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. Is the AI Boom Over?
- Nvidia gave guidance for significantly slower Q/Q growth in Q2
- Nvidia and its HBM suppliers have told of shortages, driving hyperscale datacenters to build excess inventory
- At the first sign of softness, Nvidia’s customers are likely to enter a digestion phase, drastically reducing orders
2. ASML Readthrough: Are There Signs of an Industry Slow Down?
- ASML’s results last week indicated continued strength in the semiconductor industry. We analyze the results to identify any potential signs of weakening or pauses in global industry momentum for Taiwan.
- Net system bookings surged 54% QoQ and ASML reported rising utilization levels of its clients’ equipment. Inventory days rose significantly, but this is due to upcoming 2025 orderbook deliveries.
- New US, Europe, and Japan fabs bolster strong revenue outlook into 2026E. Overall, robust industry demand persists according to ASML’s latest data, with no major signs of softness.
3. Taiwan Tech Weekly: Strong TSMC & ASML Data Fails to Rally the Semiconductor Sector
- Taiwan Stocks Fall On Potential New U.S. Tech Restrictions for China & Potential Policy Shift from a Trump White House… Strong TSMC & ASML Results Fail to Rally the Sector
- Even Tighter Technology Restrictions for China? — US Could Use Special Rule to Restrict Selling of Products Made by Foreign Companies
- We See TSMC’s Margins Increasing Much Higher Than Guidance in Long-Term; 2Q24 Shows Apple Ramping Up
4. TechChain Insights: Call with Silicon Motion; QLC NAND Emerging as Key Enabler for AI Devices
- We had a conference call with Silicon Motion; the leading global provider of NAND flash controllers and solid-state storage solutions for the consumer, enterprise, and industrial markets.
- We focus on how Silicon Motion is leveraging advantages of QLC NAND flash memory, which is becoming a critical memory solution for new AI servers, AI PCs, and AI mobiles
- Maintain Structural Long rating for Silicon Motion and $102 valuation. The company is in a leading position to benefit from the rising importance of advanced memory controllers for AI applications.
5. Earnings: TSMC, AEHR, ASML, VAT Group, Export Restrictions
Aehr had a messy print, with the core business actually weaker than expected as they incorporated their recent acquisition. It’s hard to stay bearish, as they have a lot of potential product launches coming.
TSMC beat gross margins despite everything because of higher utilization. The logic cycle is starting to kick off in earnest. I believe WFE Capex will be much higher next year.
ASML talked up high-NA DRAM insertion on 25/26. Only Samsung could do it. Good luck, Samsung!
6. Taiwan Dual-Listings Monitor: TSMC and ASE Premium Trading Range Blow-Outs During Recent Sell-Off
- TSMC: Crashed Then Rebounded to +15.1% Premium; Likely to Break Down Again
- UMC: -0.2% Discount; Earnings Imminent; Notable Decrease in ADR Headroom
- ASE: Rebounded to +9.2 Premium After Major Breakdown; Likely to Drop Again
7. Semiconductor Equipment Stocks: A Bounce Before the Reckoning
- Irate U.S. politicians have gunned down their own tech sector, triggering declines of 7% to 20% among leading semiconductor equipment stocks outside China.
- We expect a bounce after such large declines – and further gains for Naura and AMEC in China.
- Investors now face difficult questions about the future of Chinese demand, the sustainability of the AI boom, and valuations. We are not optimistic.
8. Nidec (6594 JP): Buy into Current Decline
- If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues.
- The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.
- Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.
9. ASE Color Suggests Widening Performance Gap Between Leading-Edge and Mature Semiconductor Players
- A TALE OF TWO SEMI INDUSTRIES: ASE’s latest earnings commentary indicates that the performance gap between “leading-edge” technologies and “traditional/mature” semiconductor technologies may be widening.
- CAPITAL REQUIREMENT TO KEEP PACE IS RISING: Capacity utilization is starkly different for traditional vs. leading-edge capacity; and capital requirements to keep up in terms of advanced capacity is rising.
- ENTRY BARRIERS RISING: We suspect that smaller players could face significant challenges in keeping up with the investments necessary for leading-edge packaging and testing capacity. ASE needs to invest heavily.
10. ASEH (3017.TT; ASX.US): Selective Products Have Hit Bottom While General Products Lag Behind.
- General products did not show an immediate recovery, but selective products have reached the bottom.
- The 3Q24 sales will grow in the mid to high teens QoQ in EMS, and IC-ATM sales will grow in the mid to high single digits QoQ.
- AI remains strong across all sectors. Despite AI SP driving the replacement cycle, other general demands still show muted recovery in 3Q24.
