Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

Advanced Micro Devices / Equity Bottom-Up

<h2><em>Summary of finding the beneficiaries</em></h2><p><em>After our recent discussions with two cloud data center experts, we conclude a rising requirement on faster and more NVME (Non-Volatile Memory Express) SSD flash storages, networking I/O cards, and AI used GPU/FPGA/TPU cards (please see Table 3 in our earlier report "<a href="https://www.smartkarma.com/insights/fiat-chrysler-is-leaving-waymo-to-join-bmw-intel-autonomous-platform-negative-positive-to" target="_blank" data-smartkarma-citation="insights:12899">Fiat Chrysler Is Leaving Waymo to Join BMW-Intel Autonomous Platform; Negative/Positive To?</a> " dated 17 August 2017) are driving a big demand on PCI Express lanes or PCI Express switch if using </em>…</p>

Summary of finding the beneficiariesAfter our recent discussions with two cloud data center experts, we conclude a rising requirement on faster and more NVME (Non-Volatile Memory Express) SSD flash storages, networking I/O cards, and AI used GPU/FPGA/TPU cards (please see Table 3 in our earlier report "Fiat Chrysler Is Leaving Waymo to Join BMW-Intel Autonomous Platform; Negative/Positive To? " dated 17 August 2017) are driving a big demand on PCI Express lanes or PCI Express switch if using …

Andrew on Tech: Finding the Four Beneficiaries from Rising PCI Express Lanes for Data Center

Thematic Investing in Tech and Media, CM Research

Cyrus Mewawalla

Thematic Investing in Tech and Media

Thematic TMT investing

CM Research

CM Research is an independent research house based in London, England. We provide global thematic research in the Technology, Media and Telecoms (TMT) sectors. 

Our focus is on disruptive technologies: how will they unfold; which industries will be impacted; and who will be the ultimate winners and losers. 

Our aim is to help investors predict share prices and corporate executives stay one step ahead of the technology trends that are shaping their industry. 

We research technology investment themes in detail and then feed the results into a scorecard system to quantify the impact of several conflicting themes on individual stocks. 

Recent themes covered include internet TV, the Internet of Things, Big Data, Mobile payments, crowdfunding, artificial intelligence, the cloud, software defined networking and Generation Hashtag.

We cover the top 500 global TMT stocks by market capitalisation and several technology start-ups and pre-IPO companies too. 

In 2015, CM Research analysts outperformed the Bloomberg Benchmark Analyst Index - which measures how good analysts are at predicting stock prices - by 7.1%.

Thematic (Sector/Industry)

<p><strong>Voice is set to become the next big computing platform</strong><br>Many of us will be talking increasingly to machines. Products such as smartphones, in-car infotainment systems, biometric ID systems, home speakers, games consoles, televisions, doors, fridges and industrial machines are already, or will soon become, “conversational”.</p><p>Speech recognition technology is currently about 90% accurate. In order for voice-activated products to go mainstream, speech recognition needs to reach 99% accuracy. This may take until 2030.</p><p>But, in the meantime, investors need now to factor voice-driven AI into their thinking and into the way they assess the future prospects of many of their mid-term investments.</p>

Voice is set to become the next big computing platform Many of us will be talking increasingly to machines. Products such as smartphones, in-car infotainment systems, biometric ID systems, home speakers, games consoles, televisions, doors, fridges and industrial machines are already, or will soon become, “conversational”.Speech recognition technology is currently about 90% accurate. In order for voice-activated products to go mainstream, speech recognition needs to reach 99% accuracy. This may take until 2030.But, in the meantime, investors need now to factor voice-driven AI into their thinking and into the way they assess the future prospects of many of their mid-term investments.

<h2>Summary</h2><ul>
<li>
<strong>Solid 2H17</strong>: We expect 2Q beat and good 2H17 guidance to drive analysts to revise up their numbers on Intel. However, we remain our cautious view on rising client computing and data center CPU competition from AMD and ARM vendor like <a href="https://www.smartkarma.com/entities/969" target="_blank" data-smartkarma-citation="entities:969:1">Qualcomm Inc (QCOM US)</a>, AI/autonomous drive training/inference competition from <a href="https://www.smartkarma.com/entities/5891" target="_blank" data-smartkarma-citation="entities:5891:1">Nvidia Corp (NVDA US)</a> and <a href="https://www.smartkarma.com/entities/11369" target="_blank" data-smartkarma-citation="entities:11369:1">Alphabet Inc Cl C (GOOG US)</a> TPU.</li>
<li>
<strong>Stronger in the cloud but weakness in enterprise data center demand</strong>: Intel comments stronger public cloud growth in 2Q17…</li>
</ul>

Summary

Solid 2H17: We expect 2Q beat and good 2H17 guidance to drive analysts to revise up their numbers on Intel. However, we remain our cautious view on rising client computing and data center CPU competition from AMD and ARM vendor like Qualcomm Inc (QCOM US), AI/autonomous drive training/inference competition from Nvidia Corp (NVDA US) and Alphabet Inc Cl C (GOOG US) TPU.

