Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

<ul>
<li>Silergy foresees the demand will be larger than capacity in 2022. Silergy expects Auto, Sever Mother-board, SSD and others should be showing a strong demand in 2022.</li>
<li>The shipment lead-time is controlled around 5~6 months, which indicated that the demand is strong for 2022~23.</li>
<li>The generation 3rd will be optimized until 2026. Silergy will need some new suppliers for generation 4th in 2023. In 2026, generation 3rd &amp; 4th will dominate Silergy’s revenue. </li>
</ul>


Silergy foresees the demand will be larger than capacity in 2022. Silergy expects Auto, Sever Mother-board, SSD and others should be showing a strong demand in 2022.
The shipment lead-time is controlled around 5~6 months, which indicated that the demand is strong for 2022~23.
The generation 3rd will be optimized until 2026. Silergy will need some new suppliers for generation 4th in 2023. In 2026, generation 3rd &amp; 4th will dominate Silergy’s revenue. 


Silergy (6415.TT): Earnings Conference for 4Q21- The Demand Is Strong for 2022~23.

<ul>
<li>The 1st quarter is relatively a lower season. Therefore, we expect that the revenue/NM is about RMB$8. 7bn/9.0% in 1Q22 respectively, which declines ~10% QoQ and grow 30% YoY. </li>
<li>To our understanding, QCOM is still the biggest client in JCET. The rest of clients have changing a bit in JCET since Huawei was being driven out.</li>
<li>Overall speaking, China is devoted in developing OSAT (Outsource Semiconductor Assembly and Packaging) business, and the gap shall be close to ASEH and Amkor. </li>
</ul>


The 1st quarter is relatively a lower season. Therefore, we expect that the revenue/NM is about RMB$8. 7bn/9.0% in 1Q22 respectively, which declines ~10% QoQ and grow 30% YoY. 
To our understanding, QCOM is still the biggest client in JCET. The rest of clients have changing a bit in JCET since Huawei was being driven out.
Overall speaking, China is devoted in developing OSAT (Outsource Semiconductor Assembly and Packaging) business, and the gap shall be close to ASEH and Amkor. 


JCET (600584.CN): The 1Q22 Will Be a Lower Season, and the Recent Ukraine Crisis Did Post a Shadow.

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

On 8 February, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> <a href="https://www.dialog-semiconductor.com/sites/default/files/danube_full2.7announcement_final.pdf" target="_blank" rel="noopener">announced an agreement</a> to acquire <a href="https://www.smartkarma.com/entities/dialog-semiconductor-plc-664a1f83-2a21-4690-a91f-fb971832e7ad" target="_blank" data-smartkarma-citation="entities:21607:1" rel="noopener">Dialog Semiconductor (DLG GR)</a>, supplier of Apple.
Consideration. €67.5 per share, in cash, adjustable for dividends or capital distrubutions at the discretion of Renesas. To be conducted though a scheme of arrangement (document to be published on or before 8 March).
<ul>
<li>This values 100% of the equity capital of Dialog at €4,886 mn (as reported), for an implied EV of €4,556.5 mn.</li>
<li>This represents 3.7x EV/Fwd Revenue (vs. historic average of c 1.6x), 17.4x EV/Fwd EBITDA and 22.2x P/Fwd E (vs. historic average of 8x), (please see other recent transaction multiples further down).</li>
</ul>
The shares of Dialog shot up by 16% vs. the prior day, with c. €353 mn traded.
I believe the deal makes strategic sense, as the offer underlines the relevance of both power and low power connectivity to the automobile and industrial semiconductors.
The median implied valuation across multiples is €65.07 per share. On this basis, the price offered by Renesas seems fair.
Bloomberg has reported the interest of STM in Dialog, nevertheless, STM has already exposure to Apple and I doubt it would be willing to pay up to increase it.
Gross spread is c. 3.3%, with a high volume traded on today's (9 March session). The deal is expected to become effective in H2 2021.
With high chances for the deal to complete, recommendation is Long DLG GR.

