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

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>TSMC reported 3Q23 results yesterday -- Gross margin beat expectations and remains near historical highs.</li>
<li>TSMC maintains expectation of a 15-20% earnings CAGR through 2026E. Gross margin guided to remain near all-time highs.</li>
<li>Accumulate TSMC as a Structural Long position -- Undemanding multiple can drive Target Price NT$760 for ~40% Upside.</li>
</ul>


TSMC reported 3Q23 results yesterday -- Gross margin beat expectations and remains near historical highs.
TSMC maintains expectation of a 15-20% earnings CAGR through 2026E. Gross margin guided to remain near all-time highs.
Accumulate TSMC as a Structural Long position -- Undemanding multiple can drive Target Price NT$760 for ~40% Upside.


TSMC Results Highlight PC, Smartphone, Auto Turn-Arounds; Undemanding Valuation Can Drive 40% Upside

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 54.3%/ 41.7%/ NT$8.14/ 25.8% in 3Q23. The revenue/ GMO/ OPM is US$18.8-19.6bn/ 51.5-53.5%; OPM: 39.5-41.5% in 4Q23F guidance.</li>
<li>Moving into 4Q23F, TSMC expects their business to be supported by smartphone seasonality, while AI-related demand continues to be strong. </li>
<li>TSMC anticipates 2024F to experience healthy growth, and TSMC has noticed a resurgence in demand for smartphones and PCs.</li>
</ul>


The revenue/ GM/ OPM/ EPS/ ROE is USD$17.57b/ 54.3%/ 41.7%/ NT$8.14/ 25.8% in 3Q23. The revenue/ GMO/ OPM is US$18.8-19.6bn/ 51.5-53.5%; OPM: 39.5-41.5% in 4Q23F guidance.
Moving into 4Q23F, TSMC expects their business to be supported by smartphone seasonality, while AI-related demand continues to be strong. 
TSMC anticipates 2024F to experience healthy growth, and TSMC has noticed a resurgence in demand for smartphones and PCs.


TSMC (2330.TT;TSM.US): Lukewarm 4Q23F Outlook, and Hope to Experience a Healthy Growth in 2024F.

<ul>
<li>We change our stance to be a bit bullish for <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a>.</li>
<li>In 4Q23F, MediaTek's outlook is getting a bit stronger upside.</li>
<li>The Smartphone market is turning positive, but it's too early to claim a fully rebound.</li>
</ul>


We change our stance to be a bit bullish for Mediatek Inc (2454 TT).
In 4Q23F, MediaTek's outlook is getting a bit stronger upside.
The Smartphone market is turning positive, but it's too early to claim a fully rebound.


MediaTek (2454.TT): Smartphone Is Turning a Bit Stronger

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>TSMC and ASML will report results this week. We may get additional detail about the scope of AI-related demand as a medium-term driver for the semiconductor industry.</li>
<li>Many Taiwan AI plays were top losers last week. Separately, the U.S. is expected to announce new tech restrictions for China this week.</li>
<li>SK Hynix is reportedly working closely with Mediatek to integrate some of its most advanced memory in Mediatek's flagship Dimensity chips. Mediatek was a top gainer last week.</li>
</ul>


TSMC and ASML will report results this week. We may get additional detail about the scope of AI-related demand as a medium-term driver for the semiconductor industry.
Many Taiwan AI plays were top losers last week. Separately, the U.S. is expected to announce new tech restrictions for China this week.
SK Hynix is reportedly working closely with Mediatek to integrate some of its most advanced memory in Mediatek's flagship Dimensity chips. Mediatek was a top gainer last week.


Taiwan Tech Weekly: TSMC & ASML Results This Week; Taiwan AI Plays Top Losers

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>The 4Q23F outlook is still coming down, but it’s not as worse as we originally expected.</li>
<li>Samsung is staying a very stable demand for 28nm capacity in UMC.</li>
<li>Based on our estimates, the wafer ASP is clearly increasing from 2Q22 to 4Q23F, despite a decline in demand from 4Q22 until now.</li>
</ul>


The 4Q23F outlook is still coming down, but it’s not as worse as we originally expected.
Samsung is staying a very stable demand for 28nm capacity in UMC.
Based on our estimates, the wafer ASP is clearly increasing from 2Q22 to 4Q23F, despite a decline in demand from 4Q22 until now.


UMC (2303.TT): We Estimate The Outlook Is Down a Bit to Lower QoQ in 4Q23F

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.

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

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TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC Results Highlight PC, Smartphone, Auto Turn-Arounds; Undemanding Valuation Can Drive 40% Upside

TSMC maintained its expectation of a 15-20% earnings CAGR through 2026E. It also reiterated its view that it can maintain its gross margin near all...

Vincent Fernando, CFA

TSMC (2330.TT;TSM.US): Lukewarm 4Q23F Outlook, and Hope to Experience a Healthy Growth in 2024F.

TSMC expects their business to be supported by smartphone seasonality, while AI-related demand continues to be strong. TSMC anticipates 2024F to...

Patrick Liao

MediaTek (2454.TT): Smartphone Is Turning a Bit Stronger

We change our stance to be slightly bullish for MediaTek. In 4Q23F, MediaTek's outlook is becoming stronger. The smartphone market is turning...

Patrick Liao

Taiwan Tech Weekly: TSMC & ASML Results This Week; Taiwan AI Plays Top Losers

SK Hynix is reportedly working closely with Mediatek to integrate some of its most advanced memory in Mediatek's flagship Dimensity chips. Mediatek...

Vincent Fernando, CFA

UMC (2303.TT): We Estimate The Outlook Is Down a Bit to Lower QoQ in 4Q23F

The 4Q23F outlook is coming down, but it’s not as worse as we originally expected. Samsung stays a very stable demand for 28nm capacity in UMC....

Patrick Liao

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