Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

The SIA released its semiconductor figures for January - sales were up 13.2% over January of 2020 and 0.9% over a record December.  The year is off to a good start, despite COVID issues, shortages, earthquakes, and extreme weather.

The SIA released its semiconductor figures for January - sales were up 13.2% over January of 2020 and 0.9% over a record December.  The year is off to a good start, despite COVID issues, shortages, earthquakes, and extreme weather.

Saturday's 7.1 earthquake in Japan could have caused important supply disruptions for semiconductors.  We reached out to over a dozen companies to check their status, and those who replied indicated that there was little impact.  Still, the automotive sector has reason to be nervous.

Saturday's 7.1 earthquake in Japan could have caused important supply disruptions for semiconductors.  We reached out to over a dozen companies to check their status, and those who replied indicated that there was little impact.  Still, the automotive sector has reason to be nervous.

Japan Quake and Chip Shortages, Tough on Auto?

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

On 8 February, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> <a href="https://www.dialog-semiconductor.com/sites/default/files/danube_full2.7announcement_final.pdf" target="_blank" rel="noopener">announced an agreement</a> to acquire <a href="https://www.smartkarma.com/entities/dialog-semiconductor-plc-664a1f83-2a21-4690-a91f-fb971832e7ad" target="_blank" data-smartkarma-citation="entities:21607:1" rel="noopener">Dialog Semiconductor (DLG GR)</a>, supplier of Apple.
Consideration. €67.5 per share, in cash, adjustable for dividends or capital distrubutions at the discretion of Renesas. To be conducted though a scheme of arrangement (document to be published on or before 8 March).
<ul>
<li>This values 100% of the equity capital of Dialog at €4,886 mn (as reported), for an implied EV of €4,556.5 mn.</li>
<li>This represents 3.7x EV/Fwd Revenue (vs. historic average of c 1.6x), 17.4x EV/Fwd EBITDA and 22.2x P/Fwd E (vs. historic average of 8x), (please see other recent transaction multiples further down).</li>
</ul>
The shares of Dialog shot up by 16% vs. the prior day, with c. €353 mn traded.
I believe the deal makes strategic sense, as the offer underlines the relevance of both power and low power connectivity to the automobile and industrial semiconductors.
The median implied valuation across multiples is €65.07 per share. On this basis, the price offered by Renesas seems fair.
Bloomberg has reported the interest of STM in Dialog, nevertheless, STM has already exposure to Apple and I doubt it would be willing to pay up to increase it.
Gross spread is c. 3.3%, with a high volume traded on today's (9 March session). The deal is expected to become effective in H2 2021.
With high chances for the deal to complete, recommendation is Long DLG GR.

On 8 February, Renesas Electronics (6723 JP) announced an agreement to acquire Dialog Semiconductor (DLG GR), supplier of Apple.
Consideration. €67.5 per share, in cash, adjustable for dividends or capital distrubutions at the discretion of Renesas. To be conducted though a scheme of arrangement (document to be published on or before 8 March).

This values 100% of the equity capital of Dialog at €4,886 mn (as reported), for an implied EV of €4,556.5 mn.
This represents 3.7x EV/Fwd Revenue (vs. historic average of c 1.6x), 17.4x EV/Fwd EBITDA and 22.2x P/Fwd E (vs. historic average of 8x), (please see other recent transaction multiples further down).

The shares of Dialog shot up by 16% vs. the prior day, with c. €353 mn traded.
I believe the deal makes strategic sense, as the offer underlines the relevance of both power and low power connectivity to the automobile and industrial semiconductors.
The median implied valuation across multiples is €65.07 per share. On this basis, the price offered by Renesas seems fair.
Bloomberg has reported the interest of STM in Dialog, nevertheless, STM has already exposure to Apple and I doubt it would be willing to pay up to increase it.
Gross spread is c. 3.3%, with a high volume traded on today's (9 March session). The deal is expected to become effective in H2 2021.
With high chances for the deal to complete, recommendation is Long DLG GR.

Dialog Semiconductor - Renesas Electronics Recommended Cash Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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This week in StubWorld ...
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<div>
<ul>
<li>
<a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> outperforms as global carmakers face a chip shortage;</li>
<li>
<a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> increases its questionable stake in <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a>; and</li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>'s ramps up its buybacks.</li>
</ul>
</div>
<hr>
<div>
Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.
</div>
<div>
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.
</div>


This week in StubWorld ...




Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage;

Gulf Energy Development Public Company (GULF TB) increases its questionable stake in Intouch Holdings (INTUCH TB); and

Jardine Matheson Holdings (JM SP)'s ramps up its buybacks.




Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Automakers are starting to struggle with chip shortages as the Nikkei reports <a href="https://asia.nikkei.com/Business/Automobiles/Global-chip-shortage-threatens-automakers-worldwide" target="_blank" rel="noopener">here</a>, <a href="https://asia.nikkei.com/Business/Automobiles/Nissan-to-cut-car-production-due-to-lack-of-chips" target="_blank" rel="noopener">here</a> and <a href="https://asia.nikkei.com/Business/Automobiles/Honda-cuts-car-production-on-massive-chip-shortage" target="_blank" rel="noopener">here</a>. This is an extension of a broad chip shortage globally as WFH demand, the launch of new consoles, GPUs and CPUs and rapidly recovering auto sales pour some short-term fuel on the long-term fire of expanding electrification and digitalisation. No wonder then that TSMC is up 134% from its March lows, but Renesas is up an even more impressive 248% since its lows of 2020 and could continue to outperform.

Automakers are starting to struggle with chip shortages as the Nikkei reports here, here and here. This is an extension of a broad chip shortage globally as WFH demand, the launch of new consoles, GPUs and CPUs and rapidly recovering auto sales pour some short-term fuel on the long-term fire of expanding electrification and digitalisation. No wonder then that TSMC is up 134% from its March lows, but Renesas is up an even more impressive 248% since its lows of 2020 and could continue to outperform.

Renesas – Auto Chip Shortage Could Drive Further Gains

Germany

Infineon Technologies AG designs, manufactures, and markets semiconductors. The Company offers products include power semiconductors, microcontrollers, security controllers, radio frequency products, and sensors. Infineon markets its products to the automotive, industrial, communications, and consumer and security electronics sectors.

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Infineon Technologies (IFX GR)

January Semiconductors Up 13.2% Y/Y

Semiconductor revenues broke records in both December and January, and the business seems poised to continue to fare very well over 2021. This...

Jim Handy

Japan Quake and Chip Shortages, Tough on Auto?

Will Saturday's Japan earthquake further disrupt the semiconductor supply chain? Early reports seem tame enough, but automobile manufacturers are...

Jim Handy

Dialog Semiconductor - Renesas Electronics Recommended Cash Offer

I believe the deal makes strategic sense, the price offered seems fair. Gross spread is c. 3.3% (complexion exp. H2 2021). With high chances for...

Jesus Rodriguez Aguilar

StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage; Gulf Energy increases its questionable stake in Intouch; and Jardine...

David Blennerhassett

Renesas – Auto Chip Shortage Could Drive Further Gains

Renesas could continue to outperform despite a 248% rally from its 2020 lows as automotive electrification joins work from home demand to create a...

Mio Kato

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