Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.</li>
<li>
<a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a> and HLMC are capable of producing DDICs at 40nm and below.</li>
<li>Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.</li>
</ul>


We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.

Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.


Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

<ul><li>Taiwan's wafer foundry industry set to expand in Q2 2024 with potential government and financial support.</li><li>London Tech Week 2024 showcases AI, semiconductors, deep tech, startups, and global tech partnerships.</li><li>Quanta sees profits double despite workforce reduction, while Intel invests in Luxshare in China to boost market presence.</li></ul>

Taiwan's wafer foundry industry set to expand in Q2 2024 with potential government and financial support.London Tech Week 2024 showcases AI, semiconductors, deep tech, startups, and global tech partnerships.Quanta sees profits double despite workforce reduction, while Intel invests in Luxshare in China to boost market presence.

Tech Supply Chain Tracker (19-Jun-2024): Taiwan wafer industry in 2Q24

<ul>
<li>The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn. </li>
<li>The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.  </li>
<li>The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.  </li>
</ul>


The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn. 
The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.  
The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.  


Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

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

<ul>
<li>Novatek reported 1Q24 results yesterday after the Taiwan close; gross margin came in ahead of guidance and revenue was in-line.</li>
<li>Nevertheless, the company's forward color regarding end market display applications demand in 2Q24 and 2024 was relatively muted.</li>
<li>Given the stock is at all-time highs and up about 25% since early February, we see the stock at risk of selling in the near-term. We rate Novatek as Underperform.</li>
</ul>


Novatek reported 1Q24 results yesterday after the Taiwan close; gross margin came in ahead of guidance and revenue was in-line.
Nevertheless, the company's forward color regarding end market display applications demand in 2Q24 and 2024 was relatively muted.
Given the stock is at all-time highs and up about 25% since early February, we see the stock at risk of selling in the near-term. We rate Novatek as Underperform.


Novatek Seeing Soft Consumer Electronics Demand; Muted Forward Guidance; Shares Appear at Risk

<ul>
<li>
<a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a>'s sales in 1Q24 showed a 6.2% YoY growth, implying a positive growth outlook for 2024F compared to 2023.</li>
<li>Looking ahead to 2Q24F forecasts, the anticipated orders from <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> could have a positive impact on Novatek's 1Q24 sales.</li>
<li>A significant growth is expected after 2Q24, particularly following Novatek's qualification for the <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple (AAPL US)</a> iPhone 16.</li>
</ul>



Novatek Microelectronics Corp (3034 TT)'s sales in 1Q24 showed a 6.2% YoY growth, implying a positive growth outlook for 2024F compared to 2023.
Looking ahead to 2Q24F forecasts, the anticipated orders from United Microelectronics Corp (2303 TT) could have a positive impact on Novatek's 1Q24 sales.
A significant growth is expected after 2Q24, particularly following Novatek's qualification for the Apple (AAPL US) iPhone 16.


Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.

Taiwan

Novatek Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs).  The Company's products are used in telecommunication, computer peripherals, and LCD (liquid crystal display) drivers.

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Novatek Microelectronics Corp (3034 TT)

Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

Novatek Microelectronics Corp expected to see 5% QoQ revenue growth in 3Q24, while facing declining demand for 55nm TDDI. SMIC and HLMC can...

Patrick Liao

Tech Supply Chain Tracker (19-Jun-2024): Taiwan wafer industry in 2Q24

Taiwan's wafer foundry industry grows, CIP calls for offshore wind support, London Tech Week highlights AI and startups, Global PMX improves with...

Tech Supply Chain Tracker

Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...

Patrick Liao

Novatek Seeing Soft Consumer Electronics Demand; Muted Forward Guidance; Shares Appear at Risk

Novatek's cautious outlook for future demand and all-time high share price may lead to near-term selling pressure. Limited potential for near-term...

Vincent Fernando, CFA

Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.

Novatek's strong 1Q24 sales growth sets a positive tone for 2024, with potential boosts from UMC orders and iPhone 16 qualification.

Patrick Liao

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Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

​Novatek Microelectronics Corp expected to see 5% QoQ revenue growth in 3Q24, while facing declining demand for 55nm TDDI. SMIC and HLMC can...

Patrick Liao

Tech Supply Chain Tracker (19-Jun-2024): Taiwan wafer industry in 2Q24

Taiwan's wafer foundry industry grows, CIP calls for offshore wind support, London Tech Week highlights AI and startups, Global PMX improves with...

Tech Supply Chain Tracker

Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

​Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...

Patrick Liao

Novatek Seeing Soft Consumer Electronics Demand; Muted Forward Guidance; Shares Appear at Risk

​Novatek's cautious outlook for future demand and all-time high share price may lead to near-term selling pressure. Limited potential for near-term...

Vincent Fernando, CFA

Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.

​Novatek's strong 1Q24 sales growth sets a positive tone for 2024, with potential boosts from UMC orders and iPhone 16 qualification.

Patrick Liao

Novatek Microelectronics Corp expected to see 5% QoQ revenue growth in 3Q24, while facing declining demand for 55nm TDDI. SMIC and HLMC can...

Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...

Novatek's cautious outlook for future demand and all-time high share price may lead to near-term selling pressure. Limited potential for near-term...

Novatek's strong 1Q24 sales growth sets a positive tone for 2024, with potential boosts from UMC orders and iPhone 16 qualification.