Weekly Top Ten Tech Hardware and Semiconductor – Jan 7, 2024

1. Micron Makes Surprise Settlement With Fujian Jinhua. But Why?

By William Keating, Ingenuity

• After a trial that dragged on for close to five years, the US DoJ case against Fujian Jinhua heard closing arguments in September 2023
• Co-Defendant UMC already settled with Micron over two years ago. The two companies have since gone on to further expand their business relationship 
• The surprise settlement with Fujian Jinhua may help smooth the path for Micron’s troubled operations in China

2. Semiconductor Outlook 2024: AI’s Adolescence

By Douglas O’Laughlin, Fabricated Knowledge

• The year 2023 began with a significant downturn in the semiconductor market.
• Significant capacity additions were brought on after the historic shortages due to COVID-19, and then demand wobbled as interest rates quickly rose.
• Supply outpaced demand, and the market turned into a period of oversupply.

3. Ushio (6925 JP): Tie-Up with Applied Materials Adds to Long-Term Potential

By Scott Foster, LightStream Research

• Ushio has tied up with Applied Materials (AMAT) to develop lithography systems for package substrates using AMAT’s Digital Lithography Technology.
• This should keep the focus on Ushio’s more advanced technologies (which also include EUV mask inspection light sources) and its potential to rebound with the semiconductor cycle.
• The shares have dropped back 10% since mid-December, providing an entry point. 3Q results are scheduled to be announced on February 9.

4. Misumi Group (9962 JP): Heads up for 3Q Results in Late January

By Scott Foster, LightStream Research

• The gradual upward trend in monthly sales, which has continued through November, has further to go in our estimation. 
• At 22x EPS guidance for FY Mar-24, the shares are at the low end of their 5-year P/E range.
• Guidance remains unchanged. 3Q results are due to be announced at the end of January

5. UMC (2303.TT; UMC.US): 1Q24F Outlook, the Wafer Demand of MediaTek and Samsung.

By Patrick Liao

• The wafer demand outlook for 1Q24F should be around flat, but ASP (Average Selling Price) is expected to decline by negative mid-single digits.
• Compared to 4Q23, Mediatek Inc (2454 TT)‘s foundry demand is larger and Samsung Electronics (005930 KS)‘s foundry demand is downsized in 1Q24F. 
• United Microelectronics Corp (2303 TT) and Intel Corp (INTC US) are currently discussing the allocation issue of 12nm capacity.

6. Mobileye Profit Warning Is A Harbinger Of Gloom As Q423 Earnings Loom

By William Keating, Ingenuity

• From a growth forecast of >20% YoY just two months ago, 2024 is now pegged as a low-to-no growth year
• This will be a big negative for the likes of Infineon, ST Microelectronics, NXP, Globalfoundries and HH Grace, among others. 
• Our anticipated gloomy Q423 earnings season just got a whole lot gloomier

7. ‘Clippy’ Having the Last Laugh? Microsoft’s Design Change to Drive AI PC Adoption; Dell Trade Update

By Vincent Fernando, CFA, Zero One

• On January 4th, Microsoft announced a design change for PCs whereby a new physical key will be added to PC keyboards; the Microsoft Copilot key.
• Microsoft Copilot will become a must-have for companies in our view. Initial Copilot capabilities can dramatically improve worker productivity and this should help drive AI PC upgrades for the industry.
• CES 2024 Jan 9th – 12th will showcase AI PC models sporting Intel’s Core Ultra processors and Microsoft’s new Copilot key. We also update our Dell vs. Taiwan PCs trade.

8. Vanguard (5347.TT): 1Q24F Revenue Might Decline ~10% QoQ.

By Patrick Liao

• Vanguard Intl Semiconductor (5347 TT) is likely to see that there could be a decline of around 10% QoQ in 1Q24F.
• In terms of revenue contribution, Taiwan, US, China, Europe, and Japan account for approximately 40%, 20%, 15%, 15%, and 10% respectively.
• Taiwan Semiconductor (TSMC) (2330 TT) may give up technology development at 40nm and above and transfer them to Vanguard.