Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

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

<ul>
<li>United Microelectronics ADRs trading at a discount, risk-reward appears compelling.</li>
<li>TSMC has normalized; and reports are that it may launch a Singapore-based 12-inch semiconductor fab.</li>
<li>ChipMOS discount still compelling; and we now have detailed coverage of the company.</li>
</ul>


United Microelectronics ADRs trading at a discount, risk-reward appears compelling.
TSMC has normalized; and reports are that it may launch a Singapore-based 12-inch semiconductor fab.
ChipMOS discount still compelling; and we now have detailed coverage of the company.


Taiwan Dual-Listings: TSMC Normalizes; UMC, ChipMOS Compelling Discounts

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

<ul>
<li>The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.</li>
<li>The <a href="https://www.smartkarma.com/entities/vaneck-vectors-semiconductor" target="_blank" data-smartkarma-citation="entities:32807:1" rel="noopener">VanEck Vectors Semiconductor (SMH US)</a> ETF tracks the index and has an AUM of US$7.2bn.</li>
<li>Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.</li>
</ul>


The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.


MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

<ul>
<li>TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one contributing factor.</li>
<li>UMC and ChipMOS ADRs are trading at discounts that are unlikely to last much longer given the historical trading behavior.</li>
<li>Chunghwa Telecom ADRs are trading at a discount - If the ADRs drop in today's U.S. trading then will open up a historically rare discount.</li>
</ul>


TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one contributing factor.
UMC and ChipMOS ADRs are trading at discounts that are unlikely to last much longer given the historical trading behavior.
Chunghwa Telecom ADRs are trading at a discount - If the ADRs drop in today's U.S. trading then will open up a historically rare discount.


Taiwan Dual-Listings: Taiwan Exchange Holiday Opens Up Potential Spread Opportunities

<ul>
<li>The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.</li>
<li>Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.</li>
<li>Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.</li>
</ul>


The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.
Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.
Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.


Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<ul>
<li>Intel cut its dividend by 2/3rd, freeing up $4B in cash.</li>
<li>The company revised own capital intensity guidance for 2023 to low 30s% from 35%, while maintaining 24/25 guidance.</li>
<li>Recent $11B debt raise and Mobile eye shares should provide enough capital for the next year.</li>
</ul>


Intel cut its dividend by 2/3rd, freeing up $4B in cash.
The company revised own capital intensity guidance for 2023 to low 30s% from 35%, while maintaining 24/25 guidance.
Recent $11B debt raise and Mobile eye shares should provide enough capital for the next year.


Intel’s Cut Its Dividend, But Should It Cut Its Foundry?

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 Dual-Listings: TSMC Normalizes; UMC, ChipMOS Compelling Discounts

TSMC has normalized; and reports are that it may launch a Singapore-based 12-inch semiconductor fab. Chunghwa swings back from extreme discount.

Vincent Fernando, CFA

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

No constituent changes, but there are float/capping changes. Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. Stocks are...

Brian Freitas

Taiwan Dual-Listings: Taiwan Exchange Holiday Opens Up Potential Spread Opportunities

TSMC's ADR premium has fallen substantially from early February and late January levels. Berkshire's U-turn on the shares is likely one...

Vincent Fernando, CFA

Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E

Firms are also significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.

Vincent Fernando, CFA

Intel’s Cut Its Dividend, But Should It Cut Its Foundry?

Intel unsuprisingly cut its dividend given the massive PC inventory glut and lack of FCF in 2023 and to keep its foundry plans intact...we question...

Aaron Gabin

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