Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

United Microelectronics Corp / Equity Bottom-Up

<ul>
<li>We believe UMC's 3Q22 order is full, but the growth could be within 3% QoQ.</li>
<li>Asian clients are turning weak, and US clients are getting stronger.</li>
<li>The mainland China demand could be making an impact because of the COVID-19 pandemic.</li>
</ul>


We believe UMC's 3Q22 order is full, but the growth could be within 3% QoQ.
Asian clients are turning weak, and US clients are getting stronger.
The mainland China demand could be making an impact because of the COVID-19 pandemic.


UMC (UMC.US; 2303.TT): 3Q22 Order Is Full- The Demand from Asia Is Turning Weak, but US Is Stronger

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.

<ul>
<li>Denso 4QFY22 revenue was strong at ¥1,506bn (+4.8% vs. consensus) but increases in raw material prices resulted in OP of just ¥85bn (-31.8% vs. consensus). </li>
<li>The company’s FY23 guidance was conservative projecting just ¥6,350bn (+2.2% vs. consensus at +15.1% YoY) but OP guidance was for ¥560bn (+5.3% vs. consensus).  </li>
<li>We expect volume to grow further and the depreciating Yen should favourably impact ASPs next year.</li>
</ul>


Denso 4QFY22 revenue was strong at ¥1,506bn (+4.8% vs. consensus) but increases in raw material prices resulted in OP of just ¥85bn (-31.8% vs. consensus). 
The company’s FY23 guidance was conservative projecting just ¥6,350bn (+2.2% vs. consensus at +15.1% YoY) but OP guidance was for ¥560bn (+5.3% vs. consensus).  
We expect volume to grow further and the depreciating Yen should favourably impact ASPs next year.


Denso – Strong Overshoot Potential And Only Modest Execution Risk

<ul>
<li>UMC delivered a shining GM and outlook. The GM outlook is 45% in 2Q22, which beat our forecast.</li>
<li>UMC believes 22/28 nanometer will be a long-lasting node driven by applications, such as Wi-Fi 6, 6E, networking and OLED driver IC.</li>
<li>The overall business covered by LTA is close to 30%-40%.</li>
</ul>


UMC delivered a shining GM and outlook. The GM outlook is 45% in 2Q22, which beat our forecast.
UMC believes 22/28 nanometer will be a long-lasting node driven by applications, such as Wi-Fi 6, 6E, networking and OLED driver IC.
The overall business covered by LTA is close to 30%-40%.


UMC (UMC.US; 2303.TT): 1Q22 Results/2Q22 Preview- GM Beats Results and Forecast

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

<ul>
<li>Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.</li>
<li>It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.</li>
<li>Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.</li>
</ul>


Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.
It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.
Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.


Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Event-Driven

<ul>
<li>We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. </li>
<li>Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. </li>
<li>This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.</li>
</ul>


We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. 
Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. 
This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.


Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

Japan

DENSO CORPORATION manufactures electronic parts for automobiles.  The Company's products include automobile air conditioners, air bags, ignition systems, generators, power steering systems, and spark plugs with iridium electrode. The Company also produces communication equipment for mobile navigation system.

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Denso Corp (6902 JP)

UMC (UMC.US; 2303.TT): 3Q22 Order Is Full- The Demand from Asia Is Turning Weak, but US Is Stronger

We believe UMC's 3Q22 order is full, but the growth could be within 3% QoQ. Asian clients are turning weak, and US clients are getting stronger.

Patrick Liao

Denso – Strong Overshoot Potential And Only Modest Execution Risk

We expect a volume recovery to shed light on rising content per vehicle for Denso and for margins to noticeably overshoot excessively conservative...

Mio Kato

UMC (UMC.US; 2303.TT): 1Q22 Results/2Q22 Preview- GM Beats Results and Forecast

The GM outlook is 45% in 2Q22, which beat our forecast. UMC believes 22/28 nanometer will be a long-lasting node driven by applications, such as Wi...

Patrick Liao

Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Rohm will probably not acquire Toshiba's power device business. Instead, it will keep working with NEDO to expand its own capabilities. Down 24%...

Scott Foster

Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

We believe a listing of Toshiba's device business would not create an especially attractive security for investors and that a sale to a domestic...

Mio Kato

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