Weekly Top Ten Tech Hardware and Semiconductor – May 12, 2024

1. Taiwan Dual-Listings: TSMC Spread Slumps Then Fully Rebounds; Shorts Spiking Ahead of IMOS Results

By Vincent Fernando, CFA, Zero One

• TSMC: Premium Fell and Then Rebounded, Now +15.6%; Can Consider Shorting Again
• ASE: Falls to +12.3%; Wait for Higher Level Before Considering a New Short Again
• ChipMOS: -0.6% Discount; Massing of Short Interest Right Ahead of Earnings

2. Taiwan Tech Weekly: Hon Hai New All-Time Highs; Asustek Soars; Leading Chip Testing Firm Exits China

By Vincent Fernando, CFA, Zero One

• Taiwan Tech Rallies Along With Rebound In Global Tech; Hon Hai, Asustek Top Gainers; KYEC a Top Loser After Announcing China Market Divestment
• PC Monitor: The Next Version of MSFT CoPilot Will Be the Killer App for a Global AI PC Upgrade Cycle 
• ASMedia GDR Early Look – Momentum Has Been Strong, and Raising Would Grow Its Cash Base Almost 6x 

3. Silicon Motion: Leader in Powerful Niche for Edge AI Memory; Plus Key Wins for Data Center Solution

By Vincent Fernando, CFA, Zero One

• Silicon Motion’s lQ24 results confirmed the company’s end-demand strength as implied by previous Samsung and SK Hynix management commentary re: solid state memory.
• Management has increased 2024E guidance, citing rising ASPs and strong demand due to its memory controller products’ usage in edge AI applications such as AI PCs and AI smartphones.
• The street upgraded target prices across the board after the results; however we note the stock remains below its past acquistion offer price by Maxlinear and we see further upside.

4. KLAC. Priced For Perfection In 2025 & Beyond

By William Keating, Ingenuity

• Q124 revenues of 2.36 billion, $60 million above the guided midpoint, down 5% QoQ and down 3% YoY.
• Current quarter revenue guidance of $2.5 billion representing a ~6% QoQ increase and about the same YoY.
• Share price close to record highs yet CY2024 outlook is tepid while the massive over reliance on China just keeps on going

5. SMIC (981.HK): 1Q24 Outlook Was Improved, and The 2Q24 Outlook Appears to Be Better than 1Q24.

By Patrick Liao

• It’s an exciting 1Q24 result that revenue and GM beat the prior guidance.
• The 2Q24 outlook appears to be better than 1Q24, with revenue expected to increase by 5% to 7% QoQ and GM by 9% to 11%.
• We consider the primary bottleneck is the embargo of EUV machines to China from the Netherlands.

6. KYEC (2449.TT): 1Q24F Was a Seasonal Dip, but 2Q24F Should Be Picking up Below 5% QoQ.

By Patrick Liao

• In 1Q24, it was reported that the revenue growth was -3.35% QoQ, slightly exceeding our expectation of a 5% QoQ decline.
• For 2Q24, revenue is expected to grow, but the increase is projected to be less than 5% QoQ.  
• NVIDIA revenue in KYEC is forecasted to reach 15% by the end of 2024F, up from about 2% in 2023, driven by the increasing demand for AI.

7. GlobalWafers (6488.TT): Demand Was Weaker in 1H24F, and We Hope It Will Be Better in 2H24F.

By Patrick Liao

• 1Q24 revenue and GM are in line, but operating income at 24.3% was 1% below consensus.
• GlobalWafers anticipates revenue in 2024 will likely be similar to 2023, which means 1H24 revenue could account for 45% of the 2024 yearly revenue.
• The planned dividend payout for 2024 is NT$19.0, with NT$8.0 from 1H23 and NT$11 from 2H23. 

8. Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

By Patrick Liao

• The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn. 
• The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.  
• The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.  

9. AMD’s MI300 Disappointment, Hyperscalers Capex, and FPGAs

By Douglas O’Laughlin, Fabricated Knowledge

• I will start with a AMD section. Shares are down ~6-7% on last week’s result. Let’s talk about the result and why it was so disappointing.

• AMD exactly matched EPS, was slightly light on revenue, and guided essentially in line with Q2 guidance.

• This also was one of the slightest EPS and revenue beats in recent years. The last time this happened, the PC segment was imploding. This time it’s embedded revenue.

10. Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked

By Scott Foster, LightStream Research

• MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
• Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
• Consolidation of the share price is likely to continue until orders and profit trends are confirmed.