This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Premium Holding Up; ASE & CHT See Sharp Drops
- 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
- 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
- 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
- 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?
- 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.
- 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
- 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
- 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
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Tech Weekly: TSMC Taking More Samsung Customers; Hon Hai Unveils Major AI Projects
- 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.
- 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
- 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
- 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?
- 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.
- 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
- 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
- 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
- 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
- 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.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging
- 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
- 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
- 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?
- 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
- 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?
- 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
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely
- 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
- 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
- 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…
- 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
- 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
- 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.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Returning to Higher Trading Range? ASE’s Two Upcoming Events
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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?
- 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
- 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.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Advantest (6857 JP): High Valuation, Low Visibility
- Visibility is poor. Following excellent 1Q results, management raised FY Mar-25 sales guidance by 14%, operating profit guidance by 53% and net profit guidance by 57%.
- Strong demand for AI processors and memory should support more than 35% growth in IC tester revenues and a doubling of operating profit in the two years to Mar-26.
- The shares have dropped to the bottom of their recent trading range, but are still selling at more than 30x our EPS estimate for next fiscal year.
2. Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium
- TSMC: +15.9% Premium; Sales Rose 33% YoY in August & Headroom Increased
- UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
- ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium
3. Taiwan Tech Weekly: TSMC Becoming More Dominant; Apple’s AI Opportunity; Taiwan Market Hammered
- TSMC Extends Global Foundry Dominance Amid 33% Sales Surge – A Buy on Weakness Despite Market Concerns
- Apple ‘Glowtime’ AI Announcements: Mixed Analyst and Media Reactions May Overlook Key Advantage — Apple Is Best Positioned to Seamlessly Integrate AI Into Your Smartphone Experience
- Taiwan Market Gainers & Losers: Consumer Electronics & Memory Names Some of the Hardest Hit
4. Silicon Wafers. Recovery Is Nigh Yet Valuations Have Slumped To 5 Year Lows. But Why?
- During Q224, the top 4 silicon wafer manufacturers saw their revenues increase 12.3% QoQ to ~$2.5 billion. This was down 3% YoY.
- Silicon wafer area shipments in Q224 amounted to 3,035 million square inches (MSI), an increase of 7.1% QoQ but a decline of 8.9% YoY.
- The Silicon wafer segment is entering a recovery phase. Yet, you can buy the key players today for the same price you would have paid 5 years ago. That’s nice..
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
- The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
- Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock
2. Intel Cancels 20A. Now Why Would They Go & Do That?
- Intel’s CFO says the company is going to “kind of skip over productizing 20A”
- This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
- The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp
3. TSMC (2330.TT; TSM.US): Benefiting from Intel (INTC.US) Skipping 20A Process.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.
- Intel plans to stick with the 18A process and has identified about 5 potential customers.
- As of now, TSMC remains the primary source for technology deliveries.
4. Taiwan Tech Weekly: Nvidia’s SG Revenue Red Flag; Rise of Custom Silicon; SEMICON Taiwan This Week
- Latest Industry Signals — Nvidia Crashed While Marvell Soared… Custom Silicon a Threat to Nvidia’s Monster Growth? Taiwan AI/Server Exposed Names Were a Mixed Bag of Performance
- Key Events to Watch — SEMICON Taiwan This Week, We Will Be Attending
- Perspective — NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
5. Hotchips Conference Sparknotes
- Hot Chips this year was primarily about AI chips (per the theme of every semiconductor conference as of late).
- The most impactful presentation by far was the Broadcom CPO presentation, SuperMicro water cooling, MTIA, and some honorable mentions to Enfabrica and Dojo/Mojo from Tesla.
- The biggest disappointment was AMD, which presented nothing incremental and, of course, the CPU announcements.
6. Vanguard (5347.TT): The Outlook of 4Q24 Seems a Bit Softer.
- The 4Q24 is slightly on the downside, and we are currently adopting a somewhat conservative approach.
- Visibility extends for no more than 3 months, and any increase in demand is primarily driven by urgent orders.
- As for the upcoming 12″ Fab, which is in collaboration with Nxp Semiconductors Nv (NXPI US), it has commenced local recruitment efforts in Singapore.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
- NVIDIA delivered another blockbuster quarter with record revenues of $30 billion, blowing well past the guided $28 billion, up 15% QoQ and up 122% YoY.
