Tech Hardware and Semiconductor

1. Taiwan Tech Weekly: TSMC 2NM Yield Jump Rumors; Seeing Taiwan’s Starlink Alternative Firsthand in KS

By Vincent Fernando, CFA, Zero One

• TSMC’s N2 Progress Sparks Buzz Amid Yield Improvement Rumors; If True Then 2nm Will Become Even More Successful Than 3nm
• Hon Hai & TASA Showcase Homegrown Space Technologies Including an Alternative to Starlink
• Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing 

2. Intel Ex-CEO Calls For 24 Hours Of Prayer & Fasting For Intel’s Remaining 100k Employees

By William Keating, Ingenuity

• Pat Gelsinger took to X to invite us to join him in 24 hours of “praying and fasting” for Intel’s 100k employees to help them navigate “this difficult period”
• This is an unprecedented move never before seen in the semiconductor world, albeit we suspect that IBM may have dabbled in something similar to resurrect their 2nm process prowess
• This coming Thursday is the proposed date. Don’t expect miracles, this could take until the following Monday for the full impact to manifest itself in terms of share price appreciation

3. Taiwan Dual-Listings Monitor: TSMC Spread At Decent Short Level; UMC Short Interest Rises Again

By Vincent Fernando, CFA, Zero One

• TSMC: +23.5% Premium; Decent Level to Short Relative to Historical Trading Range
• UMC: +0.1% Premium; Middle of the Historical Trading Range; Short Interest Rises Again
• ASE: +3.5% Premium; Near Middle of Recent Range, Wait for Better Levels

4. AMD’s Lisa Su Named Time CEO Of The Year

By William Keating, Ingenuity

• AMD’s Lisa Su has been honoured as Time’s CEO of the year, a fitting tribute to a leader who  pulled off what many thought to be impossible
• Despite flawless execution and carving out a brand new $5 billion market segment within AI Acceleration, AMD’s share prices is down 44% from its 52 week high
• AMD will ultimately face headwinds from Arm but, for the time being, their growth will come from continuing to take market share from Intel and building on their Instinct platform 

5. Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing

By Vincent Fernando, CFA, Zero One

• Last Week: Himax Buyback Program Announced; Likely a Strong Use of Cash
• Himax Strengthening Automotive Display Leadership; Progress with Korea Display Companies
• Himax LCOS Microdisplay Technology Deepening Entrenchment in Designs of Major AR Glasses Players — Maintain Structural Long Rating.

6. Mediatek: Apple Watch Win Highlights Smartwatch Market Opportunity; Apple Supply Chain Breakthrough

By Vincent Fernando, CFA, Zero One

• Mediatek’s Apple Watch Win Highlights Smartwatch Market Opportunity; Breakthrough Into Apple’s Supply Chain
• MediaTek’s Role in Apple Watch Connectivity; Mediatek’s TSMC Relationship to Provide a Lasting Advantage
• Mediatek Rallied But Remains Below Highs; Significant Upside Remains — Maintain Structural Long

7. MediaTek (2454.TT): D9400 Success Will Extend into 2025. Prepare to Re-Qualify IPad and IWatch.

By Patrick Liao

• Although the outlook for 1Q25 might be somewhat negative, we believe that it is a reasonably typical result.
• We understand that MediaTek did not succeed in qualifying its Apple iPad and iWatch CPUs originally, but we believe it is now preparing for a re-qualification process.
• Looking ahead to 2025, we anticipate a more favorable outlook for MediaTek.

8. Nidec (6594 JP): India & Nvidia Point the Way Forward

By Scott Foster, LightStream Research

• Shipping the first water-based cooling systems for servers equipped with Nvidia’s new Blackwell GPUs and building two new motor factories in India.
• Moving beyond excessive dependence on China while restructuring operations to reduce costs. Sales short of 1H guidnce, but operating profit up. 
• Share price down 30% since May and close to its 52-week low. Selling at 17.5x this fiscal year’s EPS guidance, the lowest P/E multiple in a decade. 

9. Intel. Laser Focus & No More Meaningless Life-Time Value Foundry Deal Updates

By William Keating, Ingenuity

• Laser focus, transparency and adoption of a “say do” approach to measuring success are now the order of the day at Intel
• Data Center roadmap not in good shape and if IFS can’t deliver, MJ won’t hesitate to outsource DC products to TSMC alongside existing Client products.
• Gaudi is not a mass market product, Falcon Shores won’t be great either but we will listen, learn, iterate and fail quickly. Watch out NVIDIA !

