In today’s briefing:
- PC Monitor: Inventories Healthy & Intel Expects Over 100 Million AI PCs In Two Years
- BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates
- PI: Headwinds Persist
- ATNI: Turning Away from Debt
- TRS: Scaled for Free Cash Flow
PC Monitor: Inventories Healthy & Intel Expects Over 100 Million AI PCs In Two Years
- Intel’s results last week beat expectations by a wide margin, with margins recovering better than expected by the Street and guided to keep improving through 4Q23E.
- New Meteor Lake chips for PCs, branded as ‘Intel Core Ultra’ will officially launch December 14th and are expected to drive demand for new AI-optimized PCs in 2024E.
- Intel said that the PC industry completed its inventory digestion in 1H23, drove sequential demand growth in 3Q23, and this is expected to continue into 4Q23E.
BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates
- TSMC’s manufacturing value only accounts for 1/4 of H100 HGX bill of materials but HBM3 accounts for more than half;
- ABF substrate, SXM5 module, UBB and CCL vendors should be benefited, especially for Ibiden Co Ltd (4062 JP) on ABF substrate/OAM and Elite Material (2383 TT) on OAM/UBB CCL;
- Nvidia AI GPU likely doubling each year in next two years; Our estimates on Nvidia 2025 AI GPU EPS contribution are exceeding Bloomberg consensus earnings estimates, suggesting room to raise.
PI: Headwinds Persist
- Impinj reported third quarter results affirming the slowdown in sales volume for endpoint ICs with hopes the current softness comes to an end by the first quarter of 2024
- Concurrent with the decline in demand is the increase in endpoint IC availability from competitors
- We continue to believe the near-term fundamentals are not as strong as the stock depicts and the business is vulnerable to further headwinds, especially related to endpoint IC pricing.
ATNI: Turning Away from Debt
- ATNI is benefiting from its capital expenditure investments through an increase in revenue and adjusted EBITDA, but it has come with the price of higher interest expense
- ATNI reported third quarter results showing subscriber growth in each of its markets, but that was not enough to mend the cost of capital that has increased this year
- ATNI is now projecting 2024 capital expenditures to decline materially in what could result in improving ATNI’s debt balance over the next four quarters
TRS: Scaled for Free Cash Flow
- TRS reported third quarter results where the packaging business continues to stabilize from inventory destocking while the aerospace segment continues to grow as fast as possible
- The packaging business has gone through restructuring that should lead to higher profit margin as customers begin to increase their order activity
- Improved supply chains are aiding the sales growth in aerospace. The growth in aerospace should help push cash flow higher and offset the softness in packaging
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