Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Silergy Corp designs and manufactures a broad range of high performance analog integrated circuits.  The Company's products include single output step down regulators, dual output regulators, single output step by step regulators, power management ICs, step up LED backlight regulator, AC-DC LED lighting controller, DC input LED lighting drivers, LDO regulators, and protection switch

<ul>
<li>In the 3rd quarter of 2024, revenue was NT$4,284 million, the gross margin (GM) was 55%, the operating profit margin (OPM) was 24%, and the net margin was 15%.  </li>
<li>The Gen-4 product line is ramping up and is expected to contribute around 4% of total revenue by the end of 2025. </li>
<li>Chinese current economic stimulus programs may impact demand in the Consumer segment.  </li>
</ul>


In the 3rd quarter of 2024, revenue was NT$4,284 million, the gross margin (GM) was 55%, the operating profit margin (OPM) was 24%, and the net margin was 15%.  
The Gen-4 product line is ramping up and is expected to contribute around 4% of total revenue by the end of 2025. 
Chinese current economic stimulus programs may impact demand in the Consumer segment.  


Silergy (6415.TT): It Will Grow in 4Q24, While Auto Is Expected to Grow to 15% by the End of 2025.

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corporation operates a semiconductor foundry. The Company provides integrated circuit foundry and technology services including the testing, development, design, manufacturing, packaging, and sale of integrated circuits. Semiconductor Manufacturing International offers its products and services around the world.

Semiconductor Manufacturing International Corp (SMIC) (981 HK)

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>In 4Q24, the Company expects revenue to be flat to up 2% QoQ and gross margin to range from 18% to 20%.</li>
<li>2025 will expect AI to grow 10%+, others segment grows about single digits.  </li>
<li>SMIC's capex increase ~60k/8" equivalent capacity this year, and plan to increase around 50k per year.</li>
</ul>


In 4Q24, the Company expects revenue to be flat to up 2% QoQ and gross margin to range from 18% to 20%.
2025 will expect AI to grow 10%+, others segment grows about single digits.  
SMIC's capex increase ~60k/8" equivalent capacity this year, and plan to increase around 50k per year.


Novatek Microelectronics Corp / Equity Bottom-Up

Novatek Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs).  The Company's products are used in telecommunication, computer peripherals, and LCD (liquid crystal display) drivers.

<ul>
<li>The 4Q24 outlook shows a decline of 12% in revenue, 3% in GM, and 15% in OPM compared to the previous quarter.</li>
<li>AI-Related demand is an ongoing trend, with AI smartphones, PCs, and NBs expected to drive replacement demand.</li>
<li>Mass production of expected OLED TDDI is set to begin in 2Q25 and is progressing smoothly with customers.</li>
</ul>


The 4Q24 outlook shows a decline of 12% in revenue, 3% in GM, and 15% in OPM compared to the previous quarter.
AI-Related demand is an ongoing trend, with AI smartphones, PCs, and NBs expected to drive replacement demand.
Mass production of expected OLED TDDI is set to begin in 2Q25 and is progressing smoothly with customers.


Novatek (3034.TT): 4Q24 Revenue Downside of More than 10% QoQ.

Globalwafers Co., Ltd. specializes in silicon wafer manufacturing and also provides solar wafers and crystal rods. The Company possesses a complete production line from ingot growth, slicing, etching, diffusion, polishing to epitaxy. Their products include Epi wafers, polished wafers, etched wafers, ultra thin wafers and deep diffusion wafers.

<ul>
<li>In general, <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT)'</a> 3Q24 revenue, GM, OPM, and prepayment are hitting a recent low in 2024.</li>
<li>GlobalWafers stated that the semiconductor industry is generally recovering for AI, but we do not think that AI can represent the entire semiconductor industry.  </li>
<li>Demand for advanced sub-3nm nodes and AI technologies is expected to increase, which will drive fab utilization.</li>
</ul>


In general, Globalwafers (6488 TT)' 3Q24 revenue, GM, OPM, and prepayment are hitting a recent low in 2024.
GlobalWafers stated that the semiconductor industry is generally recovering for AI, but we do not think that AI can represent the entire semiconductor industry.  
Demand for advanced sub-3nm nodes and AI technologies is expected to increase, which will drive fab utilization.


GlobalWafers (6488.TT): The Recovery Expectation Has Been Delayed from 2H24 to 2025.

Vanguard Intl Semiconductor / Equity Bottom-Up

Vanguard International Semiconductor Corporation offers integrated circuit foundry services.  The Company manufactures 0.18um logic, mixed-signal, analog, high voltage, low power, CMOS RF, flash, embedded memory, and bipolar CMOS DMOS semiconductors.

<ul>
<li>Due to reduced seasonal demand, 4Q24 shipments will decrease by 10% to 12% (QoQ, while the average selling price (ASP) will increase by 3% to 5% QoQ.</li>
<li>Vanguard's investment in <a href="https://www.smartkarma.com/entities/episil-holdings-inc" target="_blank" data-smartkarma-citation="entities:7688:1" rel="noopener">Episil Holdings (3707 TT)</a> is focused on the 8" SiC process, indicating Vanguard's ventures into the 8" SiC foundry sector in the near future.</li>
<li>Vanguard is confident in maintaining a minimum DPS policy of NT$4.5</li>
</ul>


Due to reduced seasonal demand, 4Q24 shipments will decrease by 10% to 12% (QoQ, while the average selling price (ASP) will increase by 3% to 5% QoQ.
Vanguard's investment in Episil Holdings (3707 TT) is focused on the 8" SiC process, indicating Vanguard's ventures into the 8" SiC foundry sector in the near future.
Vanguard is confident in maintaining a minimum DPS policy of NT$4.5


Vanguard (5347.TT): 4Q24 Outlook Is a Bit Better, but Investment in EPISIL Isn't a near Term Payback

Being invited, I joined Sellside, i.e. JPMorgan, Nomura and Macquarie, totally around 9-10 years. Before that, I joined International Data Corp (https://www.idc.com/) to be the Asia Semiconductor analyst for nearly 2 years, and being invited to do personal lectures in TSMC, UMC, Samsung and etc. In my working experiences, I also had the chance to join Taiwanese panel company, AUO (2409.TT) and the buyside, Chinalife (2823.TT), totally for over 1 year.
I obtained MS degree from the Tsing-Hua University. Then I worked in the Taiwan Semiconductor companies for around 11 years. I had several US patents during my stay in the Semiconductor industry.

Being worked in the sellside and buyside, I deeply dived in the Greater China Semiconductor industry and directly covered some companies, like TSMC (2330.TT, TSM.US), UMC (2303.TT, UMC.US), Vanguard (5347.TT), ASE (3711.TT, ASX.US), SPIL (merged with ASE and delisted), KYEC ( 2449.TT), JCET (600584.CH), ASMPT (522.HK), GWC (6488.TT), WinSemi (3105.TT), Mediatek (2454.TT), Silergy (6415.TT), Novatek (3034.TT), Guoxin Micro (002049.CH) etc.