1. TSMC Chairman to Retire, + or — Impacts to Shareholders
- Chairman 69 years old Dr. Liu will retire and 70 years old CEO Dr. Wei will step up. What story do we believe? Will TSMC to regain its strong outperperformance?
- Positive impacts: we expect Arizona fab equipment move-in and ramp up might be further delayed if no subsidies are granted; two teams competing to one voice/team/direction.
- Three risks: 1. Dr. Wei at his age of 70 without a strong management backup; 2. Dr. Wei might make a wrong decision deeply; 3. absolute power corrupts.
2. The First Semi Micron to Guide 1Q24; Conservative Now but Likely Raise Later
- Driven by stronger PC/networking DRAM sales, Micron reports 5% stronger 4Q23 sales, 10-13ppts q/q margin improvement and 34% y/y decline in MOI to 5.2 months;
- Micron guides 1Q24 sales growth 8-16% q/q and 38-49% y/y and gross margin of 12%, beating Bloomberg consensus estimates by 6ppts;
- Rooms to raise: 1. 1Q24 sales of 18% q/q likely; 2. Turning profits sooner than expected; 3. +Free cash flow in 2024; 4. HBM3E for GH200/H200 to improve mix, margin.
3. Intel’s AI Everywhere In New York
- Intel’s “AI Everywhere” event turned out to be little more than last minute launches client and server products promised for 2023
- While these products have little new in the way of ground-breaking AI hardware, the entire event was infused with AI marketing to the highest degree
- Ostensibly Intel’s great hope in AI hardware acceleration, Gaudi, featured solely as a last minute gimmick announcing that Gaudi3 was “out of the fab and into the lab”. Yawn!
4. Marvell Industry Analyst Day
Marvell reported earnings recently, and I wanted to mention that at least before I continued onwards because that is a good context-setting event for the industry day.
Revenue exceeded expectations, but the mix beneath the results was illustrative.
- Datacenter revenue grew 20% QoQ, cloud over 30% QoQ; while networking was strong, they guided for a 40% QoQ decline, consistent with networking OEM results.
5. Micron Analysis, Industry Takeaways: Memory Market TAM New Highs into 2025; SK Hynix Trade
- Relative Value Trade in Micron Has Worked Since Our Last Piece; Results Blow Away Expectations
- Memory Pricing Improvement Continues, Management Expects Pricing Increases Through Calendar Year 2024 and 2025
- We Remain Structurally Long Memory; Now See Relative Value in SK Hynix
6. 2024 High Conviction: Low Semiconductor Growth
- Objective Analysis has released its 2024 semiconductor forecast, calling for growth of below 5%
- Other forecasters currently call for 11% to 17% growth, which would require another super cycle to accomplish
- We do not see any event that will drive a 2024 super cycle, even with the current rapid adoption of AI in the data center
7. Sox Index Broke New High; Nov US SEMI Equipment and Oct SIA Sales Showed Y/Y Improvement
- As expected, SOX index broke a new high, in line with Nov US semi equipment billings and Oct SIA/WSTS global sales y/y improvement.
- SEMI reports Nov front/back end equipment billings decline of 9% and 11% y/y, respectively, which was improved from 14% and 17% y/y decline in Oct, implying recovery intact.
- WSTS/SIA earlier reported Oct sales of US$46.6bn, up 3.8% m/m and down only 1% y/y (vs. 16% decline in June), suggesting semi sales y/y improvement and clearly pass the trough.
8. Why Subsystems Now
Semicap is strong, Subsystems are not. That will change.
- I think Mks Instruments (MKSI US), Ultra Clean Holdings (UCTT US), and Ichor Holdings (ICHR US) are likely good 12+ month longs as NAND spending increases, and they blow out estimates for multiple quarters in a row.
- The factor-driven size difference drives the opportunity, and they should benefit well on a relative basis next year.
Weekly Top Ten Tech Hardware and Semiconductor
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