Daily Brief TMT/Internet: Ryoyo Electro, NVIDIA Corp, Taiwan Semiconductor (TSMC) - ADR and more

In today’s briefing:

Ryoyo (8068) – Ryosan (8140): Recent and Former Activist Targets To Merge
Taiwan AI Stock Shorts Vs. Nvidia: Nvidia Outperforms, Maintain Taiwan Short Basket
U.S. Expands China Chip Restrictions: Taiwan AI Names Most at Risk of Pullback

Ryoyo (8068) – Ryosan (8140): Recent and Former Activist Targets To Merge

Today post-close, Ryoyo Electro (8068 JP) and larger equity affiliate (20.1%) Ryosan Co Ltd (8140 JP) announced their final Management Integration Plan (merger by holdco) after signalling a deal May23.
Activist-Ish-Y Silchester sold their stake in Ryosan to Ryoyo in February at a 20% premium. Activist Murakami-san had a top10 Ryosan stake end-March, went substantial 27 June, now owns 10%.
Both low-margin/ROE electronics traders have been subject to activist campaigns over the years. Both “survived”. Now they are banding together to be a bigger independent low-margin electronics trader.

Our Taiwan AI stock short basket of Quanta, Wistron, Gold Circuit, and Asia Vital has underperformed Nvidia by 12.5% since our previous piece.
Most of Taiwan’s AI stock plays have underperformed Nvidia over the same period, but by less than our basket names. Analyst recommendations remain overwhelmingly Buy for our Short basket names.
Conclusion: Maintain Quanta, Wistron, Gold Circuit, Asia Vital as a Short Basket vs. Long Nvidia. Nvidia revenue will grow at a higher percentage rate than most Taiwan AI concept stocks.

U.S. expands China chip restrictions — Implementing lower performance thresholds and further restricting sales via third party countries.
Intel and AMD chips likely also impacted, as well as equipment from ASML, Lam, Applied Materials, Tokyo Electron and others. We will learn more today from Lam and ASML results.
Taiwan AI Plays also to be impacted — Shares of Wistron, Quanta, Gold Circuit, Asia Vital Gigabyte, Super Micro, Alchip appear precarious.

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