Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (TSM US)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>The rally of the Asia Tech sector (+24% YTD) is highly concentrated in a handful of stocks. TSMC is up 64% but Samsung is down -22% YTD. </li>
<li>With the exception of AI, end-demand isn’t great. Smartphone up 8% but below 2019-21 level. PC flattish. x86 Server flattish. Telecom capex declining. Automotive electronics declining.   </li>
<li>AI is the most disruptive trend since Cloud in 2010. Years of increasing Capex are in front of us. But short-term, stocks are properly valued to rich, growth is slowing.</li>
</ul>


The rally of the Asia Tech sector (+24% YTD) is highly concentrated in a handful of stocks. TSMC is up 64% but Samsung is down -22% YTD. 
With the exception of AI, end-demand isn’t great. Smartphone up 8% but below 2019-21 level. PC flattish. x86 Server flattish. Telecom capex declining. Automotive electronics declining.   
AI is the most disruptive trend since Cloud in 2010. Years of increasing Capex are in front of us. But short-term, stocks are properly valued to rich, growth is slowing.


All Is Not Well in Tech Sector, AI Growth Slows, TSMC Expensive. Samsung, SK Hynix More Attractive.

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>The changes to the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a>, S&amp;P400 Index and S&amp;P600 Index will be announced after market close on Friday.</li>
<li>The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.</li>
<li>Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the <a href="https://www.smartkarma.com/entities/consumer-staples-select-sector-spdr-fund" target="_blank" data-smartkarma-citation="entities:27536:1" rel="noopener">XLP</a> and <a href="https://www.smartkarma.com/entities/technology-select-sector-spdr" target="_blank" data-smartkarma-citation="entities:27543:1" rel="noopener">XLK</a>.</li>
</ul>


The changes to the S&amp;P 500 INDEX (SPX INDEX), S&amp;P400 Index and S&amp;P600 Index will be announced after market close on Friday.
The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.


Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jio-platforms-ltd" target="_blank" data-smartkarma-citation="entities:50269:1" rel="noopener">Jio Platforms </a>is looking to raise up to US$3.2bn in its upcoming India IPO.</li>
<li>Jio Platforms Ltd (JPL) is a technology and digital services platform company promoted by Reliance Industries, built on a proprietary digital technology stack and pan-India connectivity infrastructure.</li>
<li>We have looked at the company’s past performance and valuations in our previous note. In this note, we will talk about the index impact.</li>
</ul>



Jio Platforms is looking to raise up to US$3.2bn in its upcoming India IPO.
Jio Platforms Ltd (JPL) is a technology and digital services platform company promoted by Reliance Industries, built on a proprietary digital technology stack and pan-India connectivity infrastructure.
We have looked at the company’s past performance and valuations in our previous note. In this note, we will talk about the index impact.


Aequitas: Jio Platforms IPO - Index Flows - Tiny Float Now, Large Impact Later

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

<ul>
<li>
<strong>Model Convergence</strong>: capabilities that once required specialized models are increasingly handled by the main Gemini LLMs, which can now be state of the art for math and other scientific questions</li>
<li>Brin admitted he is “always kind of confused as to how to prompt the models” and even the Gemini team does not know exactly where the models’ capability edges are!</li>
<li>He cited chain-of-thought (”think step by step”) as an example of a technique that seemed trivial or “the dumbest thing ever” yet drove a significant jump in AI capability.</li>
</ul>



Model Convergence: capabilities that once required specialized models are increasingly handled by the main Gemini LLMs, which can now be state of the art for math and other scientific questions
Brin admitted he is “always kind of confused as to how to prompt the models” and even the Gemini team does not know exactly where the models’ capability edges are!
He cited chain-of-thought (”think step by step”) as an example of a technique that seemed trivial or “the dumbest thing ever” yet drove a significant jump in AI capability.


Sergey Brin On Model Convergence, Prompt Engineering & Transformer Evolution

<ul>
<li>AI Capex is reaching operating cash flows, Hyperscalers won’t gear up and resort to equity issuance to finance Capex . At the same time, concerns are growing over token cost.</li>
<li>2 circular parameters – chicken and egg. More Capex is needed to increase scale, buy more efficient chips; so that token cost declines faster. Spend more to save more.</li>
<li>Your choice. 1) Cloud growth and margins are increasing. it’s a timing mismatch, Capex first, big profits later. 2) AI capacity can’t generate enough cash flow to finance itself. </li>
</ul>


AI Capex is reaching operating cash flows, Hyperscalers won’t gear up and resort to equity issuance to finance Capex . At the same time, concerns are growing over token cost.
2 circular parameters – chicken and egg. More Capex is needed to increase scale, buy more efficient chips; so that token cost declines faster. Spend more to save more.
Your choice. 1) Cloud growth and margins are increasing. it’s a timing mismatch, Capex first, big profits later. 2) AI capacity can’t generate enough cash flow to finance itself. 


Google Is Running Out of Money! Just Kidding! AI Capex Financing Versus Token Cost Decline.

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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

Alphabet (GOOG US)

All Is Not Well in Tech Sector, AI Growth Slows, TSMC Expensive. Samsung, SK Hynix More Attractive.

Difficult juncture for Asia Tech. Consumer and Enterprise segments are flattish; stocks have underperformed. AI is the only growth driver, growth...

Nicolas Baratte

Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

US$300bn tracks the Select Sector Indices. Implementation of proposed changes will set off a US$35bn trade. Apple could be bought by multiple...

Brian Freitas

Aequitas: Jio Platforms IPO - Index Flows - Tiny Float Now, Large Impact Later

Jio Platforms is looking to raise up to US$3.2bn in its upcoming India IPO. In this note, we talk about the eventual index impact.

Sumeet Singh

Sergey Brin On Model Convergence, Prompt Engineering & Transformer Evolution

Model Convergence: capabilities that once required specialized models are increasingly handled by the main Gemini LLMs, which can now be state of...

William Keating

Google Is Running Out of Money! Just Kidding! AI Capex Financing Versus Token Cost Decline.

AI companies are facing a dilemma as they need to increase Capex to lower token costs, but struggle to finance it with operating cash flows....

Nicolas Baratte

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

All Is Not Well in Tech Sector, AI Growth Slows, TSMC Expensive. Samsung, SK Hynix More Attractive.

Difficult juncture for ​Asia Tech. Consumer and Enterprise segments are flattish; stocks have underperformed. AI is the only growth driver, growth...

Nicolas Baratte

Select Sector Indices - Updated Flows as Round-Trip Trade Hits US$35bn

US$300bn tracks the Select Sector Indices. Implementation of proposed changes will set off a US$35bn trade. Apple could be bought by multiple...

Brian Freitas

Aequitas: Jio Platforms IPO - Index Flows - Tiny Float Now, Large Impact Later

Jio Platforms is looking to raise up to US$3.2bn in its upcoming India IPO. In this note, we talk about the eventual index impact.

Sumeet Singh

Sergey Brin On Model Convergence, Prompt Engineering & Transformer Evolution

Model Convergence: capabilities that once required specialized models are increasingly handled by the main Gemini LLMs, which can now be state of...

William Keating

Google Is Running Out of Money! Just Kidding! AI Capex Financing Versus Token Cost Decline.

​AI companies are facing a dilemma as they need to increase Capex to lower token costs, but struggle to finance it with operating cash flows....

Nicolas Baratte

Difficult juncture for Asia Tech. Consumer and Enterprise segments are flattish; stocks have underperformed. AI is the only growth driver, growth...

AI companies are facing a dilemma as they need to increase Capex to lower token costs, but struggle to finance it with operating cash flows....