Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<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

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>TSMC recorded in-line 3Q23 results and 4Q revenue guidance implies betterthan-expected FY23E outlook, driven by stabilised demand of smartphone &amp; PC and inventory restocking.</li><li>Auto segment may slow down in 2H23E, but it is set to rebound in 2024 driven by the NEV market.</li><li>Looking ahead, we expect market will react positively to 3Q23 results, demand stabilisation and inventory restocking. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TSMC recorded in-line 3Q23 results and 4Q revenue guidance implies betterthan-expected FY23E outlook, driven by stabilised demand of smartphone &amp; PC and inventory restocking.Auto segment may slow down in 2H23E, but it is set to rebound in 2024 driven by the NEV market.Looking ahead, we expect market will react positively to 3Q23 results, demand stabilisation and inventory restocking. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Implications of TSMC 3Q23: Cycle Nearing the Bottom

<ul><li>ASML and LAM posted in-line 3Q23 results, and a higher China sales mix is the bright spot, leading to better profitability.</li><li>Looking ahead, both believe that memory market recovery remains slow given low UTR and on-going inventory digestion, and cycle inflection visibility could be delayed to end-2023.</li><li>However, both remain positive on China demand for capacity expansion of domestic mature &amp; specialty nodes. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ASML and LAM posted in-line 3Q23 results, and a higher China sales mix is the bright spot, leading to better profitability.Looking ahead, both believe that memory market recovery remains slow given low UTR and on-going inventory digestion, and cycle inflection visibility could be delayed to end-2023.However, both remain positive on China demand for capacity expansion of domestic mature &amp; specialty nodes. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Implications of ASML/LAM Research 3Q23 Results

<ul><li>The US Department of Commerce announced a new set of restrictions on 17 Oct that strengthens 1) export controls on advanced chips with new “parameters” and expansion to 40 more countries</li><li>2) export controls of chip manufacturing equipment to 21 more countries, and 3) addition of 13 Chinese entities onto the US Entity List.</li><li>We believe new rules are largely in-line with expectations and news media on 3 Oct.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The US Department of Commerce announced a new set of restrictions on 17 Oct that strengthens 1) export controls on advanced chips with new “parameters” and expansion to 40 more countries2) export controls of chip manufacturing equipment to 21 more countries, and 3) addition of 13 Chinese entities onto the US Entity List.We believe new rules are largely in-line with expectations and news media on 3 Oct.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Implications of the US’s Updated Chip Restrictions to Global/Domestic SPE and GPU Companies

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>We estimate that SMICs 7nm yield is &gt;70% with capacity of 19k 7nm wafers per month.  We expect SMIC will be able to ship 5nm by 2026 .</li>
<li>We expect Huawei’s wafer demand to reach 18k~ 7nm per month, which would have revenue gain of US$ 550mn~ per quarter to SMIC. We raise SMIC TP to HK$ 27.</li>
<li>We expect Huawei to reach 18% share of the China smartphone market in 2024. We expect Apple and Xiaomi’s China market share to decline by 2ppt and 0.8ppt YoY, respectively.</li>
</ul>


We estimate that SMICs 7nm yield is &gt;70% with capacity of 19k 7nm wafers per month.  We expect SMIC will be able to ship 5nm by 2026 .
We expect Huawei’s wafer demand to reach 18k~ 7nm per month, which would have revenue gain of US$ 550mn~ per quarter to SMIC. We raise SMIC TP to HK$ 27.
We expect Huawei to reach 18% share of the China smartphone market in 2024. We expect Apple and Xiaomi’s China market share to decline by 2ppt and 0.8ppt YoY, respectively.


[Blue Lotus Hardware Sector Update]: SMIC 7nm and 5nm Sufficient for Huawei Rejuvenation

China

Hua Hong Semiconductor is a global pure-play semiconductor foundry specializing in embedded/standalone non-volatile memory, power discrete, analog & power management, and logic & RF technologies. The company provides diversified wafer fabrication and supporting services for various specialty process platforms. It is headquartered in Shanghai, China, and was founded in 2005.

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

Hua Hong Semiconductor (1347 HK)

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

China Technology – Implications of TSMC 3Q23: Cycle Nearing the Bottom

TSMC recorded in-line 3Q23 results and 4Q revenue guidance implies betterthan-expected FY23E outlook, driven by stabilised demand of smartphone &...

CMB International

China Technology – Implications of ASML/LAM Research 3Q23 Results

Looking ahead, both believe that memory market recovery remains slow given low UTR and on-going inventory digestion, and cycle inflection...

CMB International

Implications of the US’s Updated Chip Restrictions to Global/Domestic SPE and GPU Companies

The US Department of Commerce announced a new set of restrictions on 17 Oct that strengthens 1) export controls on advanced chips with new...

CMB International

[Blue Lotus Hardware Sector Update]: SMIC 7nm and 5nm Sufficient for Huawei Rejuvenation

We expect Huawei’s wafer demand to reach 18k~ 7nm per month, which would have revenue gain of US$ 550mn~ per quarter to SMIC. We raise SMIC TP to...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)