Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul>
<li>Micron said we bottomed, wrung their hands a ton about gross margins and comparability, and said oh, inventory accounting has helped us out</li>
<li>Oracle had a huge announcement that majorly snubbed Intel.</li>
<li>There’s another rumored AI winner. Amkor was rumored (heavy emphasis, Digitimes can be untrustworthy) to be helping Nvidia with packaging.</li>
</ul>


Micron said we bottomed, wrung their hands a ton about gross margins and comparability, and said oh, inventory accounting has helped us out
Oracle had a huge announcement that majorly snubbed Intel.
There’s another rumored AI winner. Amkor was rumored (heavy emphasis, Digitimes can be untrustworthy) to be helping Nvidia with packaging.


Micron, Oracle Database Spending, GPU Restrictions, MLPerf, Amkor, and V Icor

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

<ul>
<li>The extent to which Smartphone &amp; PC unit shipments will rebound in H2 is as yet unknown. </li>
<li>Most semi companies forecasted a muted H2 recovery. After earnings, we downgraded our FY'23 outlook for Foundry, PC, Smartphone and Silicon Wafer segments.</li>
<li>Many semi stocks are priced for a H2 rebound that's proving notoriously elusive but there are still some bargains to be found</li>
</ul>


The extent to which Smartphone &amp; PC unit shipments will rebound in H2 is as yet unknown. 
Most semi companies forecasted a muted H2 recovery. After earnings, we downgraded our FY'23 outlook for Foundry, PC, Smartphone and Silicon Wafer segments.
Many semi stocks are priced for a H2 rebound that's proving notoriously elusive but there are still some bargains to be found


Semiconductors H2 Rebound? Curb Your Enthusiasm!

Equity Bottom-Up

<ul>
<li>Q1’23 revenues of $7.19 billion, down 13% from a year ago but up 19% sequentially and ~10% higher than the guided midpoint.</li>
<li>Current quarter outlook for revenues of $11 billion, a ~55% sequential increase, sparked mayhem in the markets and sent NVIDIA’s stock soaring over 24% in after hours trading</li>
<li>Don't go chasing waterfalls, there are many other ways to rise with the tide</li>
</ul>


Q1’23 revenues of $7.19 billion, down 13% from a year ago but up 19% sequentially and ~10% higher than the guided midpoint.
Current quarter outlook for revenues of $11 billion, a ~55% sequential increase, sparked mayhem in the markets and sent NVIDIA’s stock soaring over 24% in after hours trading
Don't go chasing waterfalls, there are many other ways to rise with the tide


Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

<ul>
<li>Nanya Technology recently reported 3Q22 results and its gross margin fell substantially, but this appears mostly digested into consensus estimates.</li>
<li>The company also announced a major reduction in capex, which highlights the latest industry trend whereby supply/demand imbalances are being addressed by reduced capacity expansion.</li>
<li>Nanya Technology has outperformed the TAIEX Semi Index by ~27% in less than three weeks.</li>
</ul>


Nanya Technology recently reported 3Q22 results and its gross margin fell substantially, but this appears mostly digested into consensus estimates.
The company also announced a major reduction in capex, which highlights the latest industry trend whereby supply/demand imbalances are being addressed by reduced capacity expansion.
Nanya Technology has outperformed the TAIEX Semi Index by ~27% in less than three weeks.


Nanya Tech: Another Example of Capex Reduction, Major Share Price Divergence

<ul>
<li>Micron's near-term guidance implies that consensus estimates likely need to come down for both Micron and Nanya Tech.</li>
<li>However, Micron indicated that they expect supply/demand balance to improve in 2023E.</li>
<li>There could be more negative industry news to come, however Nanya Tech has a very strong balance sheet to weather some weak quarters and is trading at trough-type valuations.</li>
</ul>


Micron's near-term guidance implies that consensus estimates likely need to come down for both Micron and Nanya Tech.
However, Micron indicated that they expect supply/demand balance to improve in 2023E.
There could be more negative industry news to come, however Nanya Tech has a very strong balance sheet to weather some weak quarters and is trading at trough-type valuations.


Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

United States

Applied Materials, Inc. develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.  The Company's customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar photovoltaic cells and modules and other electronic devices manufacturers.

QUALCOMM, Inc . manufactures digital wireless communications equipment.  The Company licenses its code division multiple access (CDMA) and orthogonal frequency division multiplexing access intellectual property to other companies, and produces CDMA-based integrated circuits; and produces equipment and software used to track workers and assets; and software for wireless content enablement.

KLA-Tencor Corporation manufactures yield management and process monitoring systems for the semiconductor industry.  The Company's systems are used to analyze product and process quality at critical steps in the manufacture of circuits and provide feedback so that fabrication problems can be identified. KLA-Tencor operates sales, service, and application centers worldwide.

Lam Research Corporation manufactures, markets, and services semiconductor processing equipment used in the making of integrated circuits.  The Company's products are used to deposit special films on a silicon wafer and etch away portions of various films to create a circuit design.  Lam sells its products around the world.

Monolithic Power Systems Inc specializes in high-performance, integrated power solutions. The Company provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications.

ON Semiconductor Corporation supplies analog, standard logic, and discrete semiconductors for data and power management. The Company's products include integrated circuits, and analog ICs. ON also offers discrete semiconductors in a variety of surface mount and standard packages.

