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'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

<ul>
<li>TSMC's ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.</li>
<li>UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.</li>
<li>ASE ADR's are trading at a 4.7% premium. ASE's Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.</li>
</ul>


TSMC's ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.
UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.
ASE ADR's are trading at a 4.7% premium. ASE's Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.


Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

<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

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 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

Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC...

Vincent Fernando, CFA

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

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