On 8 February, Renesas Electronics (6723 JP) announced an agreement to acquire Dialog Semiconductor (DLG GR), supplier of Apple.
Consideration. €67.5 per share, in cash, adjustable for dividends or capital distrubutions at the discretion of Renesas. To be conducted though a scheme of arrangement (document to be published on or before 8 March).

This values 100% of the equity capital of Dialog at €4,886 mn (as reported), for an implied EV of €4,556.5 mn.
This represents 3.7x EV/Fwd Revenue (vs. historic average of c 1.6x), 17.4x EV/Fwd EBITDA and 22.2x P/Fwd E (vs. historic average of 8x), (please see other recent transaction multiples further down).

The shares of Dialog shot up by 16% vs. the prior day, with c. €353 mn traded.
I believe the deal makes strategic sense, as the offer underlines the relevance of both power and low power connectivity to the automobile and industrial semiconductors.
The median implied valuation across multiples is €65.07 per share. On this basis, the price offered by Renesas seems fair.
Bloomberg has reported the interest of STM in Dialog, nevertheless, STM has already exposure to Apple and I doubt it would be willing to pay up to increase it.
Gross spread is c. 3.3%, with a high volume traded on today's (9 March session). The deal is expected to become effective in H2 2021.
With high chances for the deal to complete, recommendation is Long DLG GR.

Dialog Semiconductor - Renesas Electronics Recommended Cash Offer

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

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.

In December last year, <a href="https://www.smartkarma.com/entities/broadcom-inc" target="_blank" data-smartkarma-citation="entities:998:1" rel="noopener">Broadcom Limited (AVGO US)</a> reported that it wants to sell its wireless chip unit and that it is working with the Credit Suisse Group to find potential buyers for the RF unit, a segment within the wireless chip unit. This comes as the company categorises the unit as non-core, given its change in focus to become a software business (seen as being more lucrative). This insight takes a quick look at the potential buyers of Broadcom’s wireless business and the potential value of the business.
<div style="text-align: center;" class="content-caption">Summary</div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 162.95pt;">
Wireless Unit Segments
</td>
<td style="width: 162.95pt;">
Implied Valuation (USD bn)
</td>
<td style="width: 162.95pt;">
Potential Buyers
</td>
</tr>
<tr>
<td style="width: 162.95pt;">
RF
</td>
<td style="width: 162.95pt;">
9.6
</td>
<td style="width: 162.95pt;">
Apple, Qorvo, Skyworks, MACOM, Murata
</td>
</tr>
<tr>
<td style="width: 162.95pt;">
Bluetooth/Wi-Fi Unit
</td>
<td style="width: 162.95pt;">
8.8
</td>
<td style="width: 162.95pt;">
Skyworks, Murata, NXP Semiconductors
</td>
</tr>
<tr>
<td style="width: 162.95pt;">
Touch controller/ Wireless charging
</td>
<td style="width: 162.95pt;">
1.2
</td>
<td style="width: 162.95pt;">
Apple
</td>
</tr>
</tbody>
</table>
<div class="content-remarks">
Source: Company Disclosures, News Articles, CapIQ, LSR
</div>

In December last year, Broadcom Limited (AVGO US) reported that it wants to sell its wireless chip unit and that it is working with the Credit Suisse Group to find potential buyers for the RF unit, a segment within the wireless chip unit. This comes as the company categorises the unit as non-core, given its change in focus to become a software business (seen as being more lucrative). This insight takes a quick look at the potential buyers of Broadcom’s wireless business and the potential value of the business.
Summary




Wireless Unit Segments


Implied Valuation (USD bn)


