Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.</li>
<li>Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.</li>
<li>Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.</li>
</ul>


The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.
Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.
Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.


Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.</li>
<li>The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.</li>
<li>On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.</li>
</ul>


Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.


Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

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.

Thematic (Sector/Industry)

<ul><li>IDC released 4Q22 global smartphone shipment with 18% YoY decline (vs -9.3% in 3Q22), mainly due to weak consumer demand, rising inflation and China COVID-19 impact.</li><li>For 2022, global smartphone shipment fell 11% YoY to 1.21bn unit, marking the lowest annual shipment since 2013.</li><li>By brand, Apple/ Samsung/Xiaomi/Oppo/Vivo declined 15%/16%/26%/16%/19% YoY in 4Q22.</li></ul><p><em>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.</em></p>

IDC released 4Q22 global smartphone shipment with 18% YoY decline (vs -9.3% in 3Q22), mainly due to weak consumer demand, rising inflation and China COVID-19 impact.For 2022, global smartphone shipment fell 11% YoY to 1.21bn unit, marking the lowest annual shipment since 2013.By brand, Apple/ Samsung/Xiaomi/Oppo/Vivo declined 15%/16%/26%/16%/19% YoY in 4Q22.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 - 4Q22 Global Smartphone Shipment Down 18% YoY

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Luxshare Precision Industry / Equity Bottom-Up

<ul>
<li>We have a positive view of Luxshare Precision Industry (002475 CH) and we believe its shares are well poised to outperform the market this year. </li>
<li>The recent production halts and protests at Foxconn's Zhengzhou facility due to the overly stringent COVID measures has benefited Luxshare since Apple has given more orders to the company.</li>
<li>We believe Luxshare will continue to grab more market share for producing iPhones and other products of Apple in 2023.</li>
</ul>


We have a positive view of Luxshare Precision Industry (002475 CH) and we believe its shares are well poised to outperform the market this year. 
The recent production halts and protests at Foxconn's Zhengzhou facility due to the overly stringent COVID measures has benefited Luxshare since Apple has given more orders to the company.
We believe Luxshare will continue to grab more market share for producing iPhones and other products of Apple in 2023.


Luxshare Precision Industry: More Market Share Gains from Hon Hai Precision Likely in 2023

<ul>
<li>Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.</li>
<li>Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.</li>
<li>We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.</li>
</ul>


Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.
Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.
We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.


Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

China

Luxshare Precision Industry Co., Ltd. researches, manufactures and sells connectors. The Company's products are widely used in computers, communication devices, consumer electronics products and automobiles.

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Luxshare Precision Industry (002475 CH)

Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E

Firms are also significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.

Vincent Fernando, CFA

Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a...

Vincent Fernando, CFA

China Technology - 4Q22 Global Smartphone Shipment Down 18% YoY

IDC released 4Q22 global smartphone shipment with 18% YoY decline (vs -9.3% in 3Q22), mainly due to weak consumer demand, rising inflation and...

CMB International

Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

We see Quanta & Pegatron at risk of margin pressure in 2023E -- With negative operating leverage potentially causing significant profit declines.

Vincent Fernando, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Taiwan Tech Weekly: U.S. Pushing South Korea China Restrictions, Nanya Says Memory Bottom in 1Q23E

Firms are also significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.

Vincent Fernando, CFA

Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a...

Vincent Fernando, CFA

China Technology - 4Q22 Global Smartphone Shipment Down 18% YoY

IDC released 4Q22 global smartphone shipment with 18% YoY decline (vs -9.3% in 3Q22), mainly due to weak consumer demand, rising inflation and...

CMB International

Luxshare Precision Industry: More Market Share Gains from Hon Hai Precision Likely in 2023

We believe Luxshare will continue to grab more market share for producing iPhones and other products of Apple in 2023. Recent production halts at...

Douglas Kim

Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

We see Quanta & Pegatron at risk of margin pressure in 2023E -- With negative operating leverage potentially causing significant profit declines.

Vincent Fernando, CFA