Daily Brief TMT/Internet: Hana Micron Inc, Sea , Intel Corp, NVIDIA Corp, Huawei Technology, AAC Technologies Holdings, SAP , Baidu, Snowflake and more

• US graphics chip designer NVIDIA Corp (NVDA US) has, to date, sourced HBM3 chips exclusively from SK Hynix (000660 KS).
• Shares in Samsung Electronics (005930 KS) promptly popped ~6% last Friday on news it had been added as a supplier to NVIDIA.
• Hana Micron Inc (067310 KS), which boasts Samsung as its largest customer, similarly jumped, and is up 45% in the past week. Too much too quickly?

• Sea Ltd began to step on the gas in terms of promotions in 2Q2023, even warning of potential quarterly losses, mainly due to perceived threats in Indonesia from TikTop Shop.
• Reports that TikTok Shop will be banned in Indonesia will provide significant relief in terms of competition as it is targeted for unfair competition versus local MSMEs through cheap imports.
• Sea Ltd has also relaunched FreeFire in India, which could become a significant catalyst for the recovery of the gaming business.  Valuations are attractive on both sales and earnings.

• The agreement helps Intel fill up some long-underutilised fab capacity at their Rio Rancho, New Mexico facility
• Tower likely gets a bargain-basement opportunity to increase their percentage of 300mm wafer capacity
• Tower’s automotive business grew from 11% of revenues in 2022 to 19% of revenues in H1’23. Greater 300mm capacity will help them meet this demand once foundry starts to recover. 

• NVIDIA Corporation delivered an all-around beat in the previous quarter.
• Notably, the Data Center segment experienced remarkable growth, driven by solid demand from prominent cloud service providers and major internet companies.
• In the quarter, Google Cloud and NVIDIA have recently introduced advanced AI infrastructure and tools.

• Chinese consumers have been buying Huawei’s latest flagship smartphone faster than stores can keep up with online and in some parts of the country, sources tell Caixin, amid mounting speculation the telecom giant has been able to weather U.S. sanctions.
• Huawei Technologies Co. Ltd. began shipping the new Mate 60 Pro Sunday, several people familiar with the matter told Caixin, five days after the phone’s discreet launch.
• A number of distributors told Caixin on Monday that the Mate 60 Pro had immediately sold out upon delivery.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Due to the sharp appreciation of Hana Micron’s share price this year, its valuation discount to companies such as HPSP has narrowed substantially. 
• Samsung Electronics is one of the major customers of Hana Micron. Samsung recently reported that it has successfully secured the right to supply advanced memory chips to NVIDIA.
• We do not believe Hana Micron’s valuations are attractive right now. Rather than chasing after its shares, we would rather wait for its shares to retreat (20-30%) a bit.

• Over the past few years, SAP has transformed itself into a cloud company with a lean and agile operating structure
• SAP’s cloud business is set to grow over 20% per annum through 2025
• SAP has the potential to re-rate to multiples enjoyed by its ‘pure play’ cloud peers.

• Baidu delivered a positive result and managed an all-around beat last quarter, characterized by progress and expansion.
• The focus on transformation through foundation models, particularly ERNIE and ERNIE bot, led to enhancements in products like Baidu Search and Baidu Wenku, resulting in increased user engagement and conversion rates.
• Baidu’s online marketing division harnessed generative AI to automate and enhance ad offerings, driving growth in online marketing revenue.

• Snowflake Inc. delivered a solid result and managed an all-around beat in the last quarter.
• In terms of the booking aspect, Snowflake observed encouraging indications of stabilization since the number of new bookings surpassed its initial projections.
• The company’s strong developer support, expansion of application providers, and successful events like Snowflake Summit reflected positive momentum and a growing ecosystem.