Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML  </li>
<li>The secular growth outlook for its extreme ultraviolet (EUV) inspection systems is brighter than ever  </li>
<li>Lasertec should be a core holding for Japan growth funds on expectations for continued earnings growth and high returns on equity </li>
</ul>


After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML  
The secular growth outlook for its extreme ultraviolet (EUV) inspection systems is brighter than ever  
Lasertec should be a core holding for Japan growth funds on expectations for continued earnings growth and high returns on equity 


Lasertec (6920) | A Monopoly with a Long Runway

Taiwan Tech Focused Senior Analyst

Patrick Liao

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

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.</li>
<li>The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.</li>
<li>The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect. </li>
</ul>


SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.
The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.
The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect. 


SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.

<ul>
<li>
We think SMIC is likely to reach the high-end of 1Q22 guidance, which was US$1,817~1,849mn/36~38% respectively.
</li>
<li>
We think SMIC is likely to reach ~US$1,926mn/39% for revenue/GM respectively in 2Q22.
</li>
<li>SMIC cannot have the EUV machine because of the Wassenaar Arrangement. Therefore, SMIC has to optimize its operation and to expand 28nm and above technologies.</li>
</ul>



We think SMIC is likely to reach the high-end of 1Q22 guidance, which was US$1,817~1,849mn/36~38% respectively.


We think SMIC is likely to reach ~US$1,926mn/39% for revenue/GM respectively in 2Q22.

SMIC cannot have the EUV machine because of the Wassenaar Arrangement. Therefore, SMIC has to optimize its operation and to expand 28nm and above technologies.


SMIC (981.HK): 2Q22 Preview- We Estimate Around 5% Growth Could Be the Case

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

<ul>
<li>TSMC decided to notify clients that it will raise wafer price about 6% from the beginning of 2023.</li>
<li>It's believed the Fabless company's margin could be raised too much, which is considered to be abnormal.</li>
<li>There are too many factors influencing the market right now, like the inflation, geopolitical confrontation,  Russia-Ukraine war, supply-chain risks, and etc.</li>
</ul>


TSMC decided to notify clients that it will raise wafer price about 6% from the beginning of 2023.
It's believed the Fabless company's margin could be raised too much, which is considered to be abnormal.
There are too many factors influencing the market right now, like the inflation, geopolitical confrontation,  Russia-Ukraine war, supply-chain risks, and etc.


TSMC (TSM.US; 2330.TT): Further Wafer Price Raise About 6% from the Beginning of 2023

<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

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)

Lasertec (6920) | A Monopoly with a Long Runway

After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML. Lasertec should be a core...

Mark Chadwick

SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.

The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance, but the overall demand situation...

Patrick Liao

SMIC (981.HK): 2Q22 Preview- We Estimate Around 5% Growth Could Be the Case

We thick SMIC is likely to reach ~US$6,680mn/39% for revenue/GM respectively in 2Q22. SMIC cannot but to optimize its operation and to expand 28nm...

Patrick Liao

TSMC (TSM.US; 2330.TT): Further Wafer Price Raise About 6% from the Beginning of 2023

TSMC will raise wafer price about 6% for all product lines since the beginning of 2023. It's believed the Fabless company's margin could be...

Patrick Liao

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

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