Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor (TSMC) - ADR (TSM US)</a> revenue growth target for 2024F is set at 25% or higher.</li>
<li>TSMC's dominance in the CoWoS market, with nearly 100% share, positions them well.</li>
<li>TSMC's plans to establish a new Fab in Chiayi, Taiwan, reflect the growing end demand.  </li>
</ul>



Taiwan Semiconductor (TSMC) - ADR (TSM US) revenue growth target for 2024F is set at 25% or higher.
TSMC's dominance in the CoWoS market, with nearly 100% share, positions them well.
TSMC's plans to establish a new Fab in Chiayi, Taiwan, reflect the growing end demand.  


TSMC (2330.TT; TSM.US): Raising Growth Target to 25%+ YoY in 2024F.

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>4Q23 surpassed the guidance for revenue, GM, and OPM. 4Q23 EPS reached NT$8.76, compared to NT$10.46 in 3Q23 and NT$6.64 in 4Q22.</li>
<li>1Q24F is typically the traditional low season for consumer electronics, and there are fewer working days during the Lunar New Year.</li>
<li>It is expected that the dividend payout ratio this year will be similar to previous years, which has been higher than 80% in the past few years.</li>
</ul>


4Q23 surpassed the guidance for revenue, GM, and OPM. 4Q23 EPS reached NT$8.76, compared to NT$10.46 in 3Q23 and NT$6.64 in 4Q22.
1Q24F is typically the traditional low season for consumer electronics, and there are fewer working days during the Lunar New Year.
It is expected that the dividend payout ratio this year will be similar to previous years, which has been higher than 80% in the past few years.


Novatek (3034.TT): It's the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.

Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.</li>
<li>Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  </li>
<li>By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.</li>
</ul>


The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.
Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  
By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.


No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

<ul>
<li>Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;</li>
<li>More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.</li>
<li>
<strong>Automotive/Industrial lags only not beginning of the fall</strong>: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.</li>
</ul>


Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;
More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.

Automotive/Industrial lags only not beginning of the fall: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.


Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

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

<ul>
<li>Semiconductors are the 2nd largest industry allocation and the 6th largest overweight among EM active managers. However, the momentum witnessed between 2019 and 2021 has stalled.</li>
<li>EM Growth funds remain overweight, but Value and GARP funds switch from an equal weight to an underweight.</li>
<li>TSMC is the dominant stock holding whilst SK Hynix and Mediatek occupy a 2nd tier. Alchip Technologies has captured inflows, whilst EM funds are closing LONGi Green Energy Technology exposure</li>
</ul>


Semiconductors are the 2nd largest industry allocation and the 6th largest overweight among EM active managers. However, the momentum witnessed between 2019 and 2021 has stalled.
EM Growth funds remain overweight, but Value and GARP funds switch from an equal weight to an underweight.
TSMC is the dominant stock holding whilst SK Hynix and Mediatek occupy a 2nd tier. Alchip Technologies has captured inflows, whilst EM funds are closing LONGi Green Energy Technology exposure


EM Semiconductors:  Positioning Deep Dive

Taiwan

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.

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Vanguard Intl Semiconductor (5347 TT)

TSMC (2330.TT; TSM.US): Raising Growth Target to 25%+ YoY in 2024F.

Taiwan Semiconductor (TSMC) aims for 25% revenue growth by 2024, bolstered by CoWoS market dominance and new Fab in Chiayi.

Patrick Liao

Novatek (3034.TT): It's the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.

The 4Q23 was higher revenue and earnings compared to 4Q22. 1Q24F is expected to be a slow season for consumer electronics. The company has...

Patrick Liao

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications; Huawei and HiSilicon supply chain vendors will be benefited the most

Andrew Lu

Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

Seven takeaways Post Our Global Foundry Model Updated and Initial View on 2024 foundry shipment, blended wafer price, sales, and capex growth/decline

Andrew Lu

EM Semiconductors: Positioning Deep Dive

The momentum in Semiconductor positioning witnessed between 2019 and 2021 has stalled. In this report we identifying the funds and the companies...

Steven Holden

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TSMC (2330.TT; TSM.US): Raising Growth Target to 25%+ YoY in 2024F.

​Taiwan Semiconductor (TSMC) aims for 25% revenue growth by 2024, bolstered by CoWoS market dominance and new Fab in Chiayi.

Patrick Liao

Novatek (3034.TT): It's the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.

​The 4Q23 was higher revenue and earnings compared to 4Q22. 1Q24F is expected to be a slow season for consumer electronics. The company has...

Patrick Liao

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications; Huawei and HiSilicon supply chain vendors will be benefited the most

Andrew Lu

Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

Seven takeaways Post Our Global Foundry Model Updated and Initial View on 2024 foundry shipment, blended wafer price, sales, and capex growth/decline

Andrew Lu

EM Semiconductors: Positioning Deep Dive

The momentum in Semiconductor positioning witnessed between 2019 and 2021 has stalled. In this report we identifying the funds and the companies...

Steven Holden

Taiwan Semiconductor (TSMC) aims for 25% revenue growth by 2024, bolstered by CoWoS market dominance and new Fab in Chiayi.

The 4Q23 was higher revenue and earnings compared to 4Q22. 1Q24F is expected to be a slow season for consumer electronics. The company has...