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>Its a quarter too soon to go dumpster diving in the automotive semiconductor industry. Another round of cuts is likely coming. Consider this my earnings preview.</li><li>I have leaned bearish automotive semiconductors for a few months, and I think the call has been mostly correct.</li><li>For me, the beginning of my bearishness started when I highlighted that China would try to murder the supply aspect of the market for the foreseeable future</li></ul><div data-component-name="DigestPostEmbed"><a href="https://www.fabricatedknowledge.com/p/chinese-evs-and-the-lagging-edge" target="_blank" rel="noopener"></a></div>

Its a quarter too soon to go dumpster diving in the automotive semiconductor industry. Another round of cuts is likely coming. Consider this my earnings preview.I have leaned bearish automotive semiconductors for a few months, and I think the call has been mostly correct.For me, the beginning of my bearishness started when I highlighted that China would try to murder the supply aspect of the market for the foreseeable future

Hitting the Breaks: Automotive Semiconductors

Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<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>
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.</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?

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

<ul>
<li>Qualcomm's latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results' key implications for Mediatek.</li>
<li>Qualcomm's 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.</li>
<li>Qualcomm confirmed Mediatek's view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.</li>
</ul>


Qualcomm's latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results' key implications for Mediatek.
Qualcomm's 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
Qualcomm confirmed Mediatek's view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.


Key Insights from Qualcomm's Latest Data; Mediatek Taking Market Share?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We continue to view the latest pullback as healthy/normal within the ongoing bull market, and it is quite possible that the lows have been established on MSCI ACWI (ACWI-US).</li>
<li>Upgrading EM to Market Weight; MSCI Emerging Markets, China (shanghai Composite) and Hong Kong (Hang Seng) Still Bottoming; we discussed buying in our February 23, 2024 Int'l Compass
</li>
<li>Commodities all appear to be rolling over near resistance, which is what we discussed to watch for in our April 18, 2024 Int'l Compass. This has bullish implications for ACWI</li>
</ul>


We continue to view the latest pullback as healthy/normal within the ongoing bull market, and it is quite possible that the lows have been established on MSCI ACWI (ACWI-US).
Upgrading EM to Market Weight; MSCI Emerging Markets, China (shanghai Composite) and Hong Kong (Hang Seng) Still Bottoming; we discussed buying in our February 23, 2024 Int'l Compass

Commodities all appear to be rolling over near resistance, which is what we discussed to watch for in our April 18, 2024 Int'l Compass. This has bullish implications for ACWI


Upgrading Emerging Markets to Market Weight; China/Hong Kong Continue to Bottom; Energy Breakdowns

<ul><li>Markets always act erratically, but I thought I would highlight one aspect that disproportionately impacts semiconductors.</li><li>Factor investing is not new, but we are in a unique period where Momentum has quite a period of outperformance and short-term outperformance.</li><li>This matters because semiconductors are (as far as my memory holds) the most significant weight in Momentum I’ve ever witnessed. </li></ul>

Markets always act erratically, but I thought I would highlight one aspect that disproportionately impacts semiconductors.Factor investing is not new, but we are in a unique period where Momentum has quite a period of outperformance and short-term outperformance.This matters because semiconductors are (as far as my memory holds) the most significant weight in Momentum I’ve ever witnessed. 

Netherlands

NXP Semiconductors NV operates as a global semiconductor company. The Company designs semiconductors and software for mobile communications, consumer electronics, security applications, in-car entertainment, and networking.  NXP offers its products to the automotive, identification, wireless infrastructure, lighting, mobile, and computing applications.

Nxp Semiconductors Nv (NXPI US)

Hitting the Breaks: Automotive Semiconductors

Its a quarter too soon to go dumpster diving in the automotive semiconductor industry. Another round of cuts is likely coming. Consider this my...

Fabricated Knowledge

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

Upgrading Emerging Markets to Market Weight; China/Hong Kong Continue to Bottom; Energy Breakdowns

Upgrading Emerging Markets $EEM $VWO to Market Weight; China/Hong Kong Continue to Bottom $FXI $MCHI $KWEB; Lows Likely in on $ACWI; Commodities...

Vermilion Research

Factors and Semiconductors

A friendly warning. Momentum is outperforming all factors this year, and Semiconductors are a large part of that. Markets always act erratically,...

Fabricated Knowledge

Hitting the Breaks: Automotive Semiconductors

Its a quarter too soon to go dumpster diving in the automotive semiconductor industry. Another round of cuts is likely coming. Consider this my...

Fabricated Knowledge

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

Key Insights from Qualcomm's Latest Data; Mediatek Taking Market Share?

We deep dive into Qualcomm's latest results and the key take-aways relative to Mediatek. Overall, we find the latest QCOM results as positive for...

Vincent Fernando, CFA

Upgrading Emerging Markets to Market Weight; China/Hong Kong Continue to Bottom; Energy Breakdowns

Upgrading Emerging Markets $EEM $VWO to Market Weight; China/Hong Kong Continue to Bottom $FXI $MCHI $KWEB; Lows Likely in on $ACWI; Commodities...

Vermilion Research

Factors and Semiconductors

A friendly warning. Momentum is outperforming all factors this year, and Semiconductors are a large part of that. Markets always act erratically,...

Fabricated Knowledge