Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.</li>
<li>Faster ramp on N3, likely N3E, N3P than competitor's. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024. </li>
<li>TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12" mature technology despite better demand 8" specialty technology. </li>
</ul>


TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.
Faster ramp on N3, likely N3E, N3P than competitor's. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024. 
TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12" mature technology despite better demand 8" specialty technology. 


What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors

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

TSMC (Taiwan Semiconductor Manufacturing) (TSM US)

<ul>
<li>U.S. expands China chip restrictions -- Implementing lower performance thresholds and further restricting sales via third party countries.</li>
<li>Intel and AMD chips likely also impacted, as well as equipment from ASML, Lam, Applied Materials, Tokyo Electron and others. We will learn more today from Lam and ASML results.</li>
<li>Taiwan AI Plays also to be impacted -- Shares of Wistron, Quanta, Gold Circuit, Asia Vital Gigabyte, Super Micro, Alchip appear precarious.</li>
</ul>


U.S. expands China chip restrictions -- Implementing lower performance thresholds and further restricting sales via third party countries.
Intel and AMD chips likely also impacted, as well as equipment from ASML, Lam, Applied Materials, Tokyo Electron and others. We will learn more today from Lam and ASML results.
Taiwan AI Plays also to be impacted -- Shares of Wistron, Quanta, Gold Circuit, Asia Vital Gigabyte, Super Micro, Alchip appear precarious.


U.S. Expands China Chip Restrictions: Taiwan AI Names Most at Risk of Pullback

Equity Long-Short

Mo Aziz

<ul>
<li>Near-Monopoly coater/developer share, 29.6% ROE, zero debt — but FY2026 profit quality is weak and have yet to see the earnings uplift.</li>
<li>H1 FY2027 guided +33% revenue on 2nm, HBM and packaging demand, but management withheld full-year guidance and China, 34% of FY2026 sales, is rolling over.</li>
<li>Initiate NEUTRAL, PT ¥73,000 — 50x FY2027E EPS of ¥1,465, -3.1% downside. Own the franchise, not this multiple; reassess below ¥62,000 or on the October guide.</li>
</ul>


Near-Monopoly coater/developer share, 29.6% ROE, zero debt — but FY2026 profit quality is weak and have yet to see the earnings uplift.
H1 FY2027 guided +33% revenue on 2nm, HBM and packaging demand, but management withheld full-year guidance and China, 34% of FY2026 sales, is rolling over.
Initiate NEUTRAL, PT ¥73,000 — 50x FY2027E EPS of ¥1,465, -3.1% downside. Own the franchise, not this multiple; reassess below ¥62,000 or on the October guide.


Tokyo Electron (8035 JP) - Initiate with a Neutral: Priced For A Year It Hasn't Booked Yet

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

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> and <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>'s weights in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> exceed 10% and the stocks will be capped at the September rebalance.</li>
<li>Passive trackers hold a lot of both stocks, and the capping flows will increase the real float for both stocks between 2.5%-5%.</li>
<li>The capping in <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron</a> and <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp</a> will result in funding inflows to the other index members. One-way turnover will be 1.8% resulting in a round-trip trade of JPY 1,715bn.</li>
</ul>



Tokyo Electron (8035 JP) and Advantest Corp (6857 JP)'s weights in the Nikkei 225 (NKY INDEX) exceed 10% and the stocks will be capped at the September rebalance.
Passive trackers hold a lot of both stocks, and the capping flows will increase the real float for both stocks between 2.5%-5%.
The capping in Tokyo Electron and Advantest Corp will result in funding inflows to the other index members. One-way turnover will be 1.8% resulting in a round-trip trade of JPY 1,715bn.


Nikkei225 Index Capping: Tokyo Electron, Advantest & The Reverse Funding Trade

Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

<ul><li>FY03/26 revenue reached JPY2.4tn (+0.5% YoY), with operating profit at JPY624.9bn (-10.4% YoY) and net income JPY574.5bn (+5.6% YoY).</li><li>FY03/27 1H guidance forecasts revenue of JPY1.57tn (+33.1% YoY), operating profit JPY431.0bn (+42.2% YoY), and net income JPY328.0bn (+35.7% YoY).</li><li>New semiconductor production equipment sales forecasted at JPY1.20tn (+41.2% YoY), with DRAM sales increasing by 70.3% YoY.</li></ul>

FY03/26 revenue reached JPY2.4tn (+0.5% YoY), with operating profit at JPY624.9bn (-10.4% YoY) and net income JPY574.5bn (+5.6% YoY).FY03/27 1H guidance forecasts revenue of JPY1.57tn (+33.1% YoY), operating profit JPY431.0bn (+42.2% YoY), and net income JPY328.0bn (+35.7% YoY).New semiconductor production equipment sales forecasted at JPY1.20tn (+41.2% YoY), with DRAM sales increasing by 70.3% YoY.

Tokyo Electron (8035 JP): Full-year FY03/26 flash update

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors

What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors; TSMC expects 2024 semi sector in recovery with 20...

Andrew Lu

U.S. Expands China Chip Restrictions: Taiwan AI Names Most at Risk of Pullback

Intel and AMD chips likely also impacted, as well as equipment from ASML, Lam, Applied Materials, Tokyo Electron and others. Rather than sell...

Vincent Fernando, CFA