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. Jensen’s World: Compressing Reality
- “It is so much cheaper to do simulations than real experiments, so much more flexible in testing…we can even do things which cannot be done in any lab… So it’s inevitable this trend will continue for some time.” – Richard Hamming, The Art of Doing Science and Engineering.
- Richard Hamming said this to the President of Bell Labs in the 1950s. And I think this insight rings more accurate than ever. Simulations of reality are much more flexible and cheaper than observing and interacting with reality.
- I will assert that LLMs and “AI” are effectively the logical conclusion of this trend. A large language model is trained on the largest amount of data possible, often the entire crawlable Internet, all the books ever written, and so much more.
2. The First Semi-Micron to Guide 2Q24; All Good News Except MOI
- Earlier expectation on Micron will have rooms to raise becoming a reality, largely driven by over 30% q/q NAND bit price jump for storage business in 1Q24.
- 10ppts stronger 2Q24 sales guidance and 3-6ppts higher gross margin guidance are driving free cash flow improvement.
- AI server, PC, and smartphone driving DRAM bit demand and HBM3e/HBM4 and 1-gamma EUV DRAM slowing bit supply growth both are positive except MOI remains 15% above 5 years average.
3. Micron. Back In The Black & No Going Back
- Q224 revenues of $5.8 billion, up 23% QoQ and up 58% YoY. It also well above the high end of the guided range of $5.5 billion.
- Net income turned positive & amounted to $476 million. This compares to a loss of $1 billion in Q124
- Forecasting current quarter revenues of $6.6 billion & gross margin of 26.5% at their respective midpoints
4. Taiwan Tech Weekly: Nvidia Conference; Samsung to Hike NAND Prices; TSMC Adding Capex Due to Demand
- Nvidia GTC Conference This Week Likely to Create Newsflow for Many Tech Names
- Samsung Could Hike NAND Flash Prices by 20%; Silicon Motion for Exposure
- TSMC Reportedly Placing Orders for Additional Advanced Packaging Capacity, Likely In Response to Demand Strength
5. Taiwan Dual-Listings Monitor: TSMC Premium Slumped But Remains Extreme; UMC at a Discount
- TSMC: +15% ADR Premium; Likely to Trend Further Lower Over Time
- UMC: -2.3% Discount; Decent Level to Long the ADR vs. Short Local
- ASE: +11.6% Premium; Continue to Advocate Shorting the Spread Here
6. Micron Earnings: HBM Driving Price Increases in Other Sectors
- Micron Technology reported very positive revenues this quarter and a return to profitability
- A large part of this stems from the impact that HBM demand is constraining production of standard DDR5 DRAM, driving it into a shortage
- This is good news for Micron and its DRAM competitors Samsung and SK hynix
7. NEC (6701 JP): Generative AI (Part 2)
- CEO Jensen Huang’s keynote address at Nvidia’s GTC event on March 18 was a reminder that generative AI is about building secure and reliable systems, not chatting up the future.
- NEC has spent three years developing its own AI supercomputer, creating the best performing Japanese-language large language model (LLM), and testing new AI products in-house before delivering them to clients.
- The introduction of generative AI and LLMs into business- and industry-specific solutions should provide meaningful additions to NEC’s telecom services, social infrastructure, aerospace and national security related businesses.
8. TSMC (2330.TT; TSM.US): Raising Growth Target to 25%+ YoY in 2024F.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) revenue growth target for 2024F is set at 25% or higher.
- TSMC’s dominance in the CoWoS market, with nearly 100% share, positions them well.
- TSMC’s plans to establish a new Fab in Chiayi, Taiwan, reflect the growing end demand.
9. Generative AI. Innovation Turns To Litigation, Licensing & Regulation
- The EU has just launched the World’s first AI Act
- OpenAI claims the NYT tried to hack ChatGPT in order to prove they used their archive material during one of its training phases.
- Google’s licensing of Reddit’s content in advance of the latter’s impending IPO is a win-win for both, and likely how content creators can expect to be rewarded in the future
10. Intel. CHIPS Act Funding Ceremony Overshadowed By Reports Of New Fab Delays
- Intel snags $8.5 billion in direct funding through the CHIPS and Science Act to advance its commercial semiconductor projects in Arizona, New Mexico, Ohio and Oregon.
- Investment Tax Credit (ITC) of up to 25% on > $100 billion in qualified investments and eligibility for federal loans up to $11 billion are also on offer
- Meanwhile, two separate reports suggest delays of up to two years in Ohio and suppliers in Arizona unable/unwilling to meet previous commitments to establish local supply chains. Ouch!
