Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

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

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>Chinese Foundries (HuaHong, SMIC) have outgrown ex-China (GlobalFoundries, UMC, Vanguard) very significantly. Reacting to US sanctions, Chinese Chip Designers have shifted to domestic Foundries. China / ex-China supply-chains have decoupled.</li>
<li>End-Demand diverged up to 2Q24. Chinese Foundries were mentioning end-demand recovering, customers restocking, tight capacity. Ex-China Foundries mentioning the opposite: weak end-demand, customers destocking, low utilization. </li>
<li>Change of direction in 3Q24. Chinese Foundries become cautious, we see an obvious inventory problem on overblown end-demand growth expectations. Ex-China end-demand is stabilizing, destocking coming to an end.</li>
</ul>


Chinese Foundries (HuaHong, SMIC) have outgrown ex-China (GlobalFoundries, UMC, Vanguard) very significantly. Reacting to US sanctions, Chinese Chip Designers have shifted to domestic Foundries. China / ex-China supply-chains have decoupled.
End-Demand diverged up to 2Q24. Chinese Foundries were mentioning end-demand recovering, customers restocking, tight capacity. Ex-China Foundries mentioning the opposite: weak end-demand, customers destocking, low utilization. 
Change of direction in 3Q24. Chinese Foundries become cautious, we see an obvious inventory problem on overblown end-demand growth expectations. Ex-China end-demand is stabilizing, destocking coming to an end.


Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>While Trump's sweeping wins in presidential, senate and house, and supreme court earlier gave him unprecedented mandate to reform the US economy, his agenda is unrealistic to begin with; </li>
<li>ADS/Electrification, GAI/renewable/employment, (3) inflation/trade/ immigration are just three that the Trump Administration will likely backpedal.  Execution of Trump's economic agenda requires perfect coordination which is tough to pull off</li>
<li>For a short term trade, we recommend PDD and BYD. We also like Xiaomi. Consumption stocks can benefit from stimulus package from the Chinese government.</li>
</ul>


While Trump's sweeping wins in presidential, senate and house, and supreme court earlier gave him unprecedented mandate to reform the US economy, his agenda is unrealistic to begin with; 
ADS/Electrification, GAI/renewable/employment, (3) inflation/trade/ immigration are just three that the Trump Administration will likely backpedal.  Execution of Trump's economic agenda requires perfect coordination which is tough to pull off
For a short term trade, we recommend PDD and BYD. We also like Xiaomi. Consumption stocks can benefit from stimulus package from the Chinese government.


What Trump Can and Cannot Accomplish in His 2nd Term

China New Economy Equity Analyst, Blue Lotus Research Institute

Robert McKay

China New Economy Equity Analyst

<ul>
<li>Despite wide-spread social media expectations of China's electronics industry benefiting from Middle East supply chain disruptions following explosive incidents, September trade data suggested otherwise;</li>
<li>Middle East exports declined 2.1% yoy, underperforming other regions, while electronics were worse, declining 7.0% yoy. Communication device exports to Iran, Palestine and Lebanon were among the worst performing categories;</li>
<li>This suggests terrorist related trade was a negligible portion. As customs data are two-way verifiable, we believe we can safely conclude China doesn't benefit from the war in Mid East.</li>
</ul>


Despite wide-spread social media expectations of China's electronics industry benefiting from Middle East supply chain disruptions following explosive incidents, September trade data suggested otherwise;
Middle East exports declined 2.1% yoy, underperforming other regions, while electronics were worse, declining 7.0% yoy. Communication device exports to Iran, Palestine and Lebanon were among the worst performing categories;
This suggests terrorist related trade was a negligible portion. As customs data are two-way verifiable, we believe we can safely conclude China doesn't benefit from the war in Mid East.


Did China Exports Really Benefit from the Israel/Lebanon Pager Attack?

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>Nvidia is not upset with TSMC after all. Samsung is losing another customer to TSMC at 3nm</li>
<li>Legacy Foundry Overcapacity as Chinese firms are over-extending, expect Pricing Pressure (GlobalFoundries, Hua Hong, SMIC, UMC)</li>
<li>Progress in China: new Loongson CPU and GPU. Lithography Photoresist</li>
</ul>


Nvidia is not upset with TSMC after all. Samsung is losing another customer to TSMC at 3nm
Legacy Foundry Overcapacity as Chinese firms are over-extending, expect Pricing Pressure (GlobalFoundries, Hua Hong, SMIC, UMC)
Progress in China: new Loongson CPU and GPU. Lithography Photoresist


Tech News This Week: TSMC, NVIDIA, Samsung, Legacy Semi, China Semi

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

<ul>
<li>Tier 2 foundry revenue recovery is taking far longer than most expected. </li>
<li>Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.</li>
<li>Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come</li>
</ul>


Tier 2 foundry revenue recovery is taking far longer than most expected. 
Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.
Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come


GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?

China

Hua Hong Semiconductor Limited manufactures semiconductors on 200mm wafers for specialty applications. The Company's products are used in the consumer electronic, communication, computing and industrial, and automotive industries.

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Hua Hong Semiconductor (1347 HK)

Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

Nicolas Baratte

What Trump Can and Cannot Accomplish in His 2nd Term

Trump's ambitious economic agenda faces challenges and backpedaling. We see energy electrification, GAI power demand and inflation/immigration...

Blue Lotus Research Institute

Tech News This Week: TSMC, NVIDIA, Samsung, Legacy Semi, China Semi

Nvidia's Blackwell GPU problems were Nvidia's doing, not TSMC. Samsung loses customer to TSMC at 3nm. Legacy Foundry face overcapacity, pricing...

Nicolas Baratte

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52-week Range

Market Cap (USDm)

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Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

​Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

Nicolas Baratte

What Trump Can and Cannot Accomplish in His 2nd Term

​Trump's ambitious economic agenda faces challenges and backpedaling. We see energy electrification, GAI power demand and inflation/immigration...

Blue Lotus Research Institute

Did China Exports Really Benefit from the Israel/Lebanon Pager Attack?

Despite expectations, China's Middle East exports have yet to see benefit from the pager attacks. On the contrary, electronics and communication...

Blue Lotus Research Institute

Tech News This Week: TSMC, NVIDIA, Samsung, Legacy Semi, China Semi

​Nvidia's Blackwell GPU problems were Nvidia's doing, not TSMC. Samsung loses customer to TSMC at 3nm. Legacy Foundry face overcapacity, pricing...

Nicolas Baratte

GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?

GFS 2024 Capex less than 10% of SMIC's Capex. It's a pragmatic & strategic approach, likely to be the right one in the long run.

William Keating

Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

Trump's ambitious economic agenda faces challenges and backpedaling. We see energy electrification, GAI power demand and inflation/immigration...

Nvidia's Blackwell GPU problems were Nvidia's doing, not TSMC. Samsung loses customer to TSMC at 3nm. Legacy Foundry face overcapacity, pricing...