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

Equity Bottom-Up

Dutch lithography giant <a href="https://www.smartkarma.com/entities/asml-holding-nv-b0092428-e3ec-4a92-bdd6-2f6eff7f1879" target="_blank" data-smartkarma-citation="entities:28204:1" rel="noopener">ASML</a> this week reported fourth quarter earnings of €4.3 billion, slightly ahead of expectations and an increase of 5.4% year on year. Full year 2020 revenues amounted to €13.98 billion, a sequential increase of 18.3%. The company's 2021 guidance for another year of double digit growth failed to impress the markets overnight with the share price remaining largely unmoved. By their own admission, ASML's forecast is overly conservative and there is significant potential upside that could push the company well into the mid-twenties percentage growth sequentially. Here are our thoughts on their earnings report and where we see that potential upside arising from.

Dutch lithography giant ASML this week reported fourth quarter earnings of €4.3 billion, slightly ahead of expectations and an increase of 5.4% year on year. Full year 2020 revenues amounted to €13.98 billion, a sequential increase of 18.3%. The company's 2021 guidance for another year of double digit growth failed to impress the markets overnight with the share price remaining largely unmoved. By their own admission, ASML's forecast is overly conservative and there is significant potential upside that could push the company well into the mid-twenties percentage growth sequentially. Here are our thoughts on their earnings report and where we see that potential upside arising from. 

ASML. Strong Earnings, Conservative Outlook Albeit With Significant Upside Potential.

<a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel'</a>s share price is currently down some 26% from its 52 week high, almost exactly where it was three years ago. Meanwhile, competitors <a href="https://www.smartkarma.com/entities/advanced-micro-devices-inc" target="_blank" data-smartkarma-citation="entities:19009:1" rel="noopener">Advanced Micro Devices</a> and <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA'</a>s share prices have more than doubled over the same time period. Paradoxically, demand for Intel's products has never been stronger and the company will likely deliver 5% YoY revenue growth compared to the 2% forecasted back in January. How did Intel find itself in this situation and where is the company heading from here? Here's our thoughts on the matter...

Intel's share price is currently down some 26% from its 52 week high, almost exactly where it was three years ago. Meanwhile, competitors Advanced Micro Devices and NVIDIA's share prices have more than doubled over the same time period. Paradoxically, demand for Intel's products has never been stronger and the company will likely deliver 5% YoY revenue growth compared to the 2% forecasted back in January. How did Intel find itself in this situation and where is the company heading from here? Here's our thoughts on the matter...

Intel. How Did We Get Here And Where Are We Going?

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a> is currently trading at more than 2 standard deviations above its 5yr- and 10yr historical average PE range.  A premium makes sense given a significant improvement in their competitive positioning and being in the early stages of a cyclical upswing given the advent of 5G, which should also accelerate the adoption of Internet-of-Things applications. 
This raises the question as to what a fair valuation multiple for TSMC should be. In this insight I make a comparative valuation by looking at, arguably, the two most important companies in TSMC’s value chain, both dominant in their competitive environments, namely TSMC’s largest supplier <a href="https://www.smartkarma.com/entities/asml-holding-nv" target="_blank" data-smartkarma-citation="entities:21097:1" rel="noopener">ASML Holding NV (ASML NA)</a> and their largest customer <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a>. 
My analysis focuses on the companies’ competitive positioning, geographic exposure, customer concentration, growth profile and outlook, cash flow generation, balance sheets, capital allocation and returns on invested capital to assess what a fair relative valuation might look like.

TSMC (2330 TT) is currently trading at more than 2 standard deviations above its 5yr- and 10yr historical average PE range.  A premium makes sense given a significant improvement in their competitive positioning and being in the early stages of a cyclical upswing given the advent of 5G, which should also accelerate the adoption of Internet-of-Things applications. 
This raises the question as to what a fair valuation multiple for TSMC should be. In this insight I make a comparative valuation by looking at, arguably, the two most important companies in TSMC’s value chain, both dominant in their competitive environments, namely TSMC’s largest supplier ASML Holding NV (ASML NA) and their largest customer Apple Inc (AAPL US). 
My analysis focuses on the companies’ competitive positioning, geographic exposure, customer concentration, growth profile and outlook, cash flow generation, balance sheets, capital allocation and returns on invested capital to assess what a fair relative valuation might look like.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