1. Understanding Kioxia, A Worthwhile IPO?

By Jim Handy, Objective Analysis

• Kioxia is planning to offer its IPO on 18 December 2024.  This Insight profiles Kioxia and its market.
• NAND flash, Kioxia’s product, is a commodity, and that results in dramatic price, revenue, and margin swings.
• Kioxia is in a joint venture that provides excellent scale economies which are offset by a supply agreement that amplifies troubles caused by oversupplies

2. Intel CEO Shock Resignation. What’s Going On?

By William Keating, Ingenuity

• No stated reason for Mr. Gelsinger’s shock resignation as Intel’s CEO. 
• CFO and CCG leaders named as interim co-CEO’s with the latter also assuming a newly created role as CEO of Intel’s Products (CCG, DCAI & NEX)
• It’s the beginning of the end for Intel as we used to know it

3. ASML. Class Action Lawsuit Looms As Share Price Declines 37% From Peak

By William Keating, Ingenuity

• A case against ASML being brought by the Hollywood Firefighters Pension Fund (HFPF) is now opening up into a class action lawsuit
• Claims that ASML withheld crucial information from investors in the Jan-Oct 2024 time period, e.g. impact of US sanctions, strength of the semi recovery, order backlog etc. 
• In reality, ASML warned in October 2023 that 2024 would be a zero growth year. Did the HFPF think they were kidding?

4. The Death of Intel: When Boards Fail

By Douglas O’Laughlin, Fabricated Knowledge

• If you haven’t heard the news, Pat Gelsinger is “retiring.” The reality is this was not a retirement but a firing of Pat.
• His brief stint of 1386 days was surprising because not only was he the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest.
• Pat has by no means been perfect, and the conference at UBS kind of showed the frustrations that the board likely had with Pat.

5. Intel CFO @ UBS Global Technology Conference “Core Strategy Remains Intact”

By William Keating, Ingenuity

• Earlier this week, at the UBS Global Technology Conference, Intel CFO and co-interim CEO David Zinsner declared that the company’s “core strategy remains intact”
• Recently onboarded GM of IFS Dr. Naga Chandrasekaran, explained that while 18A remains on track, there are still “many milestones” to be met before it ramps in H225
• He also admitted that 18A is more geared towards HPC, is skewed in favour of Intel Products and that 14A will likely be more suitable for the broader semiconductor ecosystem

6. Happy Thanksgiving Semicap & Semiconductors

By Douglas O’Laughlin, Fabricated Knowledge

• This is a very light note, given time constraints. It’s rumored that on Monday, we will have new export controls, which seem to be massively light.
• Importantly, they are going to exclude CXMT altogether.
• History is a pretty good guide. Almost every single export restriction has led to bad returns prior, bad returns on the week off, and positive returns almost 100% of the time 6 months after for SOXX. This applies doubly to Semicap.

7. How Important Are China Gallium, Germanium, and Antimony Bans to the US?

By Jim Handy, Objective Analysis

• China has boycotted sales of Gallium, Germanium, and Antimony, three important elements, to the US
• All three are used in the production of semiconductors, but in very small quantities.  They are also widely available from sources outside of China.
• The net impact of this boycott to the US semiconductor market should be negligible.

8. Intel’s Next CEO Will Have To Deal With An Unholy Mess. But Who Will It Be?

By William Keating, Ingenuity

• Gelsinger’s IDM 2.0 strategy will be up for debate by Intel’s BoD. Most likely it will be largely scaled back 
• The new CEO’s options will be limited by the legal agreements in place with Brookfield & Apollo, along with the restrictions imposed by the US DOC 
• Possible CEO candidates are the current Globalfoundries CEO, Tom Caulfield, former Intel board member Lip-Bu Tan and former Intel executive Stacy Smith, who recently joined Intel’s BoD

9. Taiwan Tech Weekly: Taiwan’s Space Tech Conference This Week; AI Driving New Humanoid Robot Industry

By Vincent Fernando, CFA, Zero One

• Taiwan’s Largest Space Technologies Conference Is Happening This Week– Hon Hai Is Title Sponsor Showcasing Its Satellites; We Are Also Attending
• TSMC’s 2nm Breakthrough: Kaohsiung Fab Ahead of Schedule, Apple and AMD Poised as Early Adopters
• AI Driving the Emergence of a US$2bn Humanoid Robot Market by 2027E