Skyworks Solutions, Inc., a wireless semiconductor company, designs and manufactures radio frequency and complete semiconductor system solutions for mobile communications applications.  The Company provides front-end modules, radio frequency subsystems, and system solutions to wireless handset and infrastructure customers worldwide.

Microchip Technology Incorporated designs, manufactures, and markets microcontrollers, related mixed-signal and memory products, and application development systems for high-volume embedded control applications. The Company also designs, develops, and markets linear/mixed-signal, power management, and thermal management products.

Entegris Inc. provides materials management products and services to the microelectronics industry on a worldwide basis.  The Company provides products such as wafer shippers, wafer transport and process carriers, pods, and work-in-process boxes.  Entegris also provides chemical delivery products such as valves, fittings, tubing, pipe, and containers.

Analog Devices, Inc. designs, manufactures, and markets integrated circuits used in analog and digital signal processing.  The Company's products are used in communications, computer, industrial, instrumentation, military/aerospace, automotive, and high-performance consumer electronics applications.  Analog Devices sells its products worldwide.

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

ASE Technology Holding Co., Ltd. offers assembly and testing services. The Company provides outsourced assembly, semiconductor testing, semiconductor packaging, and other related services. ASE Technology Holding operates in Taiwan.

MediaTek Inc. is a fabless semiconductor company for wireless communications and digital multimedia solutions. The company provides SOC system solutions for wireless communications, high-definition TV, optical storage, DVD and Blu-ray products.

Lasertec Corporation develops, designs, manufactures and markets photomask inspection systems to make semiconductor devices, confocal scanning laser microscopes and liquid crystal display (LCD) inspection systems.

United Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs) and related electronic products.  The Company's main products are consumer electronic ICs, memory ICs, personal computer peripheral ICs, and communication ICs.

NXP Semiconductors NV operates as a global semiconductor company. The Company designs semiconductors and software for mobile communications, consumer electronics, security applications, in-car entertainment, and networking.  NXP offers its products to the automotive, identification, wireless infrastructure, lighting, mobile, and computing applications.

LONGi Green Energy Technology Co., Ltd. develops, manufactures and sells silicon rods and silicon wafers. The Company's main products include 6 inch, 6.5 inch and 8 inch monocrystalline silicon rods and wafers.

LONGi Green Energy Technology (601012 CH)

Semiconductor Manufacturing International Corporation operates a semiconductor foundry. The Company provides integrated circuit foundry and technology services including the testing, development, design, manufacturing, packaging, and sale of integrated circuits. Semiconductor Manufacturing International offers its products and services around the world.

Semiconductor Manufacturing International Corp (SMIC) (981 HK)

Semiconductor Manufacturing International Corp (SMIC)

DISCO CORPORATION manufactures abrasive and precision industrial machinery for cutting and grinding purposes.  The Company's products are applied in the semiconductor, electronics, and construction industries to produce consumer goods such as personal computers, digital cameras, video game systems, and Digital Video Disc (DVD) players.

Renesas Electronics Corporation researches, develops, designs and manufactures electronic components such as semiconductors and integrated devices.

Micron Technology, Inc., through its subsidiaries, manufactures and markets dynamic random access memory chips (DRAMs), very fast static random access memory chips (SRAMs), Flash Memory, other semiconductor components, and memory modules.

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Micron Technology (MU US)

Micron, Oracle Database Spending, GPU Restrictions, MLPerf, Amkor, and V Icor

Micron's earnings are boring. And a Vicor signal boost. Micron said we bottomed, wrung their hands a ton about gross margins and comparability...

Fabricated Knowledge

Semiconductors H2 Rebound? Curb Your Enthusiasm!

The H2'23 recovery will likely be muted. Downgraded our FY'23 outlook for Foundry, PC, Smartphone and Silicon Wafer segments. While most semis are...

William Keating

NVIDIA. Yikes! Have We Missed The Boat?

Q1’23 revenues of $7.19 billion, -13% YoY but up +19% QoQ. Q2'23 outlook @ $11 billion, a ~55% QoQ increase. NVIDIA may be the gold rush, but picks...

William Keating

Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

Margin guidance implies Nanya Tech and Micron consensus numbers need to be reduced significantly, but Micron management comments provide positive...

Vincent Fernando, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Micron, Oracle Database Spending, GPU Restrictions, MLPerf, Amkor, and V Icor

Micron's earnings are boring. And a Vicor signal boost. Micron said we bottomed, wrung their hands a ton about gross margins and comparability...

Fabricated Knowledge

Semiconductors H2 Rebound? Curb Your Enthusiasm!

The H2'23 recovery will likely be muted. Downgraded our FY'23 outlook for Foundry, PC, Smartphone and Silicon Wafer segments. While most semis are...

William Keating

NVIDIA. Yikes! Have We Missed The Boat?

Q1’23 revenues of $7.19 billion, -13% YoY but up +19% QoQ. Q2'23 outlook @ $11 billion, a ~55% QoQ increase. NVIDIA may be the gold rush, but picks...

William Keating

Nanya Tech: Another Example of Capex Reduction, Major Share Price Divergence

Announced major reduction in capex is good news as the company is holding back volume expansion and focusing on higher value output.

Vincent Fernando, CFA

Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

Margin guidance implies Nanya Tech and Micron consensus numbers need to be reduced significantly, but Micron management comments provide positive...

Vincent Fernando, CFA