Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>Lattice is just too expensive for what it is. It’s one of the highest multiples in the space, but I acknowledge we are closer to the trough than the peak.</li><li>Tokyo Electron continues to be bullish high aspect etch and reports that they are winning in DRAM and hopefully in NAND in the future.</li><li>Arista says that AI revenue is yet to come, and 800G will mostly be in 2025, not 2024. The market got ahead of itself.</li></ul>

Lattice is just too expensive for what it is. It’s one of the highest multiples in the space, but I acknowledge we are closer to the trough than the peak.Tokyo Electron continues to be bullish high aspect etch and reports that they are winning in DRAM and hopefully in NAND in the future.Arista says that AI revenue is yet to come, and 800G will mostly be in 2025, not 2024. The market got ahead of itself.

Earnings (LSCC, ANET, GFS, Tokyo Electron, SITM, ENTG, AMAT)

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

<ul>
<li>Globalfoundries (GFS) reported Q423 revenues of $1.854 billion, marginally above the midpoint of the guidance range, down 12% YoY and essentially flat sequentially.</li>
<li>Guided Q124 down 18% QoQ with Gross Margin set to fall from 29% to 23%</li>
<li>SMIC will outspend GFS 10x in CapEx terms this year</li>
</ul>


Globalfoundries (GFS) reported Q423 revenues of $1.854 billion, marginally above the midpoint of the guidance range, down 12% YoY and essentially flat sequentially.
Guided Q124 down 18% QoQ with Gross Margin set to fall from 29% to 23%
SMIC will outspend GFS 10x in CapEx terms this year


Globalfoundries. Pressure Grows As Customer Penalties Soar

Asia and Global Semiconductor and Tech Research

Andrew Lu

<ul>
<li>The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.</li>
<li>Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  </li>
<li>By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.</li>
</ul>


The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.
Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  
By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.


No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

<ul>
<li>9.4% semi revenue decline in 2023 seems about right to us</li>
<li>Forecast of13.1% semi revenue increase in 2024, seems on the high side</li>
<li>Forecast assumes a ~45% YoY increase in memory revenue. Sanjay will be delighted to hear the good news!</li>
</ul>


9.4% semi revenue decline in 2023 seems about right to us
Forecast of13.1% semi revenue increase in 2024, seems on the high side
Forecast assumes a ~45% YoY increase in memory revenue. Sanjay will be delighted to hear the good news!


WSTS Forecasts Semi Revenue Increase of 13.1% In 2024. Seriously?

<ul>
<li>Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;</li>
<li>More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.</li>
<li>
Automotive/Industrial lags only not beginning of the fall: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.</li>
</ul>


Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;
More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.

Automotive/Industrial lags only not beginning of the fall: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.


Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

United States

GLOBALFOUNDRIES Inc. operates as a semiconductor contract manufacturing and design company. The Company offers chips designed for markets such as mobility, automotive, computing and wired connectivity, and consumer internet of things (IoT). GLOBALFOUNDRIES serves customers worldwide.

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GLOBALFOUNDRIES (GFS US)

Earnings (LSCC, ANET, GFS, Tokyo Electron, SITM, ENTG, AMAT)

Lattice is just too expensive for what it is. It’s one of the highest multiples in the space, but I acknowledge we are closer to the trough than...

Fabricated Knowledge

Globalfoundries. Pressure Grows As Customer Penalties Soar

GFS Q423 revenues of $1.854 billion, -12% YoY, flat QoQ. Guided Q124 down 18% QoQ with GM set to fall from 29% to 23%. SMIC will outspend GFS 10x...

William Keating

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications; Huawei and HiSilicon supply chain vendors will be benefited the most

Andrew Lu

WSTS Forecasts Semi Revenue Increase of 13.1% In 2024. Seriously?

WSTS forecast for 13.1% semi growth in 2024 assumes a ~45% YoY increase in memory revenue. This is an unlikely scenario and not at all the vibe we...

William Keating

Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

Seven takeaways Post Our Global Foundry Model Updated and Initial View on 2024 foundry shipment, blended wafer price, sales, and capex growth/decline

Andrew Lu

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