Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).</li>
<li>ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.</li>
<li>Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?</li>
</ul>


This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).
ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.
Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?


Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround

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

<ul>
<li>China Balloon Incident -- Negative news for China semiconductor restrictions; Up to 45nm may now be hobbled by Japan &amp; Netherlands joining.</li>
<li>Hon Hai -- January sales results strong, could help market look forward to Hon Hai's future growth.</li>
<li>Mediatek Results &amp; Upcoming Results -- Signs of slight smartphone stablization, also we highlight key Auto &amp; Industrial Semiconductor related results ahead.</li>
</ul>


China Balloon Incident -- Negative news for China semiconductor restrictions; Up to 45nm may now be hobbled by Japan &amp; Netherlands joining.
Hon Hai -- January sales results strong, could help market look forward to Hon Hai's future growth.
Mediatek Results &amp; Upcoming Results -- Signs of slight smartphone stablization, also we highlight key Auto &amp; Industrial Semiconductor related results ahead.


Taiwan Tech Weekly: Balloon Incident Could Worsen China Restrictions & Key Earnings Readthroughs

<ul>
<li>Samsung reported 4Q22 detailed results - Semiconductor earnings evaporated and its memory subsegment likely lost money.</li>
<li>Samsung re-iterated that it would NOT cut capex despite the market downturn - Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.</li>
<li>Japan and the Netherlands have joined the U.S. with chip technology restrictions for China - Hon Hai is a net winner.</li>
</ul>


Samsung reported 4Q22 detailed results - Semiconductor earnings evaporated and its memory subsegment likely lost money.
Samsung re-iterated that it would NOT cut capex despite the market downturn - Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.
Japan and the Netherlands have joined the U.S. with chip technology restrictions for China - Hon Hai is a net winner.


Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban

<ul>
<li>Inventory levels rose to highs in 3Q22 -- Now increased margin pain may come through as we move through the latest earnings season.</li>
<li>Forecasts still assume relatively strong margins vs. history and thus appear at risk of disappointment.</li>
<li>Earnings forecasts, while assuming a down-cycle, are still assuming a relatively benign down-cycle.</li>
</ul>


Inventory levels rose to highs in 3Q22 -- Now increased margin pain may come through as we move through the latest earnings season.
Forecasts still assume relatively strong margins vs. history and thus appear at risk of disappointment.
Earnings forecasts, while assuming a down-cycle, are still assuming a relatively benign down-cycle.


Why Taiwan's Semiconductor and Hardware Forecasts Might Still Be Too Optimistic

<ul>
<li>TSMC's ADR premium is in the double digits, representing a major breakout.</li>
<li>ASE Technology's premium is also in the double digits and the company will be reporting results next week.</li>
<li>Chunghwa's premium is high for its tight range, and results will be coming out for the company this week.</li>
</ul>


TSMC's ADR premium is in the double digits, representing a major breakout.
ASE Technology's premium is also in the double digits and the company will be reporting results next week.
Chunghwa's premium is high for its tight range, and results will be coming out for the company this week.


Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums

Taiwan

Taiwan Semiconductor Manufacturing Company, Ltd. manufactures and markets integrated circuits. The Company provides the following services: wafer manufacturing, wafer probing, assembly and testing, mask production, and design services. TSMC's ICs are used in computer, communication, consumer electronics, automotive, and industrial equipment industries.

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Taiwan Semiconductor (TSMC) (2330 TT)

Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround

Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus...

Vincent Fernando, CFA

Taiwan Tech Weekly: Balloon Incident Could Worsen China Restrictions & Key Earnings Readthroughs

Up to 45nm chips may now hobbled by Japan & Netherlands joining U.S. with restrictions. Mediatek sees signs of slight smartphone stablization; key...

Vincent Fernando, CFA

Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban

Samsung re-iterated that it would NOT cut capex despite the market downturn - Samsung appears ready to endure losses which is negative for Nanya...

Vincent Fernando, CFA

Why Taiwan's Semiconductor and Hardware Forecasts Might Still Be Too Optimistic

The continued rise in inventory levels seen from 3Q22 results poses a risk for margins in 4Q22E and 1Q23E results. Earnings expectations still...

Vincent Fernando, CFA

Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums

TSMC's ADR premium is in the double digits, representing a major breakout. ASE's premium is also in the double digits and will release results next...

Vincent Fernando, CFA

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