Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Thematic (Sector/Industry)

<ul>
<li>With ~2x exposure to memory compared to its peers, LRCX is feeling the pain</li>
<li>Q1 revenues of  $3.87 billion were marginally higher than the forecasted midpoint, down 26.7% sequentially and down 4.4% YoY.</li>
<li>For the current quarter, LRCX expects revenues to decline a further ~ 20% to $3.1 billion at the midpoint.</li>
</ul>


With ~2x exposure to memory compared to its peers, LRCX is feeling the pain
Q1 revenues of  $3.87 billion were marginally higher than the forecasted midpoint, down 26.7% sequentially and down 4.4% YoY.
For the current quarter, LRCX expects revenues to decline a further ~ 20% to $3.1 billion at the midpoint.


Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>TSMC is cutting its 2023E capex plans by 12% according to Taiwan's EDN. The company will also report earnings this Thursday.</li>
<li>TSMC suppliers ASML and Lam Research will also be reporting this week. Realtek will report this week as well.</li>
<li>Delta Thailand valuation still precarious relative to Delta Taiwan. Apple has continued to outperform the Quanta &amp; Pegatron pair.</li>
</ul>


TSMC is cutting its 2023E capex plans by 12% according to Taiwan's EDN. The company will also report earnings this Thursday.
TSMC suppliers ASML and Lam Research will also be reporting this week. Realtek will report this week as well.
Delta Thailand valuation still precarious relative to Delta Taiwan. Apple has continued to outperform the Quanta &amp; Pegatron pair.


Taiwan Tech Weekly: TSMC Cutting Capex, Earnings This Week; Suppliers ASML & Lam Also Will Report

<ul>
<li>Apple &amp; Hon Hai are lobbying for easier labor laws in India, setting the ground for a major shift of production to the country.</li>
<li>TSMC is being heavily courted by Singapore to set up a manufacturing facility in the city state.</li>
<li>Hon Hai will report earnings this week. We are structurally long the company despite potential for weak 4Q numbers.</li>
</ul>


Apple &amp; Hon Hai are lobbying for easier labor laws in India, setting the ground for a major shift of production to the country.
TSMC is being heavily courted by Singapore to set up a manufacturing facility in the city state.
Hon Hai will report earnings this week. We are structurally long the company despite potential for weak 4Q numbers.


Taiwan Tech Weekly: Apple & Hon Hai Push for India Labor Changes, Singapore Heavily Courting TSMC

<ul>
<li>2022 was characterised by a historically strong H1 followed by a far weaker H2</li>
<li>The current downturn is impacting memory, PC and smartphone shipments the hardest</li>
<li>2023 is shaping up to be the reverse of 2022, i.e. historically weak H1 with recovery in H2</li>
</ul>


2022 was characterised by a historically strong H1 followed by a far weaker H2
The current downturn is impacting memory, PC and smartphone shipments the hardest
2023 is shaping up to be the reverse of 2022, i.e. historically weak H1 with recovery in H2


Semiconductors: 2022 Review & 2023 Outlook

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.</li>
<li>The <a href="https://www.smartkarma.com/entities/vaneck-vectors-semiconductor" target="_blank" data-smartkarma-citation="entities:32807:1" rel="noopener">VanEck Vectors Semiconductor (SMH US)</a> ETF tracks the index and has an AUM of US$7.2bn.</li>
<li>Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.</li>
</ul>


The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.


MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

United States

Applied Materials, Inc. develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.  The Company's customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar photovoltaic cells and modules and other electronic devices manufacturers.

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Applied Materials (AMAT US)

LRCX. Memory Bites. Hard

With ~2x exposure to memory compared to its peers, LRCX is feeling the pain.Q1 revenues of $3.87 billion were -26.7% sequentially and -4.4% YoY....

William Keating

Taiwan Tech Weekly: TSMC Cutting Capex, Earnings This Week; Suppliers ASML & Lam Also Will Report

Delta Thailand valuation still precarious relative to Delta Taiwan. Apple has continued to outperform the Quanta & Pegatron pair.

Vincent Fernando, CFA

Taiwan Tech Weekly: Apple & Hon Hai Push for India Labor Changes, Singapore Heavily Courting TSMC

Hon Hai results are coming out March 15th. The U.S. is also reportedly preparing even more China restrictions for semiconductor equipment.

Vincent Fernando, CFA

Semiconductors: 2022 Review & 2023 Outlook

2023 is shaping up to be the reverse of 2022, i.e. downturn continuing through H1 with recovery in H2. A lot depends on when PC and smartphone unit...

William Keating

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

No constituent changes, but there are float/capping changes. Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. Stocks are...

Brian Freitas

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