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.

Equity Bottom-Up

<ul><li><a href="https://www.smartkarma.com/entities/entegris-inc" target="_blank" data-smartkarma-citation="entities:12493" rel="noopener">Entegris Inc (ENTG US)</a> - Memory spending is happening next year, but MSI remains weak.</li><li><a href="https://www.smartkarma.com/entities/astera-labs-inc" target="_blank" data-smartkarma-citation="entities:40921" rel="noopener">Astera Labs (ALAB US)</a> - This is now the second way to play a levered Trainium ramp, as they have extensive content with <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409" rel="noopener">Amazon.com Inc (AMZN US)</a>.</li><li><a href="https://www.smartkarma.com/entities/lattice-semiconductor-corp" target="_blank" data-smartkarma-citation="entities:7855" rel="noopener">Lattice Semiconductor (LSCC US)</a> - Standard kitchen sink; I like the stock long-term.</li></ul>

Entegris Inc (ENTG US) - Memory spending is happening next year, but MSI remains weak.Astera Labs (ALAB US) - This is now the second way to play a levered Trainium ramp, as they have extensive content with Amazon.com Inc (AMZN US).Lattice Semiconductor (LSCC US) - Standard kitchen sink; I like the stock long-term.

Earnings: ENTG, ALAB, LSCC, SITM, QCOM, MCHP, WOLF, ARM, ACLS, AAOI, ANET, LITE, COHR

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>3Q24 results are inline at the Operating level and 12% above Consensus at the Net Income level. 4Q guidance inline for revenues but 10% below Consensus at Operating level.</li>
<li>Smartphone revenues increased in 3Q24 on Premium AI-enabled chipset. However, 4Q revenue outlook is flat YoY and QoQ. The recovery period after the 2023 downturn seems to be ending.</li>
<li>The Mediatek conundrum is that the stock is expensive versus a slow 2025 outlook. Growth drivers exists but beyond 2025. <strong>In the short-term, the stock is unattractive</strong>.</li>
</ul>


3Q24 results are inline at the Operating level and 12% above Consensus at the Net Income level. 4Q guidance inline for revenues but 10% below Consensus at Operating level.
Smartphone revenues increased in 3Q24 on Premium AI-enabled chipset. However, 4Q revenue outlook is flat YoY and QoQ. The recovery period after the 2023 downturn seems to be ending.
The Mediatek conundrum is that the stock is expensive versus a slow 2025 outlook. Growth drivers exists but beyond 2025. In the short-term, the stock is unattractive.


Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

<ul>
<li>Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.</li>
<li>Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.  </li>
<li>Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather. </li>
</ul>


Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.
Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.  
Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather. 


Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

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

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.</li>
<li>Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.</li>
<li>If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.</li>
</ul>


Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.
If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.


United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>TSMC June Sales Surge Higher Than Expectations; Apple Will Be Use TSMC's 2nm Node for Next Year's iPhone 17</li>
<li>Wiwynn GDR Offering - US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong </li>
<li>Silergy (6415.TT): Trial-Run with Vanguard, and Recent Stock Drops Represent an Entry Opportunity. </li>
</ul>


TSMC June Sales Surge Higher Than Expectations; Apple Will Be Use TSMC's 2nm Node for Next Year's iPhone 17
Wiwynn GDR Offering - US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong 
Silergy (6415.TT): Trial-Run with Vanguard, and Recent Stock Drops Represent an Entry Opportunity. 


Taiwan Tech Weekly: TSMC Sales Beat High Expectations; Wiwynn GDR Offering; IPhone 17 to Use 2nm

United States

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.

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Qualcomm Inc (QCOM US)

Earnings: ENTG, ALAB, LSCC, SITM, QCOM, MCHP, WOLF, ARM, ACLS, AAOI, ANET, LITE, COHR

What a week (I’m a bit late on this)! I wanted to give a quick overview of all the companies that reported last week. Lattice Semiconductor -...

Fabricated Knowledge

Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

Since 4Q23, revenues have been fattish in NT$. YoY revenue growth is the result of the 2023 downturn. Our main concern regarding Mediatek is high...

Nicolas Baratte

Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

Smartphone growth is slowing down but ASP are increasing for Mediatek with 5G AI-enabled phones. Mediatek has other drivers, AI chips and Auto GPU....

Nicolas Baratte

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

Taiwan Tech Weekly: TSMC Sales Beat High Expectations; Wiwynn GDR Offering; IPhone 17 to Use 2nm

TSMC's strong June sales exceed expectations, Apple to use TSMC's 2nm node for iPhone 17 next year. Wiwynn's US$1.45bn dilutive offering shows...

Vincent Fernando, CFA

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Market Cap (USDm)

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Earnings: ENTG, ALAB, LSCC, SITM, QCOM, MCHP, WOLF, ARM, ACLS, AAOI, ANET, LITE, COHR

What a week (I’m a bit late on this)! I wanted to give a quick overview of all the companies that reported last week. Lattice Semiconductor -...

Fabricated Knowledge

Mediatek 3Q24 Inline, 4Q Guidance Slightly Weak, Flattish Revenue Outlook and the Stock Is Expensive

Since 4Q23, revenues have been fattish in NT$. YoY revenue growth is the result of the 2023 downturn. Our main concern regarding Mediatek is high...

Nicolas Baratte

Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break

Smartphone growth is slowing down but ASP are increasing for Mediatek with 5G AI-enabled phones. Mediatek has other drivers, AI chips and Auto GPU....

Nicolas Baratte

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

​UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

Taiwan Tech Weekly: TSMC Sales Beat High Expectations; Wiwynn GDR Offering; IPhone 17 to Use 2nm

​TSMC's strong June sales exceed expectations, Apple to use TSMC's 2nm node for iPhone 17 next year. Wiwynn's US$1.45bn dilutive offering shows...

Vincent Fernando, CFA

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

TSMC's strong June sales exceed expectations, Apple to use TSMC's 2nm node for iPhone 17 next year. Wiwynn's US$1.45bn dilutive offering shows...