1. As Expected from Our Earlier BOM/CoWoS Analysis, Consensus to Raise Nvidia Estimates Inevitably
- Nvidia reports/guides a better than expected 3Q/4Q23 sales, margin, and EPS on stronger AI GPU sales growth of nearly 3x.
- Nvidia reports a healthy 3.04 MOI, down 5% q/q and down 37% y/y and contributes nicely to account for 9% of TSMC sales.
- In spite of concerns on good news priced in, seasonal weaker 1Q24, and MI300X/ASIC alternative AI solutions, we expect more raise to come in 2024-2025E.
2. NVIDIA. Another Beat & Raise, Yet Shares Slide. But Why?
- Q3FY24 revenues of 18.1 billion, up 34% QoQ and up a staggering 206% from the year ago period. It was also ~$2 billion higher than the guided number
- NVIDIA’s current quarter forecast was for a further revenue raise of almost $2 billion with gross margins staying roughly flat at 74.5%
- Share price reaction was negative, closing down 2.5% the following day. But why?
3. A Turnaround Story for Intel by Accelerating 3nm Outsourcing to TSMC?
- By offering 15k and 30k/m 3nm capacity by 4Q24/4Q25 to Intel, TSMC will see Intel becoming one of its top 3 customers by accounting for 12% of TSMC 2025 sales
- By leveraging 3nm outsourcing, Intel will have incremental sales/capacity growth of 19-20% per year by accounting for 28%/44% of sales in 2024/2025, beating consensus’ 14%/9% y/y sales growth for 2024/2025.
- We estimate 30-35% 5 years EPS CAGR for Intel, driven by TSMC’s 2/3nm foundry support, lower cost and process R&D, lower capex and depreciation cost, and AI PC CPU launch.
4. Nvidia Still Cheap: Enterprise AI Next Driver to Kick-In; Adjusting Our Taiwan AI Plays Short Hedge
- Nvidia’s street-beating results indicate strong growth to continue; Generative AI demand will next expand from startups, consumer internet, and cloud service providers increasingly to enterprise AI-linked demand.
- Nvidia is not expensive despite recent market concerns. We believe Nvidia can meet or even beat its current calendar year 2024 earnings expectations and forward PE is cheap.
- Short a basket of Taiwan AI concept stocks vs. a core Nvidia long position rather than take profits in Nvidia. We have swapped one Taiwan stock in our short basket.
5. OpenAI Boardroom Battle: Safety First
- OpenAI was founded in 2015 by investors, including Elon Musk, Reid Hoffman, Peter Thiel, AWS, and YC Research.
- The goal was to pursue Artificial General Intelligence (AGI) safely for the benefit of humanity.
- There was an initial pledge of $1 billion, but the money that came in was $100 million from Elon Musk and $30 million from Open Philanthropy.
6. TSMC (2330.TT; TSM.US): N2 Technology Is Scheduled in 2025F.
- TSMC’s N2 technology is currently undergoing verification for a 256Mb SRAM, and it will be implemented in Hsinchu and Kaohsiung, Taiwan.
- The TSMC N3 technology capacity was 65kwpm in 3Q23, and the current version is N3B, which were adopted by Apple for the iPhone 15 this year.
- Both N3E and N2 only have 20 layers EUV masks.
7. Taiwan Tech Weekly: Nvidia Results Today; Taiwan Market Surged But Why It Might Be Still Underowned
- Nvidia Results Today U.S. Time — Taiwan Market Surged Recently on Improving AI/Semiconductor Expectations and Potential for Easing U.S.-China Tensions.
- Taiwan: Underowned, Yet Gaining on Peers. Our Fellow Insight Provider Analyzes Why Taiwan Might Still Be Underowned.
- Asia Geopolitics: Following Biden-Xi Meeting, Asia Is a Safer Place For Now.
8. Taiwan Dual Listings Monitor: TSMC Premium Slumps; CHT & ChipMOS at Rare Opportunity Levels
- TSMC: 7.4% Premium — Previous Short Has Worked, Now Wait For Better Levels
- ChipMOS: -2.0% Discount — Good Level to Go Long the Spread
- CHT: -1.2% Discount — Good Level to Go Long the Spread
9. Q323 Memory Segment Review, Outlook
- Q323 DRAM revenues amounted to $13.210 billion, up a robust 19.25% QoQ, but still down 27% from the year-ago period.
- In the case of NAND, Q323 revenues amounted to $9.3 billion, up 4% QoQ but down 31.7% YoY.
- All memory players remain loss making. We don’t anticipate a return to black until Q224.
10. What Oct US SEMI Equipment and Sep SIA/WSTS Global Sales Tell Us?
- SEMI reports Oct front/back end equipment billings decline of 14% and 18% y/y, respectively, which was improved from 18% and 24% y/y decline in September, implying early signs of recovery.
- WSTS/SIA earlier reported September sales of US$44.89bn, up 1.9% m/m and down only 4% y/y (vs. 16% decline in June), suggesting semi sales y/y improvement and pass the cycle trough.
- We are positive on SOX INDEX likely to break new high of over 4,000 in six months and expect PC/smartphone/training AI semi and DRAM semi/equipment vendors to outperform in short.
Weekly Top Ten Tech Hardware and Semiconductor
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