Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.</li>
<li>
<strong>No more Moore's Law</strong>: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.</li>
<li>Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.</li>
</ul>


TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.

No more Moore's Law: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.
Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.


What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

Equity Long-Short

Mo Aziz

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>Hua Hong joins the HSI on 7 September at ~0.54% weight. Passive rebalancing demand is mechanical, price-insensitive, and expires on effective date — irrelevant to valuation.</li>
<li>Down 22% since initiation, the stock still trades at 57x FY26E EV/EBITDA — three to four times the peer range — with FCF deeply negative through 2027.</li>
<li>BEARISH with FV HKD88 pegged to 12x FY27E EV/EBITDA — probability-weighted, sovereign-premium-adjusted, and already below SMIC's multiple for a business with inferior margins and negative FCF.</li>
</ul>


Hua Hong joins the HSI on 7 September at ~0.54% weight. Passive rebalancing demand is mechanical, price-insensitive, and expires on effective date — irrelevant to valuation.
Down 22% since initiation, the stock still trades at 57x FY26E EV/EBITDA — three to four times the peer range — with FCF deeply negative through 2027.
BEARISH with FV HKD88 pegged to 12x FY27E EV/EBITDA — probability-weighted, sovereign-premium-adjusted, and already below SMIC's multiple for a business with inferior margins and negative FCF.


Hua Hong Grace (1347 HK): HSI Inclusion Changes the Path, Not the Destination

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Index Rebalance

<ul>
<li>HSIL announced the Sep 2026 rebalance results, with two ADDs and no DELETE.</li>
<li>Hua Hong Grace and Weichai Power join the HSI on 7 Sep 2026.</li>
<li>Both ADDs fell into the announcement. Historically, positive opening gaps averaged -2.3% post-open, so we wait for the open before sizing.</li>
</ul>


HSIL announced the Sep 2026 rebalance results, with two ADDs and no DELETE.
Hua Hong Grace and Weichai Power join the HSI on 7 Sep 2026.
Both ADDs fell into the announcement. Historically, positive opening gaps averaged -2.3% post-open, so we wait for the open before sizing.


HSI Sep 2026 Index Rebalance: Post-Announcement Positioning

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>We expect one index change and we expect this to trigger total one-way flows of US$87mn including the effects of capping.</li>
<li>The index review results will be announced on 21 August.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
We expect one index change and we expect this to trigger total one-way flows of US$87mn including the effects of capping.
The index review results will be announced on 21 August.


Quiddity Leaderboard HSCEI Sep26: One Change Likely; Latest Flow Expectations

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> next month.   </li>
<li>Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. </li>
<li>November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.</li>
</ul>


October has been a poor month in the last five years, with an average return of -6.5%. This highlights the risk for the Hang Seng Index (HSI INDEX) next month.   
Factors including higher interest rates, the US mid-term election, elevated crude oil prices, and concerns about the AI investment outlook are negative issues. 
November and December are, interestingly, the good months in the last five years. Aggressive players may buy back after a possible plunge in October.


HK Strategy: The Forthcoming Black October?

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.

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Hua Hong Semiconductor (1347 HK)

What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference? TSMC revises down 2024 global semi y/y sales from over 10% to...

Andrew Lu

Hua Hong Grace (1347 HK): HSI Inclusion Changes the Path, Not the Destination

Hua Hong joins the HSI on 7 Sep. Passive bid is mechanical and temporary — it doesn't change 57x EV/EBITDA. Down 22% since SELL, 41% more to go....

Mo Aziz

HSI Sep 2026 Index Rebalance: Post-Announcement Positioning

Hang Seng Indexes announced two ADDs and no DELETE for the August 2026 review after market close on 21 Aug 2026. We review the pre-announcement...

Ke Yan, CFA, FRM

Quiddity Leaderboard HSCEI Sep26: One Change Likely; Latest Flow Expectations

We expect the index review results for HSCEI to be publicly confirmed after market close on 21st August 2026. This is a good time to revisit this...

Janaghan Jeyakumar, CFA

HK Strategy: The Forthcoming Black October?

With the HSI losing 2.5% so far today (the first trading day of Oct), it will be interesting to boomerang this Insight. Based on historical...

Osbert Tang, CFA

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