TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<div>
<p>As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.</p>
</div>
<div>
<div>
<div class="content-highlight">
<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
</div>
</div>
</div>


As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.




Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.




TMT Weekly:  3 Things that Stood Out The Week of 10/16/​​​​2020

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<p>Following the appointment of Lisa Su as CEO in 2014, AMD has staged a stunning turnaround headlined by its Ryzen series of consumer-focused processors. Its recent announcement on Zen 3 cements this and raises questions for both Intel and Nividia as the (formerly?) dominant players in their respective markets. It also has implications for the Arm acquisition, which was on shaky ground already, and that is before even considering what a Xilinx acquisition could mean for the industry.</p>

Following the appointment of Lisa Su as CEO in 2014, AMD has staged a stunning turnaround headlined by its Ryzen series of consumer-focused processors. Its recent announcement on Zen 3 cements this and raises questions for both Intel and Nividia as the (formerly?) dominant players in their respective markets. It also has implications for the Arm acquisition, which was on shaky ground already, and that is before even considering what a Xilinx acquisition could mean for the industry.

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

President

Thomas Coughlin

Coughlin Associates

Thematic (Sector/Industry)

<p>NVIDIA leads in market share of GPUs with its data center GPU business now almost as big as its gaming PC business.  The company is introducing its BlueField-2 Data Processing Units (DPUs), based upon technology from its Mellanox acquisition, in combination with open source management software, to create demand for another important data center domain specific processor that could generate revenue matching or exceeding that from NVIDIA's GPUs.</p>

NVIDIA leads in market share of GPUs with its data center GPU business now almost as big as its gaming PC business.  The company is introducing its BlueField-2 Data Processing Units (DPUs), based upon technology from its Mellanox acquisition, in combination with open source management software, to create demand for another important data center domain specific processor that could generate revenue matching or exceeding that from NVIDIA's GPUs.

NVIDIA to Increase Its Data Center Business with DPUs

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

<p>The spread of the global pandemic has resulted in the strongest two consecutive quarters on record for server sales and led to <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel</a> beating its second quarter forecast by nearly one billion dollars. This strength in server has spilled over to the DRAM and NAND segments with both staging robust recoveries from the protracted down cycle experienced in 2019. That situation may be coming to an abrupt end however. A key leading indicator suggests that server sales will fall sharply in the coming months. We also expect both DRAM and NAND prices to follow suit. Here's why.   </p>

The spread of the global pandemic has resulted in the strongest two consecutive quarters on record for server sales and led to Intel beating its second quarter forecast by nearly one billion dollars. This strength in server has spilled over to the DRAM and NAND segments with both staging robust recoveries from the protracted down cycle experienced in 2019. That situation may be coming to an abrupt end however. A key leading indicator suggests that server sales will fall sharply in the coming months. We also expect both DRAM and NAND prices to follow suit. Here's why.   

Server CPU, DRAM, NAND Sales Heading For A Significant Decline As Inventory Digestion Commences.

<p>The much-anticipated acquisition by <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA</a> of <a href="https://www.smartkarma.com/entities/arm-holdings-plc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">Arm</a> from <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank</a> was formally <a href="https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai" target="_blank" rel="noopener">announced</a> on Monday. The transaction is valued at $40 billion, an approximately equal combination of cash and NVIDIA stock.</p><p>On the surface the deal looks strategically solid from NVIDIA's perspective. It places the company at the center of Arm's one hundred and eighty billion connected device ecosystem. Perhaps even more importantly, it opens up the possibility of an outright assault on <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel's</a> data center dominance by adding Arm-based server processors to complement NVIDIA's existing lineup of GPUs and interconnect.</p><p>Underneath the surface however, this deal is fraught with issues and risks. While Arm has been a very successful company, their growth is flatlining as smartphone sales stagnate. Furthermore, we see the rise of RISC-V as a very real threat to Arm's business model in the coming years. Arm has never competed with its customers. Under NVIDIA ownership, this will be virtually impossible to avoid.</p><p>From a regulatory perspective, Arm IP moving under american ownership will raise the very real prospect that this technology will become a future weapon in the US-China trade and technology wars. In today's environment, it's difficult to see why China would agree to facilitate that possibility.</p><p>All in all we think this deal is not as good as it seems on the surface and that it will be practically impossible to get through the regulatory approval process. </p>

The much-anticipated acquisition by NVIDIA of Arm from Softbank was formally announced on Monday. The transaction is valued at $40 billion, an approximately equal combination of cash and NVIDIA stock.On the surface the deal looks strategically solid from NVIDIA's perspective. It places the company at the center of Arm's one hundred and eighty billion connected device ecosystem. Perhaps even more importantly, it opens up the possibility of an outright assault on Intel's data center dominance by adding Arm-based server processors to complement NVIDIA's existing lineup of GPUs and interconnect.Underneath the surface however, this deal is fraught with issues and risks. While Arm has been a very successful company, their growth is flatlining as smartphone sales stagnate. Furthermore, we see the rise of RISC-V as a very real threat to Arm's business model in the coming years. Arm has never competed with its customers. Under NVIDIA ownership, this will be virtually impossible to avoid.From a regulatory perspective, Arm IP moving under american ownership will raise the very real prospect that this technology will become a future weapon in the US-China trade and technology wars. In today's environment, it's difficult to see why China would agree to facilitate that possibility.All in all we think this deal is not as good as it seems on the surface and that it will be practically impossible to get through the regulatory approval process. 

NVIDIA+Arm. Strategically Solid But Practically Impossible.

United States

Advanced Micro Devices, Inc. (AMD) produces semiconductor products and devices. The Company offers products such as microprocessors, embedded microprocessors, chipsets, graphics, video and multimedia products and supplies it to third-party foundries, as well as provides assembling, testing, and packaging services. AMD serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Advanced Micro Devices (AMD US)

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

We consider the implications of AMD's latest CPU and GPU developments, as well as its move to acquire Xilinx on other competitors such as Nvidia...

Mio Kato

NVIDIA to Increase Its Data Center Business with DPUs

NVIDIA leads in mar

Thomas Coughlin

Server CPU, DRAM, NAND Sales Heading For A Significant Decline As Inventory Digestion Commences.

A leading indicator for server sales

William Keating

NVIDIA+Arm. Strategically Solid But Practically Impossible.

The long-anticipated acquisition by NVIDIA of Arm Holdings (ARM LN)

William Keating

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

TMT Weekly: 3 Things that Stood Out The Week of 10/16/​​​​2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

We consider the implications of AMD's latest CPU and GPU developments, as well as its move to acquire Xilinx on other competitors such as Nvidia...

Mio Kato

NVIDIA to Increase Its Data Center Business with DPUs

NVIDIA leads in mar

Thomas Coughlin

Server CPU, DRAM, NAND Sales Heading For A Significant Decline As Inventory Digestion Commences.

A leading indicator for server sales

William Keating

NVIDIA+Arm. Strategically Solid But Practically Impossible.

The long-anticipated acquisition by NVIDIA of Arm Holdings (ARM LN)

William Keating

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020