Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul>
<li>In this insight, we discuss the potential impact on the semiconductor supply chain if Russia invades Ukraine. Many semiconductor manufacturers rely on Russian and Ukrainian-sourced materials like neon and palladium. </li>
<li>Our guess is that the vast majority of portfolio managers are NOT likely to change their semiconductor stocks allocations in their portfolios due to concerns on the potential Russia/Ukraine conflict.</li>
<li>Palladium is mainly used to make NAND Flash memory, of which Korea and China are major producers, but fewer Taiwanese companies are engaged in this sector.</li>
</ul>


In this insight, we discuss the potential impact on the semiconductor supply chain if Russia invades Ukraine. Many semiconductor manufacturers rely on Russian and Ukrainian-sourced materials like neon and palladium. 
Our guess is that the vast majority of portfolio managers are NOT likely to change their semiconductor stocks allocations in their portfolios due to concerns on the potential Russia/Ukraine conflict.
Palladium is mainly used to make NAND Flash memory, of which Korea and China are major producers, but fewer Taiwanese companies are engaged in this sector.


Potential Semiconductor Supply Chain Crisis if Russia Invades Ukraine?

Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

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

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>SMIC had reported a very exciting outlook in 1Q22, and both of revenue and GM are rising up to US$1,817~1,848.7mn and 36~38% respectively, which is growing at 15~17% QoQ.</li>
<li>SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because of the unprecedently foundry demands. The Capex plan is ~US$5bn in 2022, which's lager than UMC’s US$3bn.</li>
<li>China is still 3-4 generations behind TSMC, which is a big gap to catch up with.</li>
</ul>


SMIC had reported a very exciting outlook in 1Q22, and both of revenue and GM are rising up to US$1,817~1,848.7mn and 36~38% respectively, which is growing at 15~17% QoQ.
SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because of the unprecedently foundry demands. The Capex plan is ~US$5bn in 2022, which's lager than UMC’s US$3bn.
China is still 3-4 generations behind TSMC, which is a big gap to catch up with.


SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?

ASE Technology Holding   / Equity Bottom-Up

<ul>
<li>Hope we could be wrong, but the outlook of 1Q22 could be a bit bearish since we believe ASE Holding (ASEH) revenue/GM will reach ~NT$165bn/19.4% and ~NT$150bn/19.5% in 4Q21/1Q22 respectively. </li>
<li>China has massive local efforts on OSAT business because of low entry barrier. In our views, China can exist very well in lower profit margin to compete.</li>
<li>The worldwide OSAT (Outsourced Semiconductor Assembly and Testing) companies of scale are majorly centered in Asia Pacific area.</li>
</ul>


Hope we could be wrong, but the outlook of 1Q22 could be a bit bearish since we believe ASE Holding (ASEH) revenue/GM will reach ~NT$165bn/19.4% and ~NT$150bn/19.5% in 4Q21/1Q22 respectively. 
China has massive local efforts on OSAT business because of low entry barrier. In our views, China can exist very well in lower profit margin to compete.
The worldwide OSAT (Outsourced Semiconductor Assembly and Testing) companies of scale are majorly centered in Asia Pacific area.


ASE Holding (ASX.US, 3711.TT): The Outlook of 1Q22 Could Be a Bit Bearish as Actionable

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>In our estimate, Vanguard’s 4Q21 revenue/GM is NT$12.6bn/46.3%, and 1Q22 revenue/GM is NT$12.3bn/46.1% respectively.</li>
<li>Vanguard has about 30% capacity utilized by TSMC’s foundry products. In technology deliverables, Vanguard also competes with TSMC for manufacturing excellence, which creates an internal competition.</li>
<li>Vanguard has dealt with their clients to share the expansion cost. Certainly, there is almost no such trust-worthy partnership, except Vanguard who has TSMC to back up.</li>
</ul>


In our estimate, Vanguard’s 4Q21 revenue/GM is NT$12.6bn/46.3%, and 1Q22 revenue/GM is NT$12.3bn/46.1% respectively.
Vanguard has about 30% capacity utilized by TSMC’s foundry products. In technology deliverables, Vanguard also competes with TSMC for manufacturing excellence, which creates an internal competition.
Vanguard has dealt with their clients to share the expansion cost. Certainly, there is almost no such trust-worthy partnership, except Vanguard who has TSMC to back up.


Vanguard (5347.TT): 8" Capacity Tightness with TSMC Standing Behind as Actionable

<ul>
<li>The GlobalWafers announced the deal to merge Siltronic did not get the approval by Germany government this morning. <strong>We maintain our Target Price for GlobalWafers doesn’t change at NT$880~960.</strong>
</li>
<li>The GlobalWafers points out that the results will not influence business activities, and the European market remains the importance for GlobalWafers.</li>
<li>
<strong>Comparing to 20s years ago, we think the semiconductor market has experienced a dramatic changes already</strong>.</li>
</ul>


The GlobalWafers announced the deal to merge Siltronic did not get the approval by Germany government this morning. We maintain our Target Price for GlobalWafers doesn’t change at NT$880~960.

The GlobalWafers points out that the results will not influence business activities, and the European market remains the importance for GlobalWafers.

Comparing to 20s years ago, we think the semiconductor market has experienced a dramatic changes already.


GlobalWafers (6488.TT): Maintain Target Price at NT$880-960 for Siltronic Mergence Failed

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)

TSMC (Taiwan Semiconductor Manufacturing)

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TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

Potential Semiconductor Supply Chain Crisis if Russia Invades Ukraine?

We discuss the potential impact on the semiconductor supply chain if Russia invades Ukraine. Many semiconductor manufacturers rely on Russian and...

Douglas Kim

SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?

SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because the unprecedently foundry demands. The Capex plan is ~US$5bn in...

Patrick Liao

ASE Holding (ASX.US, 3711.TT): The Outlook of 1Q22 Could Be a Bit Bearish as Actionable

Hope we could be wrong, but the outlook of 1Q22 could be a bit bearish since we believe ASE Holding (ASEH) revenue/GM will reach ~NT$165bn/19.4%...

Patrick Liao

Vanguard (5347.TT): 8" Capacity Tightness with TSMC Standing Behind as Actionable

In our estimate, Vanguard’s 4Q21 revenue/GM is NT$12.6bn/46.3%, and 1Q22 revenue/GM is NT$12.3bn/46.1% respectively. Vanguard dealt with clients to...

Patrick Liao

GlobalWafers (6488.TT): Maintain Target Price at NT$880-960 for Siltronic Mergence Failed

The GlobalWafers announces the deal to merge Siltronic did not get the approval by Germany government this morning. We maintain our target price...

Patrick Liao

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52-week Range

Market Cap (USDm)

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