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 reduced capex guidance to the bottom of its guidance range but maintained revenue expectations and still expects substantial growth in 2024E.</li>
<li>Dell, HP, and Qualcomm comments signal an AI-Driven PC refresh cycle ahead and 2024E PC Growth. Windows 11 upgrades could be accelerated as new PC AI applications roll out.</li>
<li>Hon Hai reported that it gained market share globally in 2022, and that it has 40% global market share for servers. Hon Hai's AI servers expected to experience triple-digit growth.</li>
</ul>


TSMC reduced capex guidance to the bottom of its guidance range but maintained revenue expectations and still expects substantial growth in 2024E.
Dell, HP, and Qualcomm comments signal an AI-Driven PC refresh cycle ahead and 2024E PC Growth. Windows 11 upgrades could be accelerated as new PC AI applications roll out.
Hon Hai reported that it gained market share globally in 2022, and that it has 40% global market share for servers. Hon Hai's AI servers expected to experience triple-digit growth.


Taiwan Tech Weekly: TSMC Cuts Capex; Hon Hai AI Servers in Demand; ASE Winning TSMC Orders

<ul>
<li>The semiconductor stock rally in the U.S. caused by Nvidia's monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.</li>
<li>TSMC and UMC's ADR premiums don't appear sustainable given their trading history.</li>
<li>Telecom CHT wasn't affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.</li>
</ul>


The semiconductor stock rally in the U.S. caused by Nvidia's monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.
TSMC and UMC's ADR premiums don't appear sustainable given their trading history.
Telecom CHT wasn't affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.


Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on 'Nvidia-Rally'

<ul>
<li>TSMC's ADR premium has enjoyed a significant rally perhaps due to increased international attention driven by positive U.S. and Japan news flow.</li>
<li>ASE's ADR premium has dropped to one of the lower values in its most recent range since the start of 2023, representing a gradual decline in this persistent premium.</li>
<li>Chunghwa Telecom's ADR is trading at a discount that likely represents a decent set-up level for this tightly trading spread.</li>
</ul>


TSMC's ADR premium has enjoyed a significant rally perhaps due to increased international attention driven by positive U.S. and Japan news flow.
ASE's ADR premium has dropped to one of the lower values in its most recent range since the start of 2023, representing a gradual decline in this persistent premium.
Chunghwa Telecom's ADR is trading at a discount that likely represents a decent set-up level for this tightly trading spread.


Taiwan Dual-Listings: TSMC Premium Rallies as Japan & U.S. Entice Further Investment; CHT Discount

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Thematic (Sector/Industry)

<ul>
<li>ASE, the global #1 OSAT company, reported Q1’23 revenues of NT$130,891 million, in line with expectations, down 26% sequentially and 9% YoY</li>
<li>Overall equipment utilisation rate fell to 60% during the first quarter</li>
<li>Q1 was the trough, but so too will be Q2</li>
</ul>


ASE, the global #1 OSAT company, reported Q1’23 revenues of NT$130,891 million, in line with expectations, down 26% sequentially and 9% YoY
Overall equipment utilisation rate fell to 60% during the first quarter
Q1 was the trough, but so too will be Q2


ASE Q1'23 Revenues Decline 26% QoQ, Q2'23 Outlook Flat Sequentially

ASE Technology Holding   / Equity Bottom-Up

<ul>
<li>ASE's results commentary for its semiconductor packaging and testing service said that inventory problems for the industry are taking longer than expected to improve.</li>
<li>The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected to persist through 2Q23E.</li>
<li>Automotive remains a bright spot for the company, with Auto-linked revenue rising 30% YoY.</li>
</ul>


ASE's results commentary for its semiconductor packaging and testing service said that inventory problems for the industry are taking longer than expected to improve.
The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected to persist through 2Q23E.
Automotive remains a bright spot for the company, with Auto-linked revenue rising 30% YoY.


ASE Technology: Semiconductor Packaging & Testing Demand Suprisingly Weak At End of Quarter

Taiwan

ASE Technology Holding Co., Ltd. offers assembly and testing services. The Company provides outsourced assembly, semiconductor testing, semiconductor packaging, and other related services. ASE Technology Holding operates in Taiwan.

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ASE Technology Holding (3711 TT)

Taiwan Tech Weekly: TSMC Cuts Capex; Hon Hai AI Servers in Demand; ASE Winning TSMC Orders

Hon Hai reported that it gained market share globally in 2022, and that it has 40% global market share for servers. Hon Hai's AI servers expected...

Vincent Fernando, CFA

Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on 'Nvidia-Rally'

The semiconductor stock rally in the U.S. caused by Nvidia's monster results and guidance last week has caused multiple ADR premiums to surge to...

Vincent Fernando, CFA

Taiwan Dual-Listings: TSMC Premium Rallies as Japan & U.S. Entice Further Investment; CHT Discount

Chunghwa Telecom's ADR is trading at a discount that likely represents a decent set-up level for this tightly trading spread.

Vincent Fernando, CFA

ASE Q1'23 Revenues Decline 26% QoQ, Q2'23 Outlook Flat Sequentially

ASE Q1 revenue down 26% QoQ, 9% YoY. Equipment utilisation fell to 60% during the quarter. Q1 was the trough, Q2 will be the same. Modest return to...

William Keating

ASE Technology: Semiconductor Packaging & Testing Demand Suprisingly Weak At End of Quarter

The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected...

Vincent Fernando, CFA

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