External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>Major global semi foundries (TSMC/UMC/VIS/GF/SMIC/HH) reported in-line 2Q23 but mixed 3Q23 outlook on slower demand recovery and ASP/margin pressure.</li><li>Overall, inventory digestion is below expectation in 2Q23 and demand recovery remains weak in 2H23E.</li><li>That said, we believe the worst is behind with global semi sales of -17% YoY in 2Q23, an improvement vs -21% YoY in 1Q23, and we expect sequential sales recovery will continue into 3Q/4Q23E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Major global semi foundries (TSMC/UMC/VIS/GF/SMIC/HH) reported in-line 2Q23 but mixed 3Q23 outlook on slower demand recovery and ASP/margin pressure.Overall, inventory digestion is below expectation in 2Q23 and demand recovery remains weak in 2H23E.That said, we believe the worst is behind with global semi sales of -17% YoY in 2Q23, an improvement vs -21% YoY in 1Q23, and we expect sequential sales recovery will continue into 3Q/4Q23E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Global Foundry 2Q23 Wrap: Prolonged Inventory Correction

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

<ul>
<li>Foundry segment is on track to decline 15% YoY with no prospects of a meaningful H2 recovery</li>
<li>Inventory levels across smartphone, PC and consumer electronic supply chains remain elevated, plagued by lack-lustre end user demand. </li>
<li>At least some of the key players appear to be lowering prices but this is highly unlikely to stimulate end user demand and may actually make things worse</li>
</ul>


Foundry segment is on track to decline 15% YoY with no prospects of a meaningful H2 recovery
Inventory levels across smartphone, PC and consumer electronic supply chains remain elevated, plagued by lack-lustre end user demand. 
At least some of the key players appear to be lowering prices but this is highly unlikely to stimulate end user demand and may actually make things worse


Q2'23 Foundry Flounders As Inventory Stubbornly Lingers

<ul><li>Lam Research and KLA reported in-line 2Q23 results but better GPM on improved product mix.</li><li>Looking into 2023, while Lam raised WFE spending on China-related and HBM demand, KLA maintained forecast of 20% YoY decline.</li><li>Both stayed cautious on low UTR in memory market (guidance of 40% to mid-40% YoY decline), but positive on AI demand to boost packaging business in FY23E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Lam Research and KLA reported in-line 2Q23 results but better GPM on improved product mix.Looking into 2023, while Lam raised WFE spending on China-related and HBM demand, KLA maintained forecast of 20% YoY decline.Both stayed cautious on low UTR in memory market (guidance of 40% to mid-40% YoY decline), but positive on AI demand to boost packaging business in FY23E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Implications of Lam Research and KLA 2Q23 results

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Asia underweight funds LATAM overweight.  Asia’s ‘big 4’, account for 64.4% of the average fund.  MENA region suffers from a lack of ownership, with Saudi Arabia held underweight by -2.92%.</li>
<li>Tech moves to the top sector holding after capturing strong inflows, displacing Financials which saw heavy outflows and negative rotation.</li>
<li>TSMC, Samsung, Tencent and Alibaba are the consensus holding.  All 4 are owned by at least 70% of funds and form the backbone of most active GEM equity funds.</li>
</ul>


Asia underweight funds LATAM overweight.  Asia’s ‘big 4’, account for 64.4% of the average fund.  MENA region suffers from a lack of ownership, with Saudi Arabia held underweight by -2.92%.
Tech moves to the top sector holding after capturing strong inflows, displacing Financials which saw heavy outflows and negative rotation.
TSMC, Samsung, Tencent and Alibaba are the consensus holding.  All 4 are owned by at least 70% of funds and form the backbone of most active GEM equity funds.


Emerging Market Funds:  Top-Down Positioning and Fund Flows Update

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>We visited Micron's advanced A3 semiconductor fab in Taichung, Taiwan last Friday. Micron is committed to expanding leading edge capacity in Taiwan.</li>
<li>Memory names rallied sharply at the end of last week after SK Hynix affirmed that 1Q23 was the cycle bottom and AI-driven DRAM demand was accelerating its recovery.</li>
<li>We reiterate our Nanya Long trade and believe it can now run further given improving industry signals. Nanya presents pure-play exposure to a DRAM turn-around accelerated by AI demand.</li>
</ul>


We visited Micron's advanced A3 semiconductor fab in Taichung, Taiwan last Friday. Micron is committed to expanding leading edge capacity in Taiwan.
Memory names rallied sharply at the end of last week after SK Hynix affirmed that 1Q23 was the cycle bottom and AI-driven DRAM demand was accelerating its recovery.
We reiterate our Nanya Long trade and believe it can now run further given improving industry signals. Nanya presents pure-play exposure to a DRAM turn-around accelerated by AI demand.


