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United Microelectronics Corporation (NYSE:UMC) and Taiwan Semiconductor Manufacturing (NYSE:TSM) are starting a rampage and I expect both stocks to do well going into 2006. Utilization at both UMC and TSM is nearing 100%, driven by strong demand for consumer electronics.

In 2006, I expect the strongest demand for consumer electronics to come from HD-DVD, Blu-Ray, Playstation 3 and HDTV application technologies. UMC and TSM produce many of the microchips used in today's consumer electronics. Taiwan’s economy, which is heavily supported by the electronics and semiconductor industries, is steadily improving and the political climate following last year's presidential election is smoothing out, easing investor fears. I expect to see UMC cross $3.40 and TSM to cross $10.30 in the next 1-3 weeks -- charts below:

TSM 1-yr chart:

UMC 1-yr chart:

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