1. Taiwan Tech Weekly: New China Tech Restrictions Monday; PC Demand Commercial Vs. Consumer Disconnect

By Vincent Fernando, CFA, Zero One

• US Set to Unveil New Wave of Semiconductor Restrictions on China
• Hon Hai Subsidiary Says Progress for Nvidia GB200 Servers is Smooth, Mass Production in 2025E
• PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump 

2. Taiwan Dual-Listings Monitor: TSMC Spread Maintains Elevated Range; UMC Short Interest Rises Higher

By Vincent Fernando, CFA, Zero One

• TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
• UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
• ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising

3. Delta Taiwan Vs. Thailand Monitor: Delta Thai Remains at Extreme Relative Value Even After Sell-Off

By Vincent Fernando, CFA, Zero One

• Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
• Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
• Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform

4. Intel Finalises US CHIPS Funding But With Some Rather Unusual T&C’s

By William Keating, Ingenuity

• Intel is now set to receive $7.86 billion in CHIPs Act funding, down from the $8.5 billion originally touted back in March 2024
• The funding comes with a raft of restrictions and caveats regarding what happens in the event of any changes in Intel’s organizational structure and/or ownership
• The US Department of Commerce also reserves the right to withhold funding and/or weigh in on decisions around outsourcing if Intel fails to meet key, critical milestones. Ouch!

5. Taiwan Semiconductor Industry Aggregate Analysis: Margins Challenged; Inventory Data Positive

By Vincent Fernando, CFA, Zero One

• Gross Margins Aggregate Data – Shows Taiwan Semiconductor Companies Under Pressure
• How TSMC and GlobalWafers show two very different margin environments; However everyone needs to manage rising energy costs into 2025E
• Aggregate Inventory Levels — Inventory Days Declining Trend is a Positive Sign

6. PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump

By Vincent Fernando, CFA, Zero One

• Soft PC Results from Dell and HPQ and Delayed Industry PC Upgrades into  2025E; Dell and HPQ Shares Fall Sharply
• Conclusion: Both Firms Confirm Relative Strength for Commercial and Weakness for Consumer; AI PCs and Windows 11 to Drive 2025E Upgrades
• Asia PC Makers Showing Stronger Growth; However, Dell & HPQ Share Rout May Weigh on Sentiment

7. Taiwan Dual-Listings Monitor: TSMC Spread Approaching Short Level; UMC Short Interest Soars Higher

By Vincent Fernando, CFA, Zero One

• TSMC: +20.4% Premium; ADR Premium is Approaching a Short Level
• UMC: +0.7% Premium; Short Interest Soars to New Two-Year Highs
• ASE: +4.2% Premium; ADR Headroom Falls to 100% Maxed Out

8. Memory Monitor: Decoupling Trade Long SK Hynix Vs. Short Nanya Tech

By Vincent Fernando, CFA, Zero One

• Memory Market Diverges: AI Demand Continues to Surges While Legacy Segments Struggle in November
• Diverging Demand Trends Highlight Market Decoupling — AI Driving HBM, Server DRAM, QLC NAND Demand
• Outlook for the Memory Market — Decoupling Trade: Long SK Hynix vs. Short Nanya Tech Trade

1. SUMCO Despairs On Legacy Rebound, EVs, China, Visibility Etc…

By William Keating, Ingenuity

• The pace of recovery in 200 millimeters appears to have been very weak. Customers continue to respect LTA prices but we have to push out delivery timing which impacts volumes.
• China appears to have developed their own capability to fabricate wafers. Quality does not necessarily appear to be very good but there is strong pressure to comply with “Buy China” 
• The recovery in legacy applications has been surprisingly slow. At this stage we don’t know whether it is a slow recovery or in fact that there won’t be a recovery.

2. Taiwan Tech Weekly: Taiwan Firms to Surge U.S. Investment Due to Trump?; AI PCs & Memory Expansion

By Vincent Fernando, CFA, Zero One

• Hon Hai, Pegatron, and Quanta Gear Up for Potential U.S. Investment Surge Amid Trump Policy Speculation
• PC Monitor: Asustek & Lenovo Signal Strong PC Growth, AI PC Expansion in Process
• Semiconductor Memory Q324 Revenue Close To Historic Highs Even As Decoupling Intensifies 

3. Taiwan Dual-Listings Monitor: Weakness Could Open TSMC Long Level; ASE Short Interest Keeps Surging

By Vincent Fernando, CFA, Zero One

• TSMC: +16.7% Premium; Further Market Weakness Could Soon Open Up Good Long Level
• UMC: -2.1% Discount; Good Level to Go Long the ADR Spread
• ASE: -0.1% Discount; Premium Completely Broken Down & Local Short Interest Continues to Surge