Stronger in the cloud but weakness in enterprise data center demand: Intel comments stronger public cloud growth in 2Q17…


Intel Sees Solid 2H17; Implications to Cloud/ Memory Demand and Competitions

<h2>Summary</h2><ul>
<li>
<strong><em>The pending legal issues remain to be an overhang for <a href="https://www.smartkarma.com/entities/969" target="_blank" data-smartkarma-citation="entities:969:1">Qualcomm.</a> However, the rate cut on royalty is well expected by analysts and investors but upside surprise on MSM shipment, ASP, and MSM EBIT margin not well expected. Also, Qualcomm and <a href="https://www.smartkarma.com/entities/9801" target="_blank" data-smartkarma-citation="entities:9801:1">NXP</a> merger should give another boost </em></strong><strong><em>to </em></strong><em><strong>2018 sales and non-GAAP EPS.</strong></em>
</li>
<li>
<strong>No more device sales and shipment data: </strong>Since pending legal issues on royalty expanded, Qualcomm no longer provides estimated global device sales and shipment data. We used these to…</li>
</ul>

Summary

The pending legal issues remain to be an overhang for Qualcomm. However, the rate cut on royalty is well expected by analysts and investors but upside surprise on MSM shipment, ASP, and MSM EBIT margin not well expected. Also, Qualcomm and NXP merger should give another boost to 2018 sales and non-GAAP EPS.


No more device sales and shipment data: Since pending legal issues on royalty expanded, Qualcomm no longer provides estimated global device sales and shipment data. We used these to…


Qualcomm Is Regaining Its Momentum on MSM Chipset Sales Despite Licensee Disputes

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<h2>Summary</h2><ul>
<li>
<strong>Miss again</strong>: Despite TSMC starts 10nm ramp up for Apple A11, TSMC guides 6% weaker sales of NT$246-249bn (up 15.0-16.5% q/q) than Bloomberg's NT$263bn at lower gross margin of 48.5-50.5% (vs. Bloomberg's 50.1%) and operating margin of 37-39% (vs. Bloomberg's 39.8%).</li>
<li>
<strong>Why?</strong> TSMC attributes the weaker guidance to a less favorable foreign exchange assumption of US$1 vs. NT$30.3, longer than expected inventory adjustment by fabless customers,  and 2-3ppts impacts on gross margin due to 10nm ramp…</li>
</ul>

Summary

Miss again: Despite TSMC starts 10nm ramp up for Apple A11, TSMC guides 6% weaker sales of NT$246-249bn (up 15.0-16.5% q/q) than Bloomberg's NT$263bn at lower gross margin of 48.5-50.5% (vs. Bloomberg's 50.1%) and operating margin of 37-39% (vs. Bloomberg's 39.8%).

Why? TSMC attributes the weaker guidance to a less favorable foreign exchange assumption of US$1 vs. NT$30.3, longer than expected inventory adjustment by fabless customers,  and 2-3ppts impacts on gross margin due to 10nm ramp…


TSMC: I Could Not Find Any Near-Term Catalyst to Drive 1H like Outperformance

United States

Advanced Micro Devices, Inc. (AMD) produces semiconductor products and devices. The Company offers products such as microprocessors, embedded microprocessors, chipsets, graphics, video and multimedia products and supplies it to third-party foundries, as well as provides assembling, testing, and packaging services. AMD serves customers worldwide.

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Advanced Micro Devices (AMD US)

Andrew on Tech: Finding the Four Beneficiaries from Rising PCI Express Lanes for Data Center

Summary of finding the beneficiariesAfter our recent discussions with two cloud data center experts, we conclude a rising requirement on faster and...

Andrew Lu

Voice - The Next Big Computing Platform

Voice is set to become the next big computing platformMany of us will be talking increasingly to machines. Products such as smartphones, in-car...

CM Research

Intel Sees Solid 2H17; Implications to Cloud/ Memory Demand and Competitions

Summary Solid 2H17: We expect 2Q beat and good 2H17 guidance to drive analysts to revise up their numbers on Intel. However, we remain our...

Andrew Lu

Qualcomm Is Regaining Its Momentum on MSM Chipset Sales Despite Licensee Disputes

Summary The pending legal issues remain to be an overhang for Qualcomm. However, the rate cut on royalty is well expected by analysts and...

Andrew Lu

TSMC: I Could Not Find Any Near-Term Catalyst to Drive 1H like Outperformance

Summary Miss again: Despite TSMC starts 10nm ramp up for Apple A11, TSMC guides 6% weaker sales of NT$246-249bn (up 15.0-16.5% q/q) than...

Andrew Lu

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