Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Tokyo Electron (8035 JP): Getting Ahead of Itself

Disco (6146 JP): 5-To-8 Month Lead Times in the Price

Tokyo Electron (8035 JP): As Good as It Gets

November Semiconductor Sales Continue Upward Trend

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

The rapid growth of remote work and home entertainment caused by COVID-19, 5G mobile telecom, the industrial internet of things and vehicle electrification have pushed the semiconductor industry close to full capacity.<ul>
<li>In recent weeks, Volkswagen, Bosch, Continental, Toyota, Nissan, Honda, Subaru, VW, Ford and Fiat Chrysler have announced production cuts or shipment delays due to a shortage of semiconductors. </li>
<li>In December, Nvidia and AMD reported shortages of GDDR6 memory.</li>
<li>Samsung may invest more than $30 billion in its semiconductor business this year. On January 9, Japan's Nikkei newspaper reported that Chipmaking equipment manufacturers say the company has provided order plans for 2021 that point to a further 20% to 30% increase in spending.
</li>
</ul>This should support semiconductor pricing, cash flow and capital spending, possibly lifting sales of semiconductor equipment above SEMI's 4.4% growth forecast for 2021. It should also make concerns over December quarter results less relevant as market attention shifts to the year ahead.Investors in Tokyo Electron (TEL) and other makers of semiconductor production, assembly and test equipment should benefit, even if the shares appear to be overbought.TEL's 1H results were well ahead of guidance and full-year FY Mar-21 guidance was raised. But the new guidance implies a weaker 2H. In our estimation, it too is likely to prove conservative.

The rapid growth of remote work and home entertainment caused by COVID-19, 5G mobile telecom, the industrial internet of things and vehicle electrification have pushed the semiconductor industry close to full capacity.
In recent weeks, Volkswagen, Bosch, Continental, Toyota, Nissan, Honda, Subaru, VW, Ford and Fiat Chrysler have announced production cuts or shipment delays due to a shortage of semiconductors. 
In December, Nvidia and AMD reported shortages of GDDR6 memory.
Samsung may invest more than $30 billion in its semiconductor business this year. On January 9, Japan's Nikkei newspaper reported that Chipmaking equipment manufacturers say the company has provided order plans for 2021 that point to a further 20% to 30% increase in spending.

This should support semiconductor pricing, cash flow and capital spending, possibly lifting sales of semiconductor equipment above SEMI's 4.4% growth forecast for 2021. It should also make concerns over December quarter results less relevant as market attention shifts to the year ahead.Investors in Tokyo Electron (TEL) and other makers of semiconductor production, assembly and test equipment should benefit, even if the shares appear to be overbought.TEL's 1H results were well ahead of guidance and full-year FY Mar-21 guidance was raised. But the new guidance implies a weaker 2H. In our estimation, it too is likely to prove conservative. 

Tokyo Electron (8035 JP): Semiconductor Shortage Points to Stronger Year Ahead