4. PC Monitor: Asustek & Lenovo Signal Strong PC Growth, AI PC Expansion in Process

By Vincent Fernando, CFA, Zero One

• Asustek Guides for 20%+ YoY PC Revenue Growth in 4Q24E;  Lenovo Delivers 17% YoY PC Revenue Growth in CY3Q24
• AI PCs: A Multi-Year Upgrade Cycle with Rising Average Selling Prices; AI PCs 80% of the PC Market by 2027E
• Maintain Structural Long View for AI PC Up-Cycle; Asustek, Acer, & Lenovo Well-Positioned Through 2025E

5. NVIDIA Q3FY25 Growth Story Still On Track But Heed The Flaws In Jensen’s GenAI Vision

By William Keating, Ingenuity

• NVIDIA this week reported Q3FY25 revenues of $35.082 billion, up 17% QoQ, up 94% YoY and a full $2.5 billion above the guided midpoint.
• Looking ahead, NVIDIA is forecasting revenues of $37.5 billion, up ~7% sequentially. Gross margins to decline slightly to 73%.
• Contrary to Jensen Huang’s vision, the existing $1 trillion worth of data centers do not need to be “modernized” into AI factories. This is pure fantasy. 

6. NVIDIA: Waiting on Blackwell, and the Networking Question

By Douglas O’Laughlin, Fabricated Knowledge

• Nvidia posted earnings yesterday, and guidance was light of buy-side bogeys. I’m not going to step into the mind game of bogeys here, but there are some finer points to focus on.
• NVIDIA reports Q3 EPS $0.81 ex-items vs FactSet $0.75. Reports Q3: Revenue $35.08B vs FactSet $33.17B (2 billion beat like clockwork)
• Q4 Guidance: Revenue $37.5B +/- 2% vs FactSet $37.09B (a bit light). GAAP and non-GAAP gross margins are expected to be 73.0% and 73.5%, respectively, +/- 50 bps. (also light)

7. For Its WFE Q324 Season Finale, AMAT Returns ASML’s Favour & Sinks Semis Yet Again

By William Keating, Ingenuity

• Revenues of $7.05 billion were marginally higher than midpoint of $6.93 billion, up 4% QoQ and up 5% YoY.  Guided current quarter at $7.15 billion +1.5% QoQ , +10.5% YoY
• Most WFE share prices have retreated to early 2022 levels, matching with when annual revenues first exceeded the $100 billion level
• After a 44% growth spurt in 2021, we have had three years with mostly no growth. We expect the same in 2025. Invest accordingly

1. 2025 High Conviction: AI Chip Spend Slows

By Jim Handy, Objective Analysis

• AI spending is fueling today’s semiconductor market, as generative AI demand falls into place
• Hyperscale datacenters are doing the bulk of today’s spending as they invest in advance of demand
• These investments are falling into question, and spending is likely to level off or drop in 2025, leading to a dramatic semiconductor downturn

2. Earnings: ENTG, ALAB, LSCC, SITM, QCOM, MCHP, WOLF, ARM, ACLS, AAOI, ANET, LITE, COHR

By Douglas O’Laughlin, Fabricated Knowledge

• Entegris Inc (ENTG US) – Memory spending is happening next year, but MSI remains weak.
• Astera Labs (ALAB US) – This is now the second way to play a levered Trainium ramp, as they have extensive content with Amazon.com Inc (AMZN US).
• Lattice Semiconductor (LSCC US) – Standard kitchen sink; I like the stock long-term.

3. Silergy (6415.TT): It Will Grow in 4Q24, While Auto Is Expected to Grow to 15% by the End of 2025.

By Patrick Liao

• In the 3rd quarter of 2024, revenue was NT$4,284 million, the gross margin (GM) was 55%, the operating profit margin (OPM) was 24%, and the net margin was 15%.  
• The Gen-4 product line is ramping up and is expected to contribute around 4% of total revenue by the end of 2025. 
• Chinese current economic stimulus programs may impact demand in the Consumer segment.  

4. Silicon Wafers Q324 Area Shipments, Revenue, EBIT, Outlook & More

By William Keating, Ingenuity

• Silicon wafer area shipments in Q324 amounted to 3,214 million square inches (MSI), up 5.9% QoQ and up 6.8% YoY,
• Q324 saw the combined revenues from the top four players in the segment reaching $2.5 billion, up 0.5% QoQ and up 6.5% YoY
• Top 4 EBIT amounted to just $337 million, up 1.5% QoQ but down 38.9% YoY.

