Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC) – ADR, OpenAI, Beijing Fourth Paradigm Technology, Hive Box Holdings, Richwave Technology, UL Solutions Inc, Reddit , Structural Monitoring Cdi, Acal PLC and more

• 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

• 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?

• The new transformer model requires significant amount of inference and multilevel reasoning
• The demand for inference compute is skyrocketing, surpassing current silicon architecture capabilities
• OpenAI’s new model showcases the future potential of AI, but also highlights the gap in semiconductor architectures and computing infrastructure

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• Beijing Fourth Paradigm Technology (6682 HK) was listed in Hong Kong on 28th Sept 2023 after raising US$130m. Its one-year lockup will expire on 27th Sept 2024.
• Beijing Fourth Paradigm is a platform-centric AI enterprise solutions provider. It was the largest player by revenue in the platform-centric decision-making AI market in China in 2022, as per CIC.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Delivery workers would like to pay to save their time.
• Retailers would also like to pay for return delivery to raise their service quality.
• However, product buyers have to pay, but would not like to pay the delay fee.

• Gold Apollo denies involvement in Lebanon pager explosions, while Taiwan’s MOEA confirms pager assembly happening in Taiwan.
• Taiwan’s wafer foundry industry set to grow in 3Q 2024; can new orders and cost reductions drive Intel’s recovery?
• E Ink Prism technology revolutionizing automotive and consumer electronics;CATL looking to expand in solar-storage market.

• UL Solutions reported a strong performance in the second quarter of 2024, marking a continuation of growth across all segments and geographies.
• This performance included an 8.4% increase in organic growth, resulting in $730 million in revenue.
• The company benefited significantly from high demand in its Industrial segment and saw positive trends in its Consumer and Software & Advisory segments.

• Reddit’s second quarter 2024 earnings reflect a company in the midst of scaling its user base and revenue streams, with notable strides in technological advancements and international expansion.
• The discourse during the call highlighted that Reddit, under the leadership of CEO Steve Huffman and COO Jen Wong, continues to push aggressively on growth, particularly through enhancements in user experience and advertising efficacy.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• RaaS Research is initiating coverage of vertically-integrated aviation designer and manufacturer Structural Monitoring Systems (ASX:SMN) with a DCF derived valuation of $0.82/share, representing potential capital upside of 44% from the current share price.
• SMN delivered its maiden EBITDA profit in FY24 and we expect the company to maintain profitability into FY25 while bringing key new products to market.
• A likely decline in contract manufacturing revenues to make way for higher margin own brand products should have a positive impact on group gross margins going forward, adding to the earnings leverage from expected revenue growth (management have forecast 25% revenue growth in FY25).

discoverIE’s first capital markets day (CMD) in six years was an opportunity for the group to recap how via its buy-and-build strategy it has successfully grown the company from a market cap of £25m in 2009 to £592m today, while transforming the business from an electronics distributor to a pure-play specialist electronics design and manufacture company. Management also outlined how it expects to drive future growth and profitability. New at the CMD was the announcement of an additional target market, security. As the group has matured, it has put in place structures and processes to maximise revenue opportunities and optimise profitability and cash flow, while retaining the group’s essential DNA.