Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>Both TSMC and UMC saw about 20% cut in automotive industry wafer sales in 3Q23, which was 20% worse than customers' guidance.</li>
<li>Reasons for discrepancies: 1. IDMs cut foundry orders but keep in house utilization higher; 2. Worse than expected US auto factories strike; 3. Rate hike results in worse car sales.</li>
<li>We suggest clients to be cautious on the investment of automotive supply chain for the next 3-6 months</li>
</ul>


Both TSMC and UMC saw about 20% cut in automotive industry wafer sales in 3Q23, which was 20% worse than customers' guidance.
Reasons for discrepancies: 1. IDMs cut foundry orders but keep in house utilization higher; 2. Worse than expected US auto factories strike; 3. Rate hike results in worse car sales.
We suggest clients to be cautious on the investment of automotive supply chain for the next 3-6 months


Top Foundries See Cut in Automotive Industry Wafer Sales, Implications

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> raised US$26.5bn selling 177.9m shares of <a href="https://www.smartkarma.com/entities/sk-hynix-inc-a4e8e2ec-1a75-4752-b58c-eaa0d074d145" target="_blank" data-smartkarma-citation="entities:50283:1" rel="noopener">SK Hynix (SKHY US)</a> at US$149/share. <a href="https://www.smartkarma.com/entities/sk-hynix-inc-a4e8e2ec-1a75-4752-b58c-eaa0d074d145" target="_blank" data-smartkarma-citation="entities:50283:1" rel="noopener">SK Hynix (SKHY US)</a> closed at a 15.5% premium to the local line.</li>
<li>There will be passive buying in the local shares and the ADR line over the next few months. The ADR line could trade at a premium in the near-term.</li>
<li>We expect the ADR to trade between a 30-35% premium in the very short-term and that could drift lower following the limited passive buying in the ADR.</li>
</ul>



SK Hynix (000660 KS) raised US$26.5bn selling 177.9m shares of SK Hynix (SKHY US) at US$149/share. SK Hynix (SKHY US) closed at a 15.5% premium to the local line.
There will be passive buying in the local shares and the ADR line over the next few months. The ADR line could trade at a premium in the near-term.
We expect the ADR to trade between a 30-35% premium in the very short-term and that could drift lower following the limited passive buying in the ADR.


SK Hynix (000660 KS; SKHY US): Updated Index Flows/Timing & Where Could the Premium Settle?

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<ul><li>The report highlights a significant increase in trading volumes for derivatives, particularly in options and swaps markets.</li><li>Regulatory changes have impacted the reporting requirements for financial institutions, affecting compliance costs and operational procedures.</li><li>Technological advancements in algorithmic trading have led to improved execution speeds and reduced transaction costs for market participants.</li></ul>

The report highlights a significant increase in trading volumes for derivatives, particularly in options and swaps markets.Regulatory changes have impacted the reporting requirements for financial institutions, affecting compliance costs and operational procedures.Technological advancements in algorithmic trading have led to improved execution speeds and reduced transaction costs for market participants.

SGX Equity Derivatives Monthly Highlights Jun 2026

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>We’re going thru another iteration of the “AI peak” theory, driven by Hyperscalers’ declining Free Cash Flow. Coinciding with an “AI bubble” narrative, following the April-May stock rally.  </li>
<li>Stocks aren’t expensive. Semiconductors are trading at average PEx (17.7x forward EPS), Hyperscalers at -1 standard deviation (21.1x forward EPS). No valuations bubble. Expectations bubble? Consensus forecasts look reasonable.</li>
<li>Hyperscalers’ declining Free Cash Flows is true. Increasing Debt issuance is true. Also true: Cloud revenues are accelerating, margins are expanding. Most extraordinary is the increase in Remaining Performance Obligations.</li>
</ul>


We’re going thru another iteration of the “AI peak” theory, driven by Hyperscalers’ declining Free Cash Flow. Coinciding with an “AI bubble” narrative, following the April-May stock rally.  
Stocks aren’t expensive. Semiconductors are trading at average PEx (17.7x forward EPS), Hyperscalers at -1 standard deviation (21.1x forward EPS). No valuations bubble. Expectations bubble? Consensus forecasts look reasonable.
Hyperscalers’ declining Free Cash Flows is true. Increasing Debt issuance is true. Also true: Cloud revenues are accelerating, margins are expanding. Most extraordinary is the increase in Remaining Performance Obligations.