1. Taiwan Dual-Listings Monitor: TSMC Premium Holding Up; ASE & CHT See Sharp Drops

By Vincent Fernando, CFA, Zero One

• TSMC: +15.6% Premium; Relatively Aggressive Trade is to Long Premium
• ASE: -3.0% Discount; Good Level to Go Long the Premium
• CHT: -2.8% Discount; Good Level to Go Long the Premium

2. TSMC Q324 Earnings Key Takeaways

By William Keating, Ingenuity

• Q424 revenue forecast of $26.5 billion, up 13% QoQ and the highest Q3 to Q4 revenue jump since Q4 2017
• Demand for AI acceleration is real and just beginning. According to a key customer of theirs, “demand right now is just insane”
• Overseas fabs progressing well with Arizona yielding well and on track for high volume production in early 2025

3. ASML Tanks Semis On Tepid 2025 Outlook

By William Keating, Ingenuity

• ASML reported revenues of €7.5 billion, +19% QoQ and +11.9% YoY. This was €200 million above the high end of the guided range. Q424 guided to €9 billion
• Logic Fab delays and a collapse in sales to China caused ASML to reduce their 2025 forecast to the low end of the €30 -€40 billion guided in November 2022
• Despite these challenges, ASML’s latest forecast still implies 16% YoY growth in 2025

4. TSMC 3Q24: Capex & Margin Guidance Remains Strong; Explains Why AI Demand Not Overhyped; Stay Long

By Vincent Fernando, CFA, Zero One

• TSMC Delivers Strong 3Q24 Revenue and Margin Growth; Margin Guidance Climbs
• Management Says Believes AI Demand is Not Hyped… Companies Extracting ROIs
• TSMC – Structural Long Rating Maintained; NT$1,515 Price Target Suggests 46% Upside

5. Semis Just Broke a Record.  Why Did Nobody Notice?

By Jim Handy, Objective Analysis

• August’s WSTS semiconductor revenues registered a record high of more than $53 billion
• Nobody seemed to notice, including the organization making the announcement
• There’s valid concern that the market is on the verge of a collapse, and this may be overshadowing record sales

6. TSMC (2330.TT; TSM.US): 4Q24 Outgrowth; Co-Work with Almost AI Innovators.

By Patrick Liao

• 4Q24 Guidance: Sales will be US$26.1-26.9bn, up 13%; GM outlook will be 57-59%; and OPM outlook is 46.5-48.5%
• AI revenue contribution will triple and reach mid-teens sales contribution this year. Almost every AI innovator cooperates with TSMC.
• APT will grow above the corporate average in the next five years.GM is approaching the corporate average, but it’s not the same currently.

7. KYEC (2449.TT): 4Q24 Outlook Brightening; NVDA Will Become #1 Client in 2025

By Patrick Liao

• We expect King Yuan Electronics Co, Ltd. (2449 TT)‘s 4Q24 outlook to be a seasonal uptrend with a slight increase quarter-over-quarter.
• NVIDIA Corp (NVDA US) will become the top client at KYEC, and Mediatek Inc (2454 TT) is expected to become the second-largest client in the outlook for 2025.  
• The focus will primarily be on currently available sources, particularly KYEC for production.  

8. Taiwan Tech Weekly: IPhone 16 Sales Surge in China; Samsung’s Strength Diluted Against TSMC’s Focus

By Vincent Fernando, CFA, Zero One

• Hua-Where? Hua-Who? Report: Apple’s iPhone 16 Pro & Pro Max Sales Surge 44% in China; A Strong Start Amidst Competition
• Samsung Under Siege: Facing Major Challenges Across Verticals as TSMC Tightens Foundry Grip
• TSMC 3Q24: Guidance Remains Strong; Explains Why AI Demand Not Overhyped; Stay Long… TSMC is Working with All AI Innovators

1. Taiwan Tech Weekly: TSMC Taking More Samsung Customers; Hon Hai Unveils Major AI Projects

By Vincent Fernando, CFA, Zero One

• Samsung’s foundry business is losing more customers to TSMC, who is perceived as lower risk.
• TSMC, UMC Monthly Sales: TSMC up strong but plateauing, UMC lackluster, confirming 2 big trends.
• Memory Monitor: Nanya results miss; highlights weakness in non-AI demand.

