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

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

<ul>
<li>Last Week -- TSMC's July Revenue Soared, Asustek Guided for PC Growth Acceleration, While KYEC, Mediatek, and UMC Rebounded</li>
<li>Key Events -- This Week Look to Hon Hai &amp; Zhen Ding Earnings and Guidance for Servers, AI PCs/Mobiles, iPhone 16</li>
<li>PC Monitor: Promising Uptake of Microsoft Copilot and AI Services; Remain Structurally Long </li>
</ul>


Last Week -- TSMC's July Revenue Soared, Asustek Guided for PC Growth Acceleration, While KYEC, Mediatek, and UMC Rebounded
Key Events -- This Week Look to Hon Hai &amp; Zhen Ding Earnings and Guidance for Servers, AI PCs/Mobiles, iPhone 16
PC Monitor: Promising Uptake of Microsoft Copilot and AI Services; Remain Structurally Long 


Taiwan Tech Weekly: Watch Hon Hai & Zhen Ding Guidance for Servers, AI PCs/Mobiles, and IPhone 16

<ul>
<li>TSMC: +16.1% Premium; Strong Spread Rebound, Potential Opportunity to Short the Spread</li>
<li>UMC: +1.6% Premium; Consider Shorting the Spread at This Level</li>
<li>ASE: +3.8% Premium; Uncertainty Remains on the Sustainability of the Recent Breakdown</li>
</ul>


TSMC: +16.1% Premium; Strong Spread Rebound, Potential Opportunity to Short the Spread
UMC: +1.6% Premium; Consider Shorting the Spread at This Level
ASE: +3.8% Premium; Uncertainty Remains on the Sustainability of the Recent Breakdown


Taiwan Dual-Listings Monitor: TSMC Strong Spread Rebound Into Short Zone; ASE Remains Broken Down

Taiwan Tech Focused Senior Analyst

Patrick Liao

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

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>Expected sequential revenue growth of 13% to 15%, gross margin expected between 18% and 20%.</li>
<li>The company has not increased capacity utilization through price cuts but supports customers in facing competition to maintain market share.</li>
<li>Inventory replenishment behavior will end in the third quarter, and fourth-quarter orders will more accurately reflect actual demand rather than the impact of restocking.</li>
</ul>


Expected sequential revenue growth of 13% to 15%, gross margin expected between 18% and 20%.
The company has not increased capacity utilization through price cuts but supports customers in facing competition to maintain market share.
Inventory replenishment behavior will end in the third quarter, and fourth-quarter orders will more accurately reflect actual demand rather than the impact of restocking.


SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>The 3Q24 revenue is expected 10.5% higher than 2Q24, but the GM/OPG outlook will be 5.1%/3.6% lower because of pricing adjustments and limited NRE sales .  </li>
<li>Smartphone's demand will enter peak season with expected stockpiling for new models. Automotive inventory adjustment is needed due to muted demand.  </li>
<li>Dividend payout ratio has remained at 80-85% in recent years, with no major changes expected.</li>
</ul>


The 3Q24 revenue is expected 10.5% higher than 2Q24, but the GM/OPG outlook will be 5.1%/3.6% lower because of pricing adjustments and limited NRE sales .  
Smartphone's demand will enter peak season with expected stockpiling for new models. Automotive inventory adjustment is needed due to muted demand.  
Dividend payout ratio has remained at 80-85% in recent years, with no major changes expected.