Memory Monitor: Our Site Visit to Micron's A3 Fab in Taiwan; AI Accelerating the Cycle Recovery

Taiwan

ASE Technology Holding Co., Ltd. offers assembly and testing services. The Company provides outsourced assembly, semiconductor testing, semiconductor packaging, and other related services. ASE Technology Holding operates in Taiwan.

MediaTek Inc. is a fabless semiconductor company for wireless communications and digital multimedia solutions. The company provides SOC system solutions for wireless communications, high-definition TV, optical storage, DVD and Blu-ray products.

United Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs) and related electronic products.  The Company's main products are consumer electronic ICs, memory ICs, personal computer peripheral ICs, and communication ICs.

Nanya Technology Corp. manufactures and markets dynamic random access memories (DRAMs).  The Company sells its products in Taiwan and exports worldwide.

Realtek Semiconductor Corp. designs, tests, and distributes integrated circuits which are used in consumer electronics, computer systems and peripherals, and communication network hardware.  The Company also provides technical counseling and systems software services.

Global Unichip Corporation designs and produces a wide variety of silicon chips.

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.

Vanguard International Semiconductor Corporation offers integrated circuit foundry services.  The Company manufactures 0.18um logic, mixed-signal, analog, high voltage, low power, CMOS RF, flash, embedded memory, and bipolar CMOS DMOS semiconductors.

Globalwafers Co., Ltd. specializes in silicon wafer manufacturing and also provides solar wafers and crystal rods. The Company possesses a complete production line from ingot growth, slicing, etching, diffusion, polishing to epitaxy. Their products include Epi wafers, polished wafers, etched wafers, ultra thin wafers and deep diffusion wafers.

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

Applied Materials, Inc. develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.  The Company's customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar photovoltaic cells and modules and other electronic devices manufacturers.

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.

Broadcom Inc. designs, develops, and supplies semiconductor and infrastructure software solutions. The Company offers storage adapters, controllers, networking processors, motion control encoders, and optical sensors, as well as infrastructure and security software to modernize, optimize, and secure the most complex hybrid environments. Broadcom serves customers worldwide.

KLA-Tencor Corporation manufactures yield management and process monitoring systems for the semiconductor industry.  The Company's systems are used to analyze product and process quality at critical steps in the manufacture of circuits and provide feedback so that fabrication problems can be identified. KLA-Tencor operates sales, service, and application centers worldwide.

Lam Research Corporation manufactures, markets, and services semiconductor processing equipment used in the making of integrated circuits.  The Company's products are used to deposit special films on a silicon wafer and etch away portions of various films to create a circuit design.  Lam sells its products around the world.

Monolithic Power Systems Inc specializes in high-performance, integrated power solutions. The Company provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications.

ON Semiconductor Corporation supplies analog, standard logic, and discrete semiconductors for data and power management. The Company's products include integrated circuits, and analog ICs. ON also offers discrete semiconductors in a variety of surface mount and standard packages.

Skyworks Solutions, Inc., a wireless semiconductor company, designs and manufactures radio frequency and complete semiconductor system solutions for mobile communications applications.  The Company provides front-end modules, radio frequency subsystems, and system solutions to wireless handset and infrastructure customers worldwide.

Microchip Technology Incorporated designs, manufactures, and markets microcontrollers, related mixed-signal and memory products, and application development systems for high-volume embedded control applications. The Company also designs, develops, and markets linear/mixed-signal, power management, and thermal management products.

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)

China Technology – Global Foundry 2Q23 Wrap: Prolonged Inventory Correction

Major global semi foundries (TSMC/UMC/VIS/GF/SMIC/HH) reported in-line 2Q23 but mixed 3Q23 outlook on slower demand recovery and ASP/margin pressure.

CMB International

Q2'23 Foundry Flounders As Inventory Stubbornly Lingers

Foundry heading for 15% YoY decline with no prospect of a meaningful H2 recovery. Some key players may be lowering prices. This is unlikely to...

William Keating

China Technology – Implications of Lam Research and KLA 2Q23 results

Looking into 2023, while Lam raised WFE spending on China-related and HBM demand, KLA maintained forecast of 20% YoY decline.

CMB International

Emerging Market Funds: Top-Down Positioning and Fund Flows Update

Asia underweight funds LATAM overweight. Asia’s ‘big 4’, account for 64% of the average fund. MENA region suffers from a lack of ownership, Tech...

Steven Holden

Memory Monitor: Our Site Visit to Micron's A3 Fab in Taiwan; AI Accelerating the Cycle Recovery

Memory names rallied sharply at the end of last week after SK Hynix affirmed that 1Q23 was the cycle bottom and AI-driven DRAM demand was...

Vincent Fernando, CFA

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