inventories at China distributors, lead him to expect a cyclical downturn in the first half of 2019. The analyst, who cut his estimates "across the board" for Asian logic semis, downgraded UMC (UMC) to Underweight from Neutral and downgraded ASE Technology (ASX) to Neutral from Overweight. Smaller foundries are likely to see margin pressure as 8" order cuts come through and mature 12" demand weakens, said the analyst, who added that he does not expect a reversal of the trend of Asian semis underperforming the broader PHLX Semiconductor Sector index (SOX).

Citi analyst Laura Chen upgraded UMC to Buy from Neutral with a NT$58 price target after the company posted better-than-expected Q1 results. UMC expects wafer shipments to rise by a low-single digit percentage quarter-over-quarter with average selling price staying firm, notes the analyst, who sees a "gradual improvement on the way."