2. TSMC (2330.TT; TSM.US): The Productivity and Profitability Are the Essential Competitiveness.

By Patrick Liao

• For 2nm technology, Taiwan Semiconductor (TSMC) (2330 TT) should start Apple (AAPL US) iPhone 17 production in the middle of 2025, most likely.  
• TSMC’s competitors, Samsung Electronics (005930 KS) and Intel Corp (INTC US) are running foundry business and keeping owning manufacturing business at the same time, which is contradictory to purely foundry business.
• To making the advanced chip in the US, we consider the main main concern still the cost.

3. TSMC Q324 Earnings Preview

By William Keating, Ingenuity

• September 2024 revenues of NT$251.87 billion, an increase of 0.4% MoM and an increase of 39.6% YoY.
• Year to date revenue through September 2024 now totals NT$2,025.85 billion, an increase of 31.9% YoY.
• Anticipating Q4 revenue forecast of $25.7 billion, up 10% QoQ. This would mean full year 2024 revenues of $88.8 billion, a 28.3% YoY increase

4. Cerebras Files Intent To IPO. This Will Be Interesting

By William Keating, Ingenuity

• Cerebras presently derives up to 87% of its revenue from G42
• Microsoft gatecrashed Cerebras party with a $1.5 billion investment in G42 to “accelerate AI development and global expansion”
• G42 “severed its ties” with China in advance of the Microsoft investment

5. Graphene. Wonder Material Or Hype Magnet?

By William Keating, Ingenuity

• Two decades ago, graphene hit the headlines after two professors at University of Manchester managed to isolate a slice of the just one-atom thick substance using scotch tape
• Marketed as being 200 times stronger than steel, graphene rapidly gained “wonder material” status and spawned a tidal wave of graphene based products, companies and investment opportunities
• At least four “Graphene” companies listed on London’s AIM, collectively once worth north of $1 billion, have either delisted or been reduced to penny stock status. 

6. UMC (2303.TT; UMC.US): 4Q24 Outlook Blurred; QCOM Opens up a New Chance; Considering Selling Fab 8S.

By Patrick Liao

• United Microelectron Sp Adr (UMC US)’s outlook for 4Q24 is expected to show a decrease of around -5% QoQ, with a minimum gross margin of 30%.
• Qualcomm Inc (QCOM US) moving out of Semiconductor Manufacturing International Corp (SMIC) (981 HK) and has opened up opportunities for UMC.  
• UMC is considering selling its 8″ Fab, known as 8S, due to its consistently poor performance.  

7. Nuclear Zeitgeist Part 1: A Reactor Primer

By Douglas O’Laughlin, Fabricated Knowledge

• Last month, the DOE published a paper about the commercial liftoff of Advanced Nuclear. 
• Larry Ellison mentioned that SMRs (Small modular reactors) will power data centers in the future, and Microsoft will unshutter 3 Mile Island for one last puff of a half-smoked cigarette. Just a few years ago, it was closed for economic reasons.
• This is going to be the first in a series about Nuclear Power. Today, I’ll talk about Nuclear Reactors and the basics.

8. Taiwan Semi Monthly Tracker Red Flags Double MoM In September 2024

By William Keating, Ingenuity

• Seven Taiwan semi companies from our list of sixteen are now showing negative YoY monthly growth as of September 2024, up from just three a month earlier
• Companies with a strong exposure to the AI Acceleration market are on track for strong revenue growth YoY in 2024. ASPEED is on track to double revenues this year. 
• For many of the remainder, what tepid growth they had been experiencing may be starting to stall. Watch this space. 

9. Taiwan Dual-Listings Monitor: TSMC Spread Back to Elevated Range; ASE Short Interest Spikes Higher

By Vincent Fernando, CFA, Zero One

• TSMC: +18.6% Premium; Spread Has Returned to Previous Elevated Trading Range
• UMC: +1.5% Premium; Wait for Higher Level Before Shorting the Spread
• ASE: +4.2% Premium; Can Consider Going Long the Spread at Current Level

10. Memory Monitor: Nanya Results Miss; Highlights Weakness in Non-AI Demand

By Vincent Fernando, CFA, Zero One

• Nanya Tech’s 3Q24 results missed expecations by a wide margin, coming in with a net loss instead of the consensus expectation for a profit.
• Nanya highlighed weakness in non-AI end applications for memory and cut its 2024E Capex guidance by nearly 25%, signaling caution towards the current market cycle.
• While the company’s new DDR5 capacity ramp-up should support stronger margins into 2025E, Nanya has yet to show a signifcant margin upturn in the cycle. 

1. Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging

By Vincent Fernando, CFA, Zero One

• TSMC: +14.2% Premium; Can Consider Going Long at Current Level
• UMC: +1.8% Premium; The ADR Headroom Has Decreased Yet Again
• ASE: +5.4% Premium; Short Interest Surging for The Local Shares

2. Ibiden (4062 JP): Once Again a Long-Term Buy

By Scott Foster, LightStream Research

• Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.
• Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.
• Management’s long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.

3. The Cerebras IPO Stucture Sucks

By Douglas O’Laughlin, Fabricated Knowledge

• I’m not going to write about the technical side at all, as I expect Dylan Patel’s team at SemiAnalysis to do a much better job than I can do alone.
• However, I want to note some of the funniest aspects because landmines are everywhere for this IPO. Of course, it’s driven by G42, but it’s much worse than you think. Here’s the prelim S-1.
• G42 is pretty much the only customer.

4. Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?

By Vincent Fernando, CFA, Zero One

• Key iPhone components suppliers’ share prices have substantially underperformed Apple, particularly Largan Precision, Genius Electronic Optical, and Zhen Ding.
• There are reasons for iPhone 16 upgrade optimism. We also note that key suppliers failed to rally with Apple shares post-Fed rate cut.
• Apple suppliers’ 2025E forecasts haven’t fallen much so far, despite the negative stock market reaction. If negative iPhone 16 reports prove exaggerated, Largan, Genius, and Zhen Ding could rebound.

5. Taiwan Tech Weekly: Apple Shifting AR Strategy After Meta Orion Showcase; Apple Supply Chain Monitor

By Vincent Fernando, CFA, Zero One

• Apple Set to Launch iPhone SE 4 and Updated iPad Air in Early 2025: Key Developments to Watch
• META’s Orion AR Glasses: Next Major Computing Platform After the Smartphone?
• Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?

6. GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?

By William Keating, Ingenuity

• Tier 2 foundry revenue recovery is taking far longer than most expected. 
• Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.
• Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come

1. United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

By Vincent Fernando, CFA, Zero One

• Given UMC’s partnership with Intel to produce chips using Intel’s 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
• Intel’s Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn’t have leading edge fabs nor the balance sheet to build them.
• If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.

2. Memory Monitor: Micron Results Show Clear Signs of Memory Market Upswing; DRAM Growth Upgraded

By Vincent Fernando, CFA, Zero One

• Micron’s latest results show a clear improvement in the Memory cycle. The company’s gross margin increased and guided for a further strong margin increase next quarter.
• Micron increased its overall DRAM industry growth forecast while maintaining its NAND flash forecast. Micron reiterated expectations for FY2025E to deliver record revenue for the company, with improving profitability.
• Positive news for fallen Memory industry shares — Within our Memory universe we have Structural Long ratings for Micron Technology (MU US), SK Hynix (000660 KS), and Silicon Motion Technology (SIMO US).

3. Memory Monitor: Upcoming Micron Results & Outlook Key Amid Reports of Inventory Liquidation

By Vincent Fernando, CFA, Zero One

• Memory stocks underperformed the market, falling sharply with the recent overall market rout and failing to rebound sufficiently with the latest market rally.
• Leading Memory names Micron, SK Hynix, Samsung are all substantially below their 52-week highs after market reports of slowing memory demand from PC and mobile industries and inventory liquidation.
• Taiwan names Nanya Tech, Silicon Motion, Phison are all we below their highs. Micron results on September 25th MT will provide a major outlook update for the market.

4. Micron. Zoom, Zoom, Zoom, We’re Going To The Moon…

By William Keating, Ingenuity

• Q424 revenue $7.8 billion which was $200 million above the guided midpoint, up 14% QoQ and up 93% YoY.
• Q125 revenue of $8.7 billion with gross margin 39.5%. This will be the company’s highest ever quarterly revenue
• On track for ~20% share of a $25 billion HBM market in 2025

5. Micron and WFE

By Douglas O’Laughlin, Fabricated Knowledge

• Just two weeks ago, I wrote about how I thought this was a mid-memory cycle.
• I mainly supported the memory companies if you didn’t read between the lines (ChatGPT o1 (Strawberry) and Memory)
• Fast-forward a week, and it seems that the calls for the end of memory were a bit premature.

