This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Taiwan Dual-Listings Monitor: TSMC Contraction Continues; ASE & Chunghwa at Historically Rare Levels
- TSMC: 7.7% Premium — Spread Has Fallen Further, Likely Can Short a Bit Further
- ASE: Drops to 5.1% Premium — Can Consider Going Long at Current Level Due to Maxed Headroom & ASE’s Strong Advanced Chip Packaging Story
- CHT: Trading at -0.9% Discount — Good Level to Long the Spread, Rare Discount
2. Fujitsu (6702 JP): Horizon Scandal Blows Up
- The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
- Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
- Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.
3. Semiconductor Events Deserving Your Attention @9/1/2024
- Nanya 12/23 revenues NT$ 3,162 million, +10% MoM, +31.73% YoY. UMC 12/23 revenues NT$ 16,979,226. -9.6% MoM, -18.9% YoY. Samsung Q423 Sales Flat, Op Profit +16% QoQ
- Quintaurius, a RISC-V collaboration between Bosch, Infineon, Nordic, NXP & Qualcomm, launched in Germany
- Intel takes delivery of the first ASML High-NA EUV tool. It’s a great photo opportunity but that’s about as far as it goes
4. Stories Behind the Reported Dec/4Q23 Taiwan Semi/Tech Sales
- Y/Y improvement for LCD panel, 8″/12″ raw wafer, CMOS sensor, GaAs RF, cooling system, design service, and semi equipment and material vendors but y/y deterioration for PC/server and gaming vendors.
- After 9 vendors beating consensus, we might see smartphone IC and RF, semi equipment OEM, and design service vendors in US to report a better than expected 4Q23 sales/earnings.
- After 6 vendors missing consensus, we might see PC/general server IC and niche memory vendors in US to report a worse than expected 4Q23 sales and earnings.
5. TSMC Finishes 2023 With A Flourish
- Q423 revenues amounted to NT$625,529. In US$ terms, using TSMC’s projected exchange rate of 32, this translates to $19.55 billion, a ~13% increase QoQ, and a 2% decrease YoY.
- FY 2023 revenues amounted to NT$2,161.74 billion, down 4.5% YoY. In US$ terms, this amounted to $69.1 billion, an 8.8% decrease YoY and the first such YoY decrease since 2009
- While we foresee Q124 revenues being down 5-10% QoQ, we expect full year 2024 revenues to grow in the range of 5-10% YoY.
6. Mobileye Guides Down; Automotive Inventory, Memory Strength, and Marvell
- Mobileye surprised markets with an extensive guide down to their results.
- Shares reacted poorly, but at first blush, it makes sense given the magnitude of the guide. Let’s walk through the release.
- It starts with inventory, and it’s clear their customers have too much inventory.
7. Taiwan Tech Weekly: Dell Outperforms Taiwan PC Names; TSMC Results Coming After Taiwan Election
- Taiwan PC names have been the top losers over the recent period, after having previously been the top winners. Our Long Dell vs. Short Acer trade is doing well.
- Nanya Tech was a top loser, falling along with its international Memory peers. Nevertheless, we note it underperformed Micron and SK Hynix. We continue to prefer SK Hynix for Memory.
- CES is happening now and will be wrapping up Friday. We like our Dell vs. Taiwan PC names through the CES event. TSMC will be reporting results January 18th.
8. Rohm (6963 JP): Quantum Process Optimization
- Use of quantum technology expected to improve electrical die sorting (EDS) performance by several percentage points.
- Collaboration with Quanmatic aims at full-scale introduction in April, the first month of FY Mar-25.
- Buy for long-term growth led by power semiconductors with margin expansion from efficiency gains.
9. Apple Partner Hon Hai Reports Weakest December Revenue In Years, But EV Growing; Buying Opportunity
- Hon Hai released its December revenue figures on January 5th; Revenue came in lower than any other December in recent history.
- Hon Hai’s MIH EV consortium is showcasing solutions at CES 2024 this week in Las Vegas. In Taiwan, the Luxgen expects 9,000 customer deliveries for its ‘n7’ EV by June.
- Hon Hai is trading at less than 5x forward 2025E PE; and on a trailing basis one of the lower EV/EBITDA’s in history. Latest share drop is a buying opportunity.
10. Ferrotec (6890 JP): Return to Growth Led by Power Semiconductor Substrates
- Ferrotec shares have dropped by a third since last July and are now selling at 8.2x EPS guidance and 0.6x book value.
- Sales and operating should start to recover in 2H of FY Mar-24, led by power semiconductor substrates.
- Buy for the upturn in the semiconductor cycle and capacity expansion in Japan, China and Malaysia. No significant damage from the Noto Peninsula earthquake has been reported.
