This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Tech Weekly: Hit Hard By AI/Tech Pullback; Watch UMC, Mediatek, Realtek, AMD, MSFT Earnings
- Top Gainers/Loser: Taiwan Tech Stocks Hit Hard Last Week By Global AI/Tech Pullback
- Key Events This Week: Major Earnings Week Including UMC, Mediatek, Realtek, AMD, Microsoft
- TechChain Insights: Call with Silicon Motion; QLC NAND Emerging as Key Enabler for AI Devices
2. AMD. Playing The Long Game
- Q224 revenues of $5.8 billion, +5.5% QoQ, +9% YoY and $100 million above the guided midpoint
- AMD forecasted current quarter revenues of $6.7 billion at the midpoint, up 15% QoQ and about the same YoY.
- AMD shares are up 9% in premarket trading, hardly the response one expected from a good but not amazing report. But why?
3. Intel Q224 Meltdown. Don’t Say We Didn’t Warn You…
- Q224 revenues of $12.8 billion, in line with their updated May outlook, ~flat QoQ and down 1% YoY.
- Gross margin (non-GAAP) was 38.7%, down 1.1 points YoY but down a whopping 4.8 points from the April outlook.
- Shares tanked >24% in after hours trading. What’s really going on at Intel?
4. Earnings: NXPI, CDNS, TXN, SLAB, Alphawave, TSEM, KLAC, SK Hynix, MXL, STM, ASMI, VRT, UCTT
- This is going to be a big week, so I’ll be as brief as I can while getting everything in one place.
- Let’s start with Automotive, which is my favorite idea set right now. The problem is that the near-term results were much weaker than I expected, and it looks like the bottom is maybe in.
- I was expecting another quarter of scrapping along the bottom, and Industrial weakness punched a new low.
5. The ROI of AI (It’s a Dollar Auction)
- The single most complicated question to answer is what exactly the ROI of AI is.
- You can easily argue that there is some value and that it can be done quite profitably when you are just inferencing the model for money.
- The problem is that when you peer a little closer at the training costs, particularly the cost of scaling models at the frontier, it’s starting to become hard to answer. What exactly is the ROI?
6. Mediatek: AI Features Can Shorten Smartphone Replacement Cycle; New Verticals to Kick In 2H25E
- Mediatek 2Q24 Earnings Beat Expectations; Strong Mid-Term Revenue Guidance Maintained
- 2Q24 Global Smartphone Market Witnessed Best Growth in Three Years
- Repeats Strong Mid-Term Guidance; Continues to Signal Revenue Strength for 2025E & 2026E. Maintain Structural Long Rating.
7. MediaTek (2454.TT): There Appears to Be No Bright Spot in 2H24F.
- 3Q24 Sales: NT$123.5-132.4 billion, down 3% to up 4% QoQ, up 12-24% YoY. 4Q24 is expected to be a slower quarter based on current expectations.
- Advanced 3nm technology can support SP, tablets, and other end devices. AI-powered functions like ARM-based CPU or EV will bear fruit in 2025.
- The GPU has partnered with NVDA. Auto chips partnered with NVDA will be shipped out later in 2025. They will power MTK’s CPU and ISP in conjunction with NVDA’s GPU.
8. PC Monitor: MSFT Results Imminent; Look for Copilot Progress; Taiwan PC Makers Show Healthy Growth
- PC Maker Shares Under Pressure — PC makers’ share prices fell by mid-to-high single digits during July. However, pure PC exposure outperformed as shown by HPQ’s gain during the month.
- Latest PC Industry Data is Promising — Latest IDC data shows that global PC shipments increased 3% YoY in 2Q24, and are up 5% YoY ex-China.
- Microsoft & Taiwan PC Maker Earnings Ahead — Microsoft reports July 30th U.S. time. We expect Taiwan PC makers to report earnings within the first two weeks of August.
9. UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses
- 3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)
- Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.
- Cooperation with Intel Corp (INTC US) is progressing well, targeting MP for 14nm in 2027.
10. UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
- UMC’s latest results indicate a mild recovery for consumer, communications, and computing industries. UMC’s capacity utilization to continue improving but industry inventory correction could last until end-2024E.
- UMC maintained 2024E capex guidance however it’s increasingly clear UMC can’t keep up the capex arms race alone. Hence we see UMC & Intel becoming closer and closer partners.
- We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.
