Weekly Top Ten Tech Hardware and Semiconductor – May 19, 2024

1. TSMC Surges As April Revenue Soars 60% YoY

By William Keating, Ingenuity

• April revenue ~NT$236.02 billion, +20.9% MoM & + 59.6% YoY
• It was the company’s second highest monthly revenue ever, made all the more remarkable by the fact that it occurred during its seasonally low first half year
• Our April YoY Taiwan monthly revenue comps are flashing green across the board with just one exception, Globalwafers

2. Intel’s Foundry Chief Runs For The Hills

By William Keating, Ingenuity

• In a surprise move, Intel announced that its foundry chief Stuart Pann is to retire from the company effective end of May after just over one year in the role
• He will be replaced by former IBM, Globalfoundries and Marvell executive Kevin O’Buckley, effective immediately
• Mr. O’Buckley now has the dubious distinction of being the third leader of IFS in as many years. 

3. Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle

By Vincent Fernando, CFA, Zero One

• Asus’s 1Q24 earnings beat consensus by 46% thanks to major increase in operating margin driven by costs optimization. Adjusted Asus brand Op profit rose 227% YoY and 98% QoQ.
• Asus will host a major AI PC launch event May 21st, with additional AI PCs launched at Computex in Taiwan June 4th. Will feature Qualcomm Inc (QCOM US) Snapdragon processors.
• Asus confident in an PC upgrade cycle and has guided for sales to rise and margins to expand in the coming quarters. We maintain our Structural Long rating for Asus.

4. Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E

By Vincent Fernando, CFA, Zero One

• Hon Hai reported 1Q24 revenue that fell 9% YoY, however the company reiterated its guidance for significant growth in 2024E and said growth now looks stronger than guided in March.
• Hon Hai’s cloud (including servers) business didn’t grow as much as guided due to material shortages; but AI server revenue up 200% YoY and significant growth is guided for 2024E.
• The traditional server market is rebounding, to grow double digits in 2024E. Hon Hai expects to take market share in 2024. Structural Long but near-term gains could be limited.

5. Himax: Signs of Automotive Demand Rebound; Why Demand Strength Is Different Than NXP and Infineon

By Vincent Fernando, CFA, Zero One

• Automotive display driver IC leader Himax reported 1Q24 results last week that were ahead of guidance. The company also guided for rising margins.
• Management believes 1Q24 represents a cyclical bottom for the company’s financial performance and expects automotive demand to rise in 2H24E.
• Himax rallied but remains 55% below its 2021 highs, yet its market opportunity larger than ever. Himax could be benefitting from different positioning within automotive chips than NXP & Infineon.

6. Optics Earnings (FN, ANET, COHR, LITE, AAOI)

By Douglas O’Laughlin, Fabricated Knowledge

• To make my content readable, this is an optics-only earnings update.
• I will discuss everything together and put together a high-level overview.
• The specific things I am interested in are Marvell’s ZR and custom silicon.

7. Taiwan Tech Weekly: All Eyes on Nvidia Results Next Week; Microsoft Copilot Edge AI To Be Showcased?

By Vincent Fernando, CFA, Zero One

• Taiwan Tech and Nvidia Rally Ahead of Nvidia Earnings Next Week; Microsoft Build Conference Could Showcase Edge AI Copilot
• Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E 
• Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle 

8. Screen Holdings (7735 JP): Guiding for Lower Profits in H2

By Scott Foster, LightStream Research

• FY Mar-24 results were ahead of guidance, but management’s FY Mar-25 forecast has sales flat and profits down in the second half.
• The shares have dropped back 24% from their all-time high, bringing the forward P/E ratio down to 22X.
• China and foundry remain strong while North America and memory pick up. Guidance is probably conservative. Buy into the weakness.

9. Semiconductor Memory. Profits Return & Tailwinds Mount On Surging (& Very Similar) ASP Increases

By William Keating, Ingenuity

• Q124 DRAM revenue $18.2 billion, up 6% QoQ and up 88% YoY. NAND revenue $14.1 billion, up 23.4% QoQ and 68.8% YoY
• ASP increases, HBM, NAND for enterprise SSD and looming shortages for legacy products are all mounting tailwinds for the beleaguered memory segment
• First quarter ASP increases for DRAM & NAND for Micron, SK Hynix & Samsung were almost identical. That’s quite a coincidence..

10. Silergy (6415.TT): Rebounding from the Bottom in 1Q24, It Will Witness Normal Orders Since 2Q24.

By Patrick Liao

• Inventory levels were at 90 days by the end of 1Q24, returning to a normal level.   
• It is expected to see consecutive QoQ growth throughout 2024, with normal orders observed since 2Q24. 
• Although Chinese mature technology is advancing, current analog capacity still falls short of local demand in China.