6. Silergy (6415.TT): Positive Optimistic Future Outlook

By Patrick Liao

• China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
• Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
• While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.

1. Taiwan Dual-Listings Monitor: TSMC Returning to Higher Trading Range? ASE’s Two Upcoming Events

By Vincent Fernando, CFA, Zero One

• TSMC: +16.6% Premium; Returning to the 15 – 20% Trading Range?
• UMC: +0.5% Premium; Near the Middle of the Historical Trading Range
• ASE: +5.2% Premium; Participating in Two Investor Conferences in Next Two Weeks

2. Lattice Semiconductor

By Douglas O’Laughlin, Fabricated Knowledge

• It’s an exciting time when your favorite semiconductor CEO comes out of “retirement” to return as a CEO.
• Mine is personally Ford Tamer, who drove Inphi to ship the best DSP in the market against much larger competitors at a much faster pace.
• In my opinion, Inphi was almost a miracle story in semiconductors. It was a literal David versus Goliath, and the man who led the team was Ford.

3. Intel. US DoD & AWS Deals Are Distractions While The Head Remains Firmly In The Sand

By William Keating, Ingenuity

• US DoD & AWS deals are little more than distractions from the main event
• Making Intel Foundry a subsidiary won’t make one whit of a difference but may just be the next step in its eventual spin-off
• The core issue, the GM collapse in Q224, was not addressed in the BM update from the CEO. That’s a problem. 

4. Taiwan Tech Weekly: TSMC Apple Arizona Production Milestone, Samsung 3nm Yield Still Weak Vs. TSMC

By Vincent Fernando, CFA, Zero One

• TSMC’s U.S. Production Strategy Achieves Major Milestone – Begins Production of Apple A16 Chips in Arizona
• Reports of Apple’s Disappointing Initial iPhone 16 Sales Data; Key Taiwan Suppliers Top Losers Recently
• Samsung Falling Behind TSMC – New Report of Low Yields Continuing to Plague Samsung’s 3nm AI Processors

5. Hezbollah’s Pager Explosions and South Korea’s Security Breach – Implications for Tech Supply Chains

By Vincent Fernando, CFA, Zero One

• Explosive pagers linked to Hezbollah attacks spark controversy for a Taiwanese brand.
• Not just Lebanon – today it was reported that the South Korean military removed Chinese-made CCTV cameras after secret backdoors were detected.
• A counter-intuitive conclusion: Despite recent news, is the trend ultimately positive for Taiwanese tech hardware makers?

6. PC Monitor: Microsoft Copilot Wave 2 Unveils Major AI Boost; Reiterate Structural Long for PC Makers

By Vincent Fernando, CFA, Zero One

• Microsoft today announced a major Copilot update, called “Wave 2”, introducing a new collaborative interface and enhanced Copilot capabilities across all major Office apps.
• Copilot continues to gain momentum with large corporations, as Microsoft announced today that Vodafone has adopted it for 68,000 employees.
• We remain Structurally Long PC Makers – We continue to believe Microsoft’s Copilot will drive PC upgrades as users recognize the productivity benefits of faster ‘AI PCs’. 

7. Current Semi Surge Still Strong

By Jim Handy, Objective Analysis

• The semiconductor market is currently enjoying an AI-driven demand surge
• The past two demand-driven surges have turned into collapses as growth returned to the long-term trend
• When we compare the past two cycles to the current one, it appears that a collapse could occur relatively soon

8. ChatGPT o1 (Strawberry) and Memory

By Douglas O’Laughlin, Fabricated Knowledge

• Strawberry was a breakthrough. Some people ask, “What’s the big deal?” but feasibly, there is a new scaling law working in tandem with training, and that’s the Chain of Thought / Inference.
• The chart below is a bit confusing, but the conclusion is the longer the model “thinks,” the better the answer.
• The new model has another log-linear scaling law. It pretty much computes, and the Bitter Lesson wins again.

9. Global Semi Sales Strength Continues In July. How Long Can It Last?

By William Keating, Ingenuity

• Global semiconductor sales for the month of July 2024 amounted to $51.3 billion, representing an increase of 18.7% increase YoY and a 2.7% increase MoM
• The July revenue number was the second highest monthly semiconductor revenue ever recorded, the highest being $51.7 billion in May 2022
• Increasing memory prices along with modest recoveries in both PC and Smartphone unit shipments will continue to drive semi sales higher through EOY 2024.

10. Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity

By Scott Foster, LightStream Research

• Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management’s guidance looks conservative.
• KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
• The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.