Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>Broadcom remains as one of the best-positioned semiconductors stocks.</li>
<li>The recent rally, however, is factoring too optimistic scenario for the future and creates a downward risk for the share price.</li>
<li>Profitability would continue to experience strong tailwinds, but this is unlikely to bring significant rewards for shareholders.</li>
</ul>


Broadcom remains as one of the best-positioned semiconductors stocks.
The recent rally, however, is factoring too optimistic scenario for the future and creates a downward risk for the share price.
Profitability would continue to experience strong tailwinds, but this is unlikely to bring significant rewards for shareholders.


Broadcom: A Well-Positioned Business, But Downward Risk Is Significant In The Near Term

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator and Cobalt 100 CPU.</li><li>Maia 100 was specifically designed with consideration of Azure hardware. It will be mainly used for AI tasks and generative AI for maximized utilization of hardware.</li><li>It will power some of Microsoft’s largest internal AI workloads running on Azure. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator and Cobalt 100 CPU.Maia 100 was specifically designed with consideration of Azure hardware. It will be mainly used for AI tasks and generative AI for maximized utilization of hardware.It will power some of Microsoft’s largest internal AI workloads running on Azure. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul><li>As we finished week 1-4 of 3Q earnings season for major global fabless/IDM semi companies (AMD/Intel/Qualcomm/TI/Infineon/STM/MTK/OnSemi), results/ guidance have been mixed on inventory level and demand recovery.</li><li>Overall, SP/PC/NB (QCOM/MTK/Intel/AMD) started restocking given seasonal demand on new product launches, and server market (Intel/AMD) has shown signs of normalised inventory and mild recovery into 4Q.</li><li>Auto segment (TI/STM/ON) in general began to show cyclical weakness and guided cautious outlook into 4Q. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

As we finished week 1-4 of 3Q earnings season for major global fabless/IDM semi companies (AMD/Intel/Qualcomm/TI/Infineon/STM/MTK/OnSemi), results/ guidance have been mixed on inventory level and demand recovery.Overall, SP/PC/NB (QCOM/MTK/Intel/AMD) started restocking given seasonal demand on new product launches, and server market (Intel/AMD) has shown signs of normalised inventory and mild recovery into 4Q.Auto segment (TI/STM/ON) in general began to show cyclical weakness and guided cautious outlook into 4Q. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Global Fabless/IDM 3Q23 Wrap: PC/SP Recovery, Auto/ Industrial Mixed

<ul><li>On 10 Nov, AI Start up Humane, founded by ex-Apple engineers, has officially launched the AI Pin, an OpenAI-powered wearable.</li><li>We believe this is a promising catalyst for the imminent surge in AI-driven consumer products.</li><li>Tech giants are increasingly positioned to discover new revenue streams through integrating AI tech into consumer products, services, or in any financially sustainable manner. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

On 10 Nov, AI Start up Humane, founded by ex-Apple engineers, has officially launched the AI Pin, an OpenAI-powered wearable.We believe this is a promising catalyst for the imminent surge in AI-driven consumer products.Tech giants are increasingly positioned to discover new revenue streams through integrating AI tech into consumer products, services, or in any financially sustainable manner. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Will Humane’s AI-Powered Screenless Device Become the Successor to Smartphones?

<ul><li>Major global semi fabless/IDM companies (AMD/Intel/Qualcomm/TI/Infineon/ STM/MTK/OnSemi) reported in-line 2Q23 but mixed 3Q23 outlook on diversified exposure on AI applications, slower consumer electronics demand recovery, continued inventory digestion and margin pressure.</li><li>Overall, inventory digestion is below expectation in 2Q23, leading to rising DOI for most fabless players.</li><li>Demand recovery is expected to remain weak in 2H23E with planned production cut for most companies especially for those with limited exposure to AI.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Major global semi fabless/IDM companies (AMD/Intel/Qualcomm/TI/Infineon/ STM/MTK/OnSemi) reported in-line 2Q23 but mixed 3Q23 outlook on diversified exposure on AI applications, slower consumer electronics demand recovery, continued inventory digestion and margin pressure.Overall, inventory digestion is below expectation in 2Q23, leading to rising DOI for most fabless players.Demand recovery is expected to remain weak in 2H23E with planned production cut for most companies especially for those with limited exposure to AI.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Global Fabless/IDM 2Q23 Wrap

United States

Broadcom Inc. designs, develops, and supplies semiconductor and infrastructure software solutions. The Company offers storage adapters, controllers, networking processors, motion control encoders, and optical sensors, as well as infrastructure and security software to modernize, optimize, and secure the most complex hybrid environments. Broadcom serves customers worldwide.

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Broadcom (AVGO US)

Broadcom: A Well-Positioned Business, But Downward Risk Is Significant In The Near Term

Profitability would continue to experience strong tailwinds, but this is unlikely to bring significant rewards for shareholders.

Vladimir Dimitrov, CFA

Technology (Hardware/Semi)

Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator...

CMB International

China Technology – Global Fabless/IDM 3Q23 Wrap: PC/SP Recovery, Auto/ Industrial Mixed

Overall, SP/PC/NB (QCOM/MTK/Intel/AMD) started restocking given seasonal demand on new product launches, and server market (Intel/AMD) has shown...

CMB International

Will Humane’s AI-Powered Screenless Device Become the Successor to Smartphones?

On 10 Nov, AI Start up Humane, founded by ex-Apple engineers, has officially launched the AI Pin, an OpenAI-powered wearable.

CMB International

China Technology – Global Fabless/IDM 2Q23 Wrap

Demand recovery is expected to remain weak in 2H23E with planned production cut for most companies especially for those with limited exposure to AI.

CMB International

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