AI Is a Bubble, Again? Stocks Aren’t Expensive. Hyperscalers’ Future Revenue Tells a Different Story

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

<ul>
<li>Global Unichip (3443 TT) is Taiwan's leading ASIC (application-specific integrated circuit) design-service company, with TSMC (2330 TT) as its largest shareholder.</li>
<li>GUC has become a leveraged play on US hyperscaler custom silicon. Cloud is now 81% of sales and the US 68%,</li>
<li>Management did not name its CPU customers, but the public record points firmly at Google.</li>
</ul>


Global Unichip (3443 TT) is Taiwan's leading ASIC (application-specific integrated circuit) design-service company, with TSMC (2330 TT) as its largest shareholder.
GUC has become a leveraged play on US hyperscaler custom silicon. Cloud is now 81% of sales and the US 68%,
Management did not name its CPU customers, but the public record points firmly at Google.


TechChain Insights Q&A: GUC's AI Boom Is Now a CPU Story, Testing the Next Bottleneck

Taiwan

Taiwan Semiconductor Manufacturing Company, Ltd. manufactures and markets integrated circuits. The Company provides the following services: wafer manufacturing, wafer probing, assembly and testing, mask production, and design services. TSMC's ICs are used in computer, communication, consumer electronics, automotive, and industrial equipment industries.

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TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

Top Foundries See Cut in Automotive Industry Wafer Sales, Implications

Top foundries see worse than expected automotive wafer sales, implying more automotive supply chain members are going to miss earnings expectation...

Andrew Lu

SK Hynix (000660 KS; SKHY US): Updated Index Flows/Timing & Where Could the Premium Settle?

With the market appearing to have finally worked out (as we stated in the Insight and based on the prospectus) that SK Hynix's conversion could be...

Brian Freitas

SGX Equity Derivatives Monthly Highlights Jun 2026

The report highlights a significant increase in trading volumes for derivatives, particularly in options and swaps markets. Regulatory changes...

Singapore Exchange Ltd (SGX)

AI Is a Bubble, Again? Stocks Aren’t Expensive. Hyperscalers’ Future Revenue Tells a Different Story

AI peak theory revisited as Hyperscalers' declining Free Cash Flow sparks "AI bubble" narrative. Valuations not bubble, expectations not inflated....

Nicolas Baratte

TechChain Insights Q&A: GUC's AI Boom Is Now a CPU Story, Testing the Next Bottleneck

Taiwan's Global Unichip is a key player in ASIC design, heavily tied to US hyperscaler custom silicon, with Google likely a major customer.

Vincent Fernando, CFA

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Top Foundries See Cut in Automotive Industry Wafer Sales, Implications

Top foundries see worse than expected automotive wafer sales, implying more automotive supply chain members are going to miss earnings expectation...

Andrew Lu

SK Hynix (000660 KS; SKHY US): Updated Index Flows/Timing & Where Could the Premium Settle?

With the market appearing to have finally worked out (as we stated in the Insight and based on the prospectus) that SK Hynix's conversion could be...

Brian Freitas

SGX Equity Derivatives Monthly Highlights Jun 2026

The report highlights a significant increase in trading volumes for derivatives, particularly in options and swaps markets. Regulatory changes...

Singapore Exchange Ltd (SGX)

AI Is a Bubble, Again? Stocks Aren’t Expensive. Hyperscalers’ Future Revenue Tells a Different Story

​AI peak theory revisited as Hyperscalers' declining Free Cash Flow sparks "AI bubble" narrative. Valuations not bubble, expectations not inflated....

Nicolas Baratte

TechChain Insights Q&A: GUC's AI Boom Is Now a CPU Story, Testing the Next Bottleneck

​Taiwan's Global Unichip is a key player in ASIC design, heavily tied to US hyperscaler custom silicon, with Google likely a major customer.

Vincent Fernando, CFA

AI peak theory revisited as Hyperscalers' declining Free Cash Flow sparks "AI bubble" narrative. Valuations not bubble, expectations not inflated....

Taiwan's Global Unichip is a key player in ASIC design, heavily tied to US hyperscaler custom silicon, with Google likely a major customer.