On 11 June, Unilever announced that it was looking to unify its group legal structure under a single parent company, <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a>, "creating a simpler company with greater strategic flexibility, that is better positioned for future success".The Dutch shareholders approved the unification on 21 September with 99.39% of the shares voted in favour, while the UK shareholders approved the proposal on 12 October with over 99% of the shares voted in favour.There is still one potential hurdle to the unification in the Departure Tax (GroenLinks initiative bill) being proposed by the GreenLeft Party in the Netherlands that could cost Unilever up to €11bn if it left the Netherlands.If the unification does go through, there will be an impact of passive fund activity on <a href="https://www.smartkarma.com/entities/unilever-nv" target="_blank" data-smartkarma-citation="entities:21141:1" rel="noopener">Unilever NV (UNA NA)</a>, but the bigger impact will be on <a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a>. We estimate the net impact of the unification will see around US$3bn of passive money flow into the stock.In this Insight, we take a look at some of the details around the unification before jumping into the impact on the stocks and the possible spread between the two lines prior to unification.

On 11 June, Unilever announced that it was looking to unify its group legal structure under a single parent company, Unilever PLC (ULVR LN), "creating a simpler company with greater strategic flexibility, that is better positioned for future success".The Dutch shareholders approved the unification on 21 September with 99.39% of the shares voted in favour, while the UK shareholders approved the proposal on 12 October with over 99% of the shares voted in favour.There is still one potential hurdle to the unification in the Departure Tax (GroenLinks initiative bill) being proposed by the GreenLeft Party in the Netherlands that could cost Unilever up to €11bn if it left the Netherlands.If the unification does go through, there will be an impact of passive fund activity on Unilever NV (UNA NA), but the bigger impact will be on Unilever PLC (ULVR LN). We estimate the net impact of the unification will see around US$3bn of passive money flow into the stock.In this Insight, we take a look at some of the details around the unification before jumping into the impact on the stocks and the possible spread between the two lines prior to unification.

<a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC</a> held a series of virtual technology symposia last week during which they provided key updates on their process technology roadmaps. While they reported numerous exciting developments, three key items stood out for us. Firstly, the extent of their leadership using EUV in high volume manufacturing. Secondly, the fact that their 5nm ramp, currently in progress, will be even faster than their 7nm ramp. This is made possible by the fact that they are experiencing lower defect density levels on 5nm at a comparable point in its ramp compared to 7nm. Thirdly, they revealed that, unlike their main competitors, they are going with an enhanced FinFET transistor design at 3nm rather than moving to Gate-All-Around. Here's a look in more detail at the background to these key announcements and why they matter.

TSMC held a series of virtual technology symposia last week during which they provided key updates on their process technology roadmaps. While they reported numerous exciting developments, three key items stood out for us. Firstly, the extent of their leadership using EUV in high volume manufacturing. Secondly, the fact that their 5nm ramp, currently in progress, will be even faster than their 7nm ramp. This is made possible by the fact that they are experiencing lower defect density levels on 5nm at a comparable point in its ramp compared to 7nm. Thirdly, they revealed that, unlike their main competitors, they are going with an enhanced FinFET transistor design at 3nm rather than moving to Gate-All-Around. Here's a look in more detail at the background to these key announcements and why they matter.

TSMC. Three Key Updates From A Remarkable Technology Symposium.

Netherlands

ASML Holding N.V. develops, produces, and markets semiconductor manufacturing equipment, specifically machines for the production of chips through lithography. The Company services clients world wide.

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

ASML Holding NV (ASML NA)

ASML. Strong Earnings, Conservative Outlook Albeit With Significant Upside Potential.

ASML's 2021 double digit growth forecast seems overly conservative to us. We think there is potential upside that will add significantly to that...

William Keating

Intel. How Did We Get Here And Where Are We Going?

Despite unprecedented demand for their products and record revenues, Intel's share price is bouncing off its March pandemic lows, close to where it...

William Keating

TSMC: A Comparative Valuation

In this insight, I make a comparative valuation by looking at two value-chain companies, both dominant in their own right, namely TSMC’s largest...

Wium Malan, CFA

Unilever Unification - Index Impact

With the Unilever unification of the PLC and NV lines approved by the Dutch and British shareholders, we take a look at the spread between the two...

Brian Freitas

TSMC. Three Key Updates From A Remarkable Technology Symposium.

TSMC held a series of virtual technology symposia last week during which they provided key updates on their process technology roadmaps. While they...

William Keating

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)