Novatek (3034.TT): 3Q24 Guidance Slightly Weak in GM

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

Taiwan Stock Exchange Weighted Index / Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/taiwan-stock-exchange-weighted-index" target="_blank" data-smartkarma-citation="entities:26056:1" rel="noopener">Taiwan Stock Exchange Weighted Index (TWSE INDEX)</a> has surged this year as the Artificial Intelligence <s>hype</s> boom has taken over.</li>
<li>Short notional has risen too, more due to higher stock prices than due to increased shorting. However, there are stocks that have seen big changes in short interest YTD.</li>
<li>The largest YTD increase in shorts have been in <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics</a>, <a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry</a>, <a href="https://www.smartkarma.com/entities/lite-on-technology-corp" target="_blank" data-smartkarma-citation="entities:14591:1" rel="noopener">Lite On Technology</a>, <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer</a>, <a href="https://www.smartkarma.com/entities/wistron-corp" target="_blank" data-smartkarma-citation="entities:2189:1" rel="noopener">Wistron Corp</a>, <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel</a>, <a href="https://www.smartkarma.com/entities/zhen-ding-technology-holding-ltd" target="_blank" data-smartkarma-citation="entities:16830:1" rel="noopener">Zhen Ding Technology Holding</a> and <a href="https://www.smartkarma.com/entities/chailease-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:6579:1" rel="noopener">Chailease Holding</a>.</li>
</ul>


The Taiwan Stock Exchange Weighted Index (TWSE INDEX) has surged this year as the Artificial Intelligence hype boom has taken over.
Short notional has risen too, more due to higher stock prices than due to increased shorting. However, there are stocks that have seen big changes in short interest YTD.
The largest YTD increase in shorts have been in Novatek Microelectronics, Hon Hai Precision Industry, Lite On Technology, Acer, Wistron Corp, China Steel, Zhen Ding Technology Holding and Chailease Holding.


Taiwan

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.

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United Microelectronics Corp (2303 TT)

Taiwan Tech Weekly: Watch Hon Hai & Zhen Ding Guidance for Servers, AI PCs/Mobiles, and IPhone 16

TSMC, Asustek, KYEC, Mediatek, and UMC see revenue growth, Hon Hai and Zhen Ding earnings in focus for servers, AI, and iPhone 16. Microsoft...

Vincent Fernando, CFA

Taiwan Dual-Listings Monitor: TSMC Strong Spread Rebound Into Short Zone; ASE Remains Broken Down

We analyze the premium and discount levels of dual-listed Taiwan companies, suggesting potential spread trading levels based on historical trends.

Vincent Fernando, CFA

SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

Patrick Liao

Novatek (3034.TT): 3Q24 Guidance Slightly Weak in GM

3Q24 revenue to rise 10.5%, but GM/OPG outlook to drop 5.1%/3.6% due to pricing adjustments. Smartphone demand peaks, automotive inventory...

Patrick Liao

Taiwan: YTD Short Interest Moves

The TWSE has surged this year as semis and AI-linked stocks have rallied. The market crash could lead to covering in stocks with large shorts as...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

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Taiwan Tech Weekly: Watch Hon Hai & Zhen Ding Guidance for Servers, AI PCs/Mobiles, and IPhone 16

​TSMC, Asustek, KYEC, Mediatek, and UMC see revenue growth, Hon Hai and Zhen Ding earnings in focus for servers, AI, and iPhone 16. Microsoft...

Vincent Fernando, CFA

Taiwan Dual-Listings Monitor: TSMC Strong Spread Rebound Into Short Zone; ASE Remains Broken Down

We analyze the premium and discount levels of dual-listed Taiwan companies, suggesting potential spread trading levels based on historical trends.

Vincent Fernando, CFA

SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

​Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

Patrick Liao

Novatek (3034.TT): 3Q24 Guidance Slightly Weak in GM

​3Q24 revenue to rise 10.5%, but GM/OPG outlook to drop 5.1%/3.6% due to pricing adjustments. Smartphone demand peaks, automotive inventory...

Patrick Liao

Taiwan: YTD Short Interest Moves

The TWSE has surged this year as semis and AI-linked stocks have rallied. The market crash could lead to covering in stocks with large shorts as...

Brian Freitas

TSMC, Asustek, KYEC, Mediatek, and UMC see revenue growth, Hon Hai and Zhen Ding earnings in focus for servers, AI, and iPhone 16. Microsoft...

Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

3Q24 revenue to rise 10.5%, but GM/OPG outlook to drop 5.1%/3.6% due to pricing adjustments. Smartphone demand peaks, automotive inventory...