Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

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

<ul>
<li>TSMC’s 1Q results were extremely strong with revenue 4.15% above consensus and OP 9.04% above consensus. </li>
<li>With the strong pricing power and favourable forex factored in consensus OP estimates for the year have moved up to TWD954bn in line with our start of year estimate. </li>
<li>However, that now leaves limited further upside in our view and we expect earnings to decline next year rather than rise.</li>
</ul>


TSMC’s 1Q results were extremely strong with revenue 4.15% above consensus and OP 9.04% above consensus. 
With the strong pricing power and favourable forex factored in consensus OP estimates for the year have moved up to TWD954bn in line with our start of year estimate. 
However, that now leaves limited further upside in our view and we expect earnings to decline next year rather than rise.


TSMC – Great 1Q But Scope For Further Good News Looks Limited

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in 2Q22 guidance.</li>
<li>Moving into 2Q22, TSMC expects their business to be supported by HPC, Automotive related demands, partially offset by smartphone seasonality.</li>
<li>The HPC platform is the strongest growing platform and the largest contribution to TSMC’s growth in 2022.</li>
</ul>


The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in 2Q22 guidance.
Moving into 2Q22, TSMC expects their business to be supported by HPC, Automotive related demands, partially offset by smartphone seasonality.
The HPC platform is the strongest growing platform and the largest contribution to TSMC’s growth in 2022.


TSMC (TSM.US; 2330.TT): 1Q22 Beats Our Forecast; 2Q22 Revenue Is in Line, and GM/OPM Beats Forecast

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>The 1Q22 revenue is NTD$63.4bn, and we estimate GM is ~40%, which is consistent with 1Q22 guidance.</li>
<li>We estimate the order is pretty much confirmed in UMC in 3Q22, which should be ~NTD$65bn.</li>
<li>UMC will increase about 10-15k/month of 28nm capacity in 2H22.</li>
</ul>


The 1Q22 revenue is NTD$63.4bn, and we estimate GM is ~40%, which is consistent with 1Q22 guidance.
We estimate the order is pretty much confirmed in UMC in 3Q22, which should be ~NTD$65bn.
UMC will increase about 10-15k/month of 28nm capacity in 2H22.


UMC (2303.TT): 2Q22 Preview and the Order Booking Is Pretty Much Full in 3Q22.

<ul>
<li>We expect TSMC will grow ~4.7% QoQ in 2Q22, and the revenue/GM/OPG is around US$17.7bn/55.1%/43.8%.</li>
<li>We highlighted TSMC was considering to increase the wafer price nearly 2 months ago, but TSMC has still not made the final decision yet.  </li>
<li>TSMC 4/5nm capacity will be ready for for 150k/month within 4Q22. We think the new iPhone 14 would request more than half of the capacity.</li>
</ul>


We expect TSMC will grow ~4.7% QoQ in 2Q22, and the revenue/GM/OPG is around US$17.7bn/55.1%/43.8%.
We highlighted TSMC was considering to increase the wafer price nearly 2 months ago, but TSMC has still not made the final decision yet.  
TSMC 4/5nm capacity will be ready for for 150k/month within 4Q22. We think the new iPhone 14 would request more than half of the capacity.


TSMC (TSM.US; 2330.TT): The Outlook Is Positive in 2Q22, and Wafer Price Lift Is Not Decided Yet.

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing Fab is 12”, and Shenzhen and Tianjin are 8” Fabs.</li>
<li>SMIC has three major trends: 1) the local demand is booming rapidly, 2) Auto, industry and others have developed actively, and 3) Huawei's event had made a great impact.</li>
<li>We note SMIC's capacity of each Fab is an estimation because 1) the local governments’ subsidies are somewhat complicated, and 2) it is involved with three local governments in 2022.</li>
</ul>


SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing Fab is 12”, and Shenzhen and Tianjin are 8” Fabs.
SMIC has three major trends: 1) the local demand is booming rapidly, 2) Auto, industry and others have developed actively, and 3) Huawei's event had made a great impact.
We note SMIC's capacity of each Fab is an estimation because 1) the local governments’ subsidies are somewhat complicated, and 2) it is involved with three local governments in 2022.


SMIC (981.HK): Local Demand Is Very Strong, but EUV Embargo Is Constrained Technical Growth Still.

Taiwan

Taiwan Semiconductor Manufacturing Company Ltd. manufactures integrated circuits based on its proprietary designs.  The Company offers a comprehensive set of integrated circuit fabrication processes to manufacture CMOS logic, mixed-mode, volatile and non-volatile memory and BiCMOS chips.  Taiwan Semiconductor is an affiliate of Philips Electronics N.V.

Taiwan Semiconductor (TSMC) - ADR (TSM US)

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Taiwan Semiconductor (TSMC) - ADR (TSM US)

TSMC – Great 1Q But Scope For Further Good News Looks Limited

TSMC's 1Q results were excellent but nevertheless prompted a negative reaction from the market raising doubts about consensus' dubious projections...

Mio Kato

TSMC (TSM.US; 2330.TT): 1Q22 Beats Our Forecast; 2Q22 Revenue Is in Line, and GM/OPM Beats Forecast

The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 55.6%/ 45.6%/ NT$7.82/ 36.2% in 1Q22. The revenue/ GMO/ OPM is US$17.6-18.2bn/ 56-58%/ OPM: 45-47% in...

Patrick Liao

UMC (2303.TT): 2Q22 Preview and the Order Booking Is Pretty Much Full in 3Q22.

The 1Q22 revenue is NTD$63.4bn, and we estimate GM is ~40%, which is consistent with 1Q22 guidance. We estimate the order is pretty much confirmed...

Patrick Liao

TSMC (TSM.US; 2330.TT): The Outlook Is Positive in 2Q22, and Wafer Price Lift Is Not Decided Yet.

We expect TSMC will grow ~4.7% QoQ in 2Q22, and the revenue/GM/OPG is around US$17.7bn/55.1%/43.8%. TSMC 4/5nm capacity will be ready for 150k...

Patrick Liao

SMIC (981.HK): Local Demand Is Very Strong, but EUV Embargo Is Constrained Technical Growth Still.

SMIC will spend ~US$5bn in Capex in 2022, of which only the Beijing is 12” Fab, and Shenzhen and Tianjin are 8” Fabs. SMIC had a limitation to...

Patrick Liao

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