Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>Taiwan Dell said "AI GPU shortage issue has been resolved. The lead time has been cut from 40 weeks by the end of 2023 to 8-12 weeks or less now.</li>
<li>We see this news short term positive but medium term negative to AI GPU supply chain vendors but need more information to confirm if this is an inflection point.</li>
<li>1. Taiwan Dell got priority supply? 2. Earlier overbooking over? 3. Lead time cut by supply upside? 4. Cooling company said the same; 5. Will lead time continue to shrink?</li>
</ul>


Taiwan Dell said "AI GPU shortage issue has been resolved. The lead time has been cut from 40 weeks by the end of 2023 to 8-12 weeks or less now.
We see this news short term positive but medium term negative to AI GPU supply chain vendors but need more information to confirm if this is an inflection point.
1. Taiwan Dell got priority supply? 2. Earlier overbooking over? 3. Lead time cut by supply upside? 4. Cooling company said the same; 5. Will lead time continue to shrink?


Early Sign of AI GPU Market Inflection Point?

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>The percentage of Global funds invested in Taiwan hits an all-time high of 57.8%.</li>
<li>Taiwan has been a key beneficiary of manager rotation alongside India, Argentina and South Korea over the last 6-months.</li>
<li>TSMC is the dominant stock holding, with 49.8% of funds holding a position and has hit record ownership among Global funds.</li>
</ul>


The percentage of Global funds invested in Taiwan hits an all-time high of 57.8%.
Taiwan has been a key beneficiary of manager rotation alongside India, Argentina and South Korea over the last 6-months.
TSMC is the dominant stock holding, with 49.8% of funds holding a position and has hit record ownership among Global funds.


Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Hon Hai beat expectations yesterday when it reported thanks to higher than expected margins. Gross margin rose to its highest level since 2018, hitting 6.7%.</li>
<li>The company has maintained its 2025E 10% gross margin target and implied that 2024 will see significant margin improvement as new higher margin businesses ramp up revenue contribution.</li>
<li>Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Company said operations continue as normal. Hon Hai remains a Structural Long.</li>
</ul>


Hon Hai beat expectations yesterday when it reported thanks to higher than expected margins. Gross margin rose to its highest level since 2018, hitting 6.7%.
The company has maintained its 2025E 10% gross margin target and implied that 2024 will see significant margin improvement as new higher margin businesses ramp up revenue contribution.
Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Company said operations continue as normal. Hon Hai remains a Structural Long.


Hon Hai's Margin Expansion Story Finally Starting to Be Realized? Results Imply Yes

<ul>
<li>U.S. chip restrictions have hobbled Hon Hai's China EV competition.</li>
<li>AI and advanced semiconductors will become a necessity for a globally competitive EV platform and Hon Hai appears to be moving aggressively to capture this opportunity.</li>
<li>The shares should see topline growth and major margin expansion into 2025, and the market appears to have not yet priced-in Hon Hai's latest advantageous position.</li>
</ul>


U.S. chip restrictions have hobbled Hon Hai's China EV competition.
AI and advanced semiconductors will become a necessity for a globally competitive EV platform and Hon Hai appears to be moving aggressively to capture this opportunity.
The shares should see topline growth and major margin expansion into 2025, and the market appears to have not yet priced-in Hon Hai's latest advantageous position.


Hon Hai: U.S. Chip Restrictions Vs. China Have Put Hon Hai in a Stronger Than Ever Position

Fitipower Integrated Technology / Equity Bottom-Up

<ul>
<li>We had a call with Fitipower management to understand the company’s latest situation in light of its weak share price and light analyst coverage. </li>
<li>Compared to the overall semiconductor industry, Fitipower’s inventory status is exceptionally better than the industry median and thus the company will be under less pressure in the coming quarters.</li>
<li>Fitipower has a large T$12bn net cash position, equivalent to 48% of its market cap. For 2022E, we expect T$4.5-5bn in EBITDA, which is about 18-20% of its market cap.</li>
</ul>


We had a call with Fitipower management to understand the company’s latest situation in light of its weak share price and light analyst coverage. 
Compared to the overall semiconductor industry, Fitipower’s inventory status is exceptionally better than the industry median and thus the company will be under less pressure in the coming quarters.
Fitipower has a large T$12bn net cash position, equivalent to 48% of its market cap. For 2022E, we expect T$4.5-5bn in EBITDA, which is about 18-20% of its market cap.


Fitipower: Large % Market Cap as Cash Makes for Acquisition Target Price Support

Taiwan

Hon Hai Precision Industry Co., Ltd. provides electronic manufacturing services for computers, communications, and consumer electronic products.  The Company's business operations include desktop and notebook PC assembly, connector production, cable assembly, PCB assembly, handset manufacturing, networking equipment, and other consumer electronic devices manufacturing.

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Hon Hai Precision Industry (2317 TT)

Early Sign of AI GPU Market Inflection Point?

Early Sign of AI GPU Market Inflection Point? We see this lead time cut news short term positive but long term negative to AI GPU supply chain...

Andrew Lu

Taiwan: Underowned, Yet Gaining on Peers

Taiwan hits record levels of exposure among actively managed Global equity funds, yet it still lags behind its counterparts in the USA and Europe.

Steven Holden

Hon Hai's Margin Expansion Story Finally Starting to Be Realized? Results Imply Yes

Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Key Event: Foxtron EV JV...

Vincent Fernando, CFA

Hon Hai: U.S. Chip Restrictions Vs. China Have Put Hon Hai in a Stronger Than Ever Position

AI and advanced semiconductors will become a necessity for a globally competitive EV platform -- This means that U.S. chip restricitons for China...

Vincent Fernando, CFA

Fitipower: Large % Market Cap as Cash Makes for Acquisition Target Price Support

We had a call with Fitipower management to understand the company’s latest situation in light of its weak share price and light analyst coverage.

Vincent Fernando, CFA

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