Potential Buyers




RF


9.6


Apple, Qorvo, Skyworks, MACOM, Murata




Bluetooth/Wi-Fi Unit


8.8


Skyworks, Murata, NXP Semiconductors




Touch controller/ Wireless charging


1.2


Apple





Source: Company Disclosures, News Articles, CapIQ, LSR


Potential Buyers for Broadcom’s Wireless Business Unit

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

We visited <a href="https://www.smartkarma.com/entities/15933" target="_blank" data-smartkarma-citation="entities:15933:1">Renesas Electronics (6723 JP)</a> today and discussed the two key issues on investors minds:<ul>
<li>
Inventory build-up is on its way to being corrected and while channel inventory could take till 2Q2019 to truly clear, Renesas' own high levels of inventory should be mostly addressed by 3Q and be at comfortable levels by 4Q.</li>
<li>
There is no way to spin the IDT acquisition as being cheap, however, we do consider it to be necessary given the changing industry dynamics and the need for a strong sensor lineup going forward. We believe the combination of Renesas' leading position for MCUs and IDT's wide array of sensors will be a winning proposition.</li>
<li>The lack of overlap among customers is a further opportunity and while it will take time for the companies to develop products that can be cross-sold or sold as packages or solutions, the expansion of the SAMs for both companies is a notable positive.</li>
<li>The company is emphasising cost synergies (USD80m) as one of the quick wins of the transaction and we believe these are likely to come through quickly and at roughly the scale the company is projecting. Moreover, while the top line synergies will take years to materialise, we would point out that though the acquisition is on the expensive side, IDT's relatively small size makes this more digestible, while its fabless model means that once suitable products are developed, the potential for revenue expansion will be significantly larger than its scale would suggest given the lack of product overlap.</li>
</ul>

We visited Renesas Electronics (6723 JP) today and discussed the two key issues on investors minds:

Inventory build-up is on its way to being corrected and while channel inventory could take till 2Q2019 to truly clear, Renesas' own high levels of inventory should be mostly addressed by 3Q and be at comfortable levels by 4Q.

There is no way to spin the IDT acquisition as being cheap, however, we do consider it to be necessary given the changing industry dynamics and the need for a strong sensor lineup going forward. We believe the combination of Renesas' leading position for MCUs and IDT's wide array of sensors will be a winning proposition.
The lack of overlap among customers is a further opportunity and while it will take time for the companies to develop products that can be cross-sold or sold as packages or solutions, the expansion of the SAMs for both companies is a notable positive.
The company is emphasising cost synergies (USD80m) as one of the quick wins of the transaction and we believe these are likely to come through quickly and at roughly the scale the company is projecting. Moreover, while the top line synergies will take years to materialise, we would point out that though the acquisition is on the expensive side, IDT's relatively small size makes this more digestible, while its fabless model means that once suitable products are developed, the potential for revenue expansion will be significantly larger than its scale would suggest given the lack of product overlap.


Renesas Electronics: Excessive Focus on IDT Deal Multiple Belies Long-Term Strategic Potential

United States

Analog Devices, Inc. designs, manufactures, and markets integrated circuits used in analog and digital signal processing.  The Company's products are used in communications, computer, industrial, instrumentation, military/aerospace, automotive, and high-performance consumer electronics applications.  Analog Devices sells its products worldwide.

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Analog Devices (ADI US)

Silergy (6415.TT): Earnings Conference for 4Q21- The Demand Is Strong for 2022~23.

Silergy expects Auto, Sever Mother-board, SSD should be showing a strong demand in 2022. The shipment lead-time is controlled at around 5~6 months,...

Patrick Liao

JCET (600584.CN): The 1Q22 Will Be a Lower Season, and the Recent Ukraine Crisis Did Post a Shadow.

Usually, the 1st quarter is relatively a lower season. Therefore, we will expect that the revenue/NM is about RMB$8. 7bn/9.0% in 1Q22 respectively,...

Patrick Liao

Dialog Semiconductor - Renesas Electronics Recommended Cash Offer

I believe the deal makes strategic sense, the price offered seems fair. Gross spread is c. 3.3% (complexion exp. H2 2021). With high chances for...

Jesus Rodriguez Aguilar

Potential Buyers for Broadcom’s Wireless Business Unit

In December last year, Broadcom Limited (AVGO US) reported that it wants to sell its wireless chip unit and that it is working with the Credit...

Aqila Ali

Renesas Electronics: Excessive Focus on IDT Deal Multiple Belies Long-Term Strategic Potential

We visited Renesas Electronics (6723 JP) today and discussed the two key issues on investors minds: Inventory build-up is on its way to being...

Mio Kato

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