1. Semiconductors. The Downturn Is Over. Or Is It?
- Global semiconductor sales have increased MoM for seven months in a row. PC & Smartphone unit shipments have bottomed and are on the rise. Memory has bottomed.
- Silicon wafer inventories are piled high, ASML, TEL facing down zero growth in 2024, foundry utilisations are (mostly) in the doldrums with further ASP cuts looming on the horizon.
- Multiple data points suggest we’ll still be talking about this downturn well into 2024
2. TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
- TSMC is expected to experience growth of ~15% YoY in 2024F.
- TSMC’s N3 is expected to dominate the market in 2024F, with applications in CPU, GPU, smartphone SoC, and more.
- We also estimate that the N2 pilot run will begin in 4Q24.
3. TSMC: Defensive AI Play in Long Upward Re-Rating Trend?
- We believe TSMC represents defensive exposure to AI for investors concerned that many other AI-related stocks’ valuations may be too high.
- While one may think TSMC seems too obvious as a play, we note that the stock is up only 4.5% over the last six months.
- We view TSMC as trading at an inexpensive valuation; even a cheap valuation should our hypothesis that the stock is structurally re-rating upwards turn out to be true.
4. Nvidia’s China Problems, Applied Materials, and Microsoft’s Accelerators
- Nvidia’s quarter was surprising to me because it was boring. There were a few incremental pieces, but the big news was everything to do with China.
- As you know, there was another round of export restrictions with a myopic focus on AI Accelerators.
- This impacted results and the outlook.
5. Memory Monitor: Micron Expects 2025E to Be Best-Ever for Memory; But Valuations Have Run Up a Lot
- Memory names have rallied strongly, with Nanya Tech outperforming since the start of November.
- DRAM bottomed and NAND flash prices have jumped. Micron says that 2025E could be a record year for the Memory industry.
- High valuations make near-term upside for Memory names uncertain. For Long/Shorts one can consider Long Micron vs. Short SK Hynix or Long Micron vs. Short Nanya Tech.
6. Micron. The Rally Is Premature
- Improving outlook with Q1F24 revenue forecast slightly above the high end of the guided range
- 2024 is being positioned as a “recovery year”, helping reset investor expectations about the nature and speed of the recovery
- Micron’s share price typically rallies strongest into record revenue years. 2024 will not be a record revenue year. As such, we think the present rally is premature.
7. Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
- TSMC: 8.2% Premium — Still Best to Wait for Better Levels
- ASE: 6.4% Premium — Wait for 5% as the Level to Go Long the Spread
- ChipMOS: -0.5% Discount — Stay Long the Spread if You Started at -2.0%
8. UMC (2303.TT; UMC.US): There Is a Greater Chance for a Rebound in 2Q24F.
- Although it is still early to determine the extent of the utilization rate that could be reached in UMC for 2Q24F, there is a greater chance for a rebound.
- UMC’s high-end technology, specifically 28nm, has a utilization rate of over 80% in 4Q23F.
- MediaTek is UMC’s largest client, dominating in WiFi, TV SoC, Bluetooth, and other areas.
9. Taiwan Tech Post-Earnings Takeaways: Semis Margins Underestimated? Hardware 2024E Forecasts Ramped
- Taiwan Tech companies beat analyst expectations by a high rate in the latest quarter
- Semiconductors: Consensus could be underestimating a margin rebound for 2024E
- Hardware aggregate forecast earnings growth increased significantly for 2024E as compared to just three months ago
10. Taiwan Tech Weekly: Taiwan AI Top Losers; Dell to Provide PC/Server Color; Post-3Q Results Takeaways
- Taiwan AI Plays Top Losers Recently, Dell Results Coming Today U.S. Time to Provide Color for PCs and Servers
- Taiwan Tech Post-Earnings Takeaways: Semis Margins Underestimated? Hardware 2024E Forecasts Ramped
- Nanya, Yageo Top Gainers; We Rate the Stocks Outperform and Structural Long Respectively
Weekly Top Ten Tech Hardware and Semiconductor
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