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

Thematic (Sector/Industry)

<ul>
<li>Forecasting PC &amp; Smartphone unit shipments to increase 5% YoY on the back on "AI Enablement"</li>
<li>Server unit shipments declined ~20% in 2023 but overall revenues remained flat, a consequence of higher ASPs associated with AI-accelerated servers</li>
<li>Server shipments will return to growth in 2024, likely +10% YoY. Server ASPs will increase yet again YoY as AI-server mix grows. </li>
</ul>


Forecasting PC &amp; Smartphone unit shipments to increase 5% YoY on the back on "AI Enablement"
Server unit shipments declined ~20% in 2023 but overall revenues remained flat, a consequence of higher ASPs associated with AI-accelerated servers
Server shipments will return to growth in 2024, likely +10% YoY. Server ASPs will increase yet again YoY as AI-server mix grows. 


Semiconductor 2023 Key Indicators In Review, 2024 Forecasts

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Korea Stock Exchange Kospi Index / Event-Driven

<ul>
<li>Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.</li>
<li>Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.</li>
<li>Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.</li>
</ul>


Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.


Korea Value-Up Index: Probable Constituents & Impact of NPS' US$8.2bn Allocation

Asia and Global Semiconductor and Tech Research

Andrew Lu

<ul>
<li>Continuous weaknesses to be seen in industrial and general non-AI server semi demand starting 3Q23 and lasting into 1Q24 and some weaknesses in digital consumer semi demand starting 4Q23.</li>
<li>Memory semiconductor vendors see strengths in 4Q23 and continuous improvement in DRAM/NAND price in 1Q24.</li>
<li>We see a healthy mid single digit q/q and y/y decline on 4Q23 MOI but suggest vendors to avoid in next 1-2 months before they guide down the market.</li>
</ul>


Continuous weaknesses to be seen in industrial and general non-AI server semi demand starting 3Q23 and lasting into 1Q24 and some weaknesses in digital consumer semi demand starting 4Q23.
Memory semiconductor vendors see strengths in 4Q23 and continuous improvement in DRAM/NAND price in 1Q24.
We see a healthy mid single digit q/q and y/y decline on 4Q23 MOI but suggest vendors to avoid in next 1-2 months before they guide down the market.


First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

<ul>
<li>Applied guided -1% q/q and Lam Research guided 8% q/q sales growth, below N.A. front end semi equipment billings' 12% q/q growth, room for analysts to raise their 4Q23E sales. </li>
<li>N.A. front end equipment sales reached US$3.775bn, up 1% m/m, down 5% y/y but back end equipment billings reached US$222mn in December, down 8% m/m and down 9% y/y.</li>
<li>Better than equipment vendors, WSTS/SIA reported November sales of US$48bn, up 3% m/m and up 5% y/y (the first month to turn positive after 14 months of consecutive y/y decline)</li>
</ul>


Applied guided -1% q/q and Lam Research guided 8% q/q sales growth, below N.A. front end semi equipment billings' 12% q/q growth, room for analysts to raise their 4Q23E sales. 
N.A. front end equipment sales reached US$3.775bn, up 1% m/m, down 5% y/y but back end equipment billings reached US$222mn in December, down 8% m/m and down 9% y/y.
Better than equipment vendors, WSTS/SIA reported November sales of US$48bn, up 3% m/m and up 5% y/y (the first month to turn positive after 14 months of consecutive y/y decline)


From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research

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

Equity Bottom-Up

<ul>
<li>MSFT's new AI features for Windows will need computers with at least 16GB of DRAM to run effectively. MSFT is asking manufacturers for this as a minimum for AI models.</li>
<li>MSFT announced Copilot Pro for individuals and small businesses last week. The desire to use generative AI and the minimum required DRAM will drive accelerated PC upgrades.</li>
<li>We note relative strength in 16GB DRAM prices; In Memory space, we continue to see relative value in SK Hynix, however, Nanya has the opportunity to Outperform in Taiwan.</li>
</ul>


MSFT's new AI features for Windows will need computers with at least 16GB of DRAM to run effectively. MSFT is asking manufacturers for this as a minimum for AI models.
MSFT announced Copilot Pro for individuals and small businesses last week. The desire to use generative AI and the minimum required DRAM will drive accelerated PC upgrades.
We note relative strength in 16GB DRAM prices; In Memory space, we continue to see relative value in SK Hynix, however, Nanya has the opportunity to Outperform in Taiwan.


Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron

South Korea

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

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SK Hynix (000660 KS)

Semiconductor 2023 Key Indicators In Review, 2024 Forecasts

PC & Smartphone unit shipments will increase 5% YoY on the back on "AI Enablement". Server shipments fell ~20% in 2023 but overall revenues...

William Keating

Korea Value-Up Index: Probable Constituents & Impact of NPS' US$8.2bn Allocation

The NPS and KRW as said to be discussing the creation of the Korea Value-Up Index and the NPS could benchmark KRW 11tn to the index. We look at...

Brian Freitas

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid; Weaknesses to be seen in industrial, general non-AI server semi,...

Andrew Lu

From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research

From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research; Applied and Lam guided below 4Q23 N.A. front...

Andrew Lu

Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron

Microsoft's new AI features for Windows require a minimum of 16GB of DRAM, prompting accelerated PC upgrades and a pulling forward of the demand...

Vincent Fernando, CFA

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52-week Range

Market Cap (USDm)

P/E

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Semiconductor 2023 Key Indicators In Review, 2024 Forecasts

PC & Smartphone unit shipments will increase 5% YoY on the back on "AI Enablement". Server shipments fell ~20% in 2023 but overall revenues...

William Keating

Korea Value-Up Index: Probable Constituents & Impact of NPS' US$8.2bn Allocation

The NPS and KRW as said to be discussing the creation of the Korea Value-Up Index and the NPS could benchmark KRW 11tn to the index. We look at...

Brian Freitas

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid; Weaknesses to be seen in industrial, general non-AI server semi,...

Andrew Lu

From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research

From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research; Applied and Lam guided below 4Q23 N.A. front...

Andrew Lu

Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron

​Microsoft's new AI features for Windows require a minimum of 16GB of DRAM, prompting accelerated PC upgrades and a pulling forward of the demand...

Vincent Fernando, CFA

Microsoft's new AI features for Windows require a minimum of 16GB of DRAM, prompting accelerated PC upgrades and a pulling forward of the demand...