- $5.6 billion in revenues were attributed to Singapore, making up more than 18% of overall revenues and up >5 times YoY
- What the heck is the city state doing with all of those GPUs?
2. TSMC (2330.TT; TSM.US): 2024 Top Clients
- TSMC’s top 5 clients for 2024 are Apple (AAPL US), Advanced Micro Devices (AMD US, Qualcomm Inc (QCOM US), Mediatek Inc (2454 TT) and NVIDIA Corp (NVDA US).
- Smartphone orders continue to dominate at TSMC, with QCOM and MediaTek being key clients.
- Looking ahead to 2025, Intel Corp (INTC US) is expected to rely more on TSMC, potentially leading to changes in TSMC’s client ranking.
3. Taiwan Dual-Listings Monitor: TSMC Maintaining Strong Premium; UMC Headroom Continues to Decrease
- TSMC: +15.4% Premium; Wait for Closer to 20% Before Opening Fresh Short
- UMC: +1.2% Premium; Can Consider Shorting at 1.5% or Higher; Headroom Continues to Decrease
- ASE: +5.2% Premium; Wait for More Extreme Levels Before New Trade
4. Taiwan Tech Weekly: Nvidia Results Imminent; Apple IPhone 16 Reveal Date; Micron’s Taiwan Expansion
- Nvidia, Dell, Marvell results coming out this week.. Apple iPhone 16 Reveal September 9th?
- Micron progressing on potential Taiwan capacity expansion due to strong HBM DRAM demand
- AMD acquires a key U.S. server systems integrator, expanding its enterprise server opportunity in a market including Taiwan’s server ODM players such as Hon Hai, Wiwynn, Inventec, Quanta, and Compal.
5. Intel Missed the Party, while AMD’s ZT Systems is the Bet to Stay in the Game
- First, let’s start with Intel. Intel had a pretty poor earnings result. There’s no two ways about it.
- Intel reports Q2 EPS $0.02 ex-items vs FactSet $0.10, announces $10B cost reduction plan; suspends dividend
- There was another layoff of around 15% of employees, a full dividend suspension (finally, guys), and a capex cut.
6. Earnings Preview (Nvidia and Marvell)
- It’s about to be primetime for the AI semiconductor trade, and for the first time in a long time (maybe ever), I wanted to write an earnings preview. It might be the first time (ever) and hopefully the last time.
- Two critical companies report this week. I’ll start with Marvell, the less important but the one I like, and then talk about some exciting dynamics at Nvidia that could lead to volatility and why it might not even matter.
- Marvell has always been a favorite of this newsletter. I won’t lie; I root for the hometown on this one. Inphi was my first paid post, and it worked out with a buyout by Marvell only two weeks later.
7. MHI (7011 JP): Election Unlikely to Affect Defense Budget
- The next leader of Japan’s ruling LDP, who will almost certainly become prime minister in October, will probably not make major changes to the nation’s defense policy.
- Guidance remains unchanged after 1Q results that suggest the possibility of a better than expected order flow but also a material negative impact from a stronger yen.
- MHI’s valuation is not yet in speculative territory, but neither is it compelling. If the yen remains stable, we expect the share price to test its recent highs.
8. Silergy (6415.TT): 2024 Can Be Operating Trough, and Revenue in 2025 Is Expected to Grow by 20-30%.
- Company’s 2Q24 overall performance exceeded expectations, and 3Q and 4Q are expected to be flat and to grow by 10-20% per quarter, respectively.
- With expectations of continued improvement in ASP and cost structure, overall gross profit margin is expected to continue to grow.
- Gen4 (12″) is mainly applied in EV, AI server, and new energy sectors, as these applications have higher specification requirements.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. TSMC Foundry 2.0: Strategic Shift Or Brand Tinkering?
- TSMC Foundry 2.0 more than doubles its addressable market and resets its market share to 28%, down from the ~60% share it has long enjoyed in the “traditional” foundry market
- The lion’s share of this new market will come from IDM, a combination of increased outsourcing (e.g. Intel) and new JV deals (e.g. Germany and Japan)
- Foundry 2.0 reflects the reality of how the semi industry is evolving and it’s the polar opposite of Intel’s IDM 2.0
2. Taiwan Tech Weekly: Taiwan Rebound Lagging Nvidia; Why TSMC’s ‘Foundry 2.0’ Is Significant
- Taiwan Tech Stocks Rally, But Lag Nvidia’s Massive Rally; Prepare for Nvidia, Dell, HP Results Next Week
- Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia’s Rebound
- TSMC Foundry 2.0: Strategic Shift Or Brand Tinkering? Why It Is Significant
3. Q224 DRAM, NAND Revenues Grow For The Fifth Quarter In a Row
- DRAM revenues amounted to $23.3 billion in Q224, representing increases of 28.3% QoQ and 110.5% YoY.
