Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

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

<ul>
<li>The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in 2Q22 guidance.</li>
<li>Moving into 2Q22, TSMC expects their business to be supported by HPC, Automotive related demands, partially offset by smartphone seasonality.</li>
<li>The HPC platform is the strongest growing platform and the largest contribution to TSMC’s growth in 2022.</li>
</ul>


The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in 2Q22 guidance.
Moving into 2Q22, TSMC expects their business to be supported by HPC, Automotive related demands, partially offset by smartphone seasonality.
The HPC platform is the strongest growing platform and the largest contribution to TSMC’s growth in 2022.


TSMC (TSM.US; 2330.TT): 1Q22 Beats Our Forecast; 2Q22 Revenue Is in Line, and GM/OPM Beats Forecast

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing Fab is 12”, and Shenzhen and Tianjin are 8” Fabs.</li>
<li>SMIC has three major trends: 1) the local demand is booming rapidly, 2) Auto, industry and others have developed actively, and 3) Huawei's event had made a great impact.</li>
<li>We note SMIC's capacity of each Fab is an estimation because 1) the local governments’ subsidies are somewhat complicated, and 2) it is involved with three local governments in 2022.</li>
</ul>


SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing Fab is 12”, and Shenzhen and Tianjin are 8” Fabs.
SMIC has three major trends: 1) the local demand is booming rapidly, 2) Auto, industry and others have developed actively, and 3) Huawei's event had made a great impact.
We note SMIC's capacity of each Fab is an estimation because 1) the local governments’ subsidies are somewhat complicated, and 2) it is involved with three local governments in 2022.


SMIC (981.HK): Local Demand Is Very Strong, but EUV Embargo Is Constrained Technical Growth Still.

<ul>
<li>We believe TSMC shall decide whether to raise wafer price in one, or two month.</li>
<li>To our understanding, Intel has gotten the wafer allocation from TSMC for the next two years.</li>
<li>To our understanding, MediaTek is the first client to perform 4nm production, although the booking quantity is less than Apple iPhone.</li>
</ul>


We believe TSMC shall decide whether to raise wafer price in one, or two month.
To our understanding, Intel has gotten the wafer allocation from TSMC for the next two years.
To our understanding, MediaTek is the first client to perform 4nm production, although the booking quantity is less than Apple iPhone.


TSMC (TSM.US; 2303.TT): TSMC Shall Decide Whether to Raise Wafer Price in One, or Two Month.

<ul>
<li>SMIC had reported a very exciting outlook in 1Q22, and both of revenue and GM are rising up to US$1,817~1,848.7mn and 36~38% respectively, which is growing at 15~17% QoQ.</li>
<li>SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because of the unprecedently foundry demands. The Capex plan is ~US$5bn in 2022, which's lager than UMC’s US$3bn.</li>
<li>China is still 3-4 generations behind TSMC, which is a big gap to catch up with.</li>
</ul>


SMIC had reported a very exciting outlook in 1Q22, and both of revenue and GM are rising up to US$1,817~1,848.7mn and 36~38% respectively, which is growing at 15~17% QoQ.
SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because of the unprecedently foundry demands. The Capex plan is ~US$5bn in 2022, which's lager than UMC’s US$3bn.
China is still 3-4 generations behind TSMC, which is a big gap to catch up with.


SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Lvmh Moet Hennessy Louis Vuitton / Technical Analysis

<ul>
<li>Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.</li>
<li>Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. </li>
<li>We highlight several buy opportunities within global Technology and Consumer Discretionary.</li>
</ul>


Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.
Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. 
We highlight several buy opportunities within global Technology and Consumer Discretionary.


Add To Global Technology and Consumer Discretionary

Netherlands

ASML Holding N.V. develops, produces, and markets semiconductor manufacturing equipment, specifically machines for the production of chips through lithography. The Company services clients world wide.

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ASML Holding NV (ASML NA)

TSMC (TSM.US; 2330.TT): 1Q22 Beats Our Forecast; 2Q22 Revenue Is in Line, and GM/OPM Beats Forecast

The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in...

Patrick Liao

SMIC (981.HK): Local Demand Is Very Strong, but EUV Embargo Is Constrained Technical Growth Still.

SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing is 12” Fab, and Shenzhen and Tianjin are 8” Fabs. SMIC had a limitation to...

Patrick Liao

TSMC (TSM.US; 2303.TT): TSMC Shall Decide Whether to Raise Wafer Price in One, or Two Month.

TSMC has the lowest wafer price among top foundry players, i.e., TSMC, UMC, GF and SMIC. For 28nm, the generic price is ~US$2,500 in TSMC, but it...

Patrick Liao

SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?

SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because the unprecedently foundry demands. The Capex plan is ~US$5bn in...

Patrick Liao

Add To Global Technology and Consumer Discretionary

Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the ACWI Discretionary Sector is on the cusp of a...

Vermilion Research

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