Weekly Top Ten Tech Hardware and Semiconductor – Aug 18, 2024

1. Taiwan Dual-Listings Monitor: TSMC Strong Spread Rebound Into Short Zone; ASE Remains Broken Down

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Scott Foster, LightStream Research

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Douglas O’Laughlin, Fabricated Knowledge

• 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

By William Keating, Ingenuity

• 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

By Vincent Fernando, CFA, Zero One

• 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