- In the case of NAND, Q224 revenues amounted to $16.5 billion, representing increases of 17% QoQ and 83% YoY.
- Unprecedented demand for HBM & DDR5, robustly increasing content per box for both PC & Smartphone, looming capacity constraints, more/better LTA coverage are all mounting tailwinds for the memory segment
4. AMD Scales Up Just As Intel Scales Down
- AMD announced their intention to acquire hyperscale solutions Provider ZT Systems in a cash and stock transaction valued at $4.9 billion
- The real target of the deal is the 1,000 Data Center design engineers all of who will transfer directly to AMD’s engineering team with an annual OpEx of $150 million
- This is AMD scaling up to grab a larger share of the ~$400 billion by 2027 AI Data Center TAM just as Intel is scaling down its workforce by 15,000
5. Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia’s Rebound
- Hon Hai’s Latest Key Take Aways — No Slowdown for AI Server or Mobile Demand Indicated
- Zhen Ding — Delivers Higher Than Expected 2Q24 Growth; No Indication of AI Server or Mobile Slowdown
- Taiwan AI Supply Chain Names Have Lagged Nvidia’s Massive Rebound Since August 9th
6. Could a Japan “Megaquake” Disrupt Semis?
- Japan’s Meteorological Agency has issued a warning of an upcoming serious 8-9-point earthquake
- The expected epicenter is home to at least one dozen semiconductor wafer fabrication plants: “Fabs”
- While it’s hard to predict earthquakes, this news should be considered when investing in the area.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Strong Spread Rebound Into Short Zone; ASE Remains Broken Down
- 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
2. Taiwan Tech Weekly: Watch Hon Hai & Zhen Ding Guidance for Servers, AI PCs/Mobiles, and IPhone 16
- 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 & 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
3. Screen Holdings (7735 JP): Still a Buy for the Bounce
- Screen has rebounded from its recent low, but strong 1H results, the recent weakening of the Yen and reasonable valuation point to further short-term upside.
- However, management is guiding for slightly lower operating profit in 2H, and Intel’s capex cuts also support a cautious outlook.
- Screen expects slower growth in 2025 wafer fab equipment demand than SEMI, and neither appear to have factored in concern over insufficient return on investment in AI.
4. Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
- TSMC: +16.3% Premium; Can Continue to Consider Shorting the Spread Here
- UMC: +0.7% Premium; Wait for Higher Levels Again Before a Fresh Short
- ASE: +4.6% Premium; Breakdown of Spread Could Persist Since History Indicates It’s Now a Normal Level
5. Earnings: ALGM, LRCX, TOLEY, NVMI, ONTO
- Some more minor data points and highlights: KLIC (ball bonders) says that utilization is 75-80%, which is a good read on China despite the negative industrial headwind.
- Allegro Microsystems is definitely scraping the bottom, and while Sanken (its distributor) is still increasing its inventory, I like the setup there.
- Arrow Electronics (Distributor) says things are improving, which is a big counterpoint to everything else.
6. ASPEED’s 159% July Revenue YoY Growth Bodes Well For H224 AI Server Shipments
- ASPEED’s July revenue amounted to NTD 601 million, up 159% YoY
- ASPEED’s YTD revenue of NTD 2,970 million, is up 88% YoY
- This bodes well for H224 server shipments, both general purpose and AI accelerated and should be reflected in NVIDIA’s earnings/outlook scheduled for August 28
7. Himax Sees China Automotive Market Softening; AI Sensing and AI/HPC Optics Opportunities Expanding
- Himax 2Q24 Results Showed Continued Margin Strength But Management Provided Cautious Outlook for 3Q24E Amidst Chinese Market Weakness
- Himax’s AI Sensing and AI/HPC Optical Data Transfer Growth Opportunity for 2025E — Investments into Obsidian Sensors & FOCI
- Himax — Maintain as a Structural Long; Market Sell-Off Opens Accumulation Opportunity