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

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>Revenues of US$568.5 million, down 10% sequentially and down 9.7% YoY, at the bottom of the previously guided range.</li>
<li>Net loss of $25.8 million compared to a profit of $7.8 million in the previous quarter and $65.5 million in the year ago period.</li>
<li>With current quarter gross margins in the 2-5% range, HHGrace has flipped from best in class in H123 to the worst in class now.</li>
</ul>


Revenues of US$568.5 million, down 10% sequentially and down 9.7% YoY, at the bottom of the previously guided range.
Net loss of $25.8 million compared to a profit of $7.8 million in the previous quarter and $65.5 million in the year ago period.
With current quarter gross margins in the 2-5% range, HHGrace has flipped from best in class in H123 to the worst in class now.


HHGrace. Yikes! Things Just Got Really Ugly

Asia and Global Semiconductor and Tech Research

Andrew Lu

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>Shortage/Oversupply, price hike/cut, automotive/industrial demand and inventory corrections are still cyclical. Gross margin should double from 22-24% now once utilization returning to 100% and no more free wafer by 2025.</li>
<li>LCD driver foundry is facing a structural competition as China panel customers are building a local supply chain.</li>
<li>Attractive below NT$70 as: 1. inventory correction should be done by 2Q24; 2. global 8" foundry sales y/y improvement began 3Q23; 3. closing to cyclical low P/BV of 2.5x.</li>
</ul>


Shortage/Oversupply, price hike/cut, automotive/industrial demand and inventory corrections are still cyclical. Gross margin should double from 22-24% now once utilization returning to 100% and no more free wafer by 2025.
LCD driver foundry is facing a structural competition as China panel customers are building a local supply chain.
Attractive below NT$70 as: 1. inventory correction should be done by 2Q24; 2. global 8" foundry sales y/y improvement began 3Q23; 3. closing to cyclical low P/BV of 2.5x.


Why Is Vanguard Semi Becoming to a Bad Student, Cyclical or Structural?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>On 7 October, Hang Seng announced the conclusions of the market consultation to increase the number of <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index (HSTECH INDEX)</a> constituents from 30 to 50.</li>
<li>While most of the proposals will be implemented as proposed, a liquidity requirement has been tightened, and revenue thresholds have been imposed for companies qualifying through the Sales Growth Stream.</li>
<li>The changes will be implemented in a single step at the December rebalance and that creates a lot of flow for all the index members, current and new.</li>
</ul>


On 7 October, Hang Seng announced the conclusions of the market consultation to increase the number of Hang Seng TECH Index (HSTECH INDEX) constituents from 30 to 50.
While most of the proposals will be implemented as proposed, a liquidity requirement has been tightened, and revenue thresholds have been imposed for companies qualifying through the Sales Growth Stream.
The changes will be implemented in a single step at the December rebalance and that creates a lot of flow for all the index members, current and new.


HSTECH Index: Market Consultation Conclusions, Updated Potential Adds & The Borderline Names

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.</li>
<li>Healthcare is the only sector in positive territory in September.  The materials sector benefited from gains in the gold sector.</li>
<li>
<a href="https://www.smartkarma.com/entities/zte-corporation-class-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE (763 HK)</a> is maintained a BUY at CMB International with a +48% 12-month upside target price.  The company is transitioning to international and AI sectors for growth.
</li>
</ul>


The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.
Healthcare is the only sector in positive territory in September.  The materials sector benefited from gains in the gold sector.

ZTE (763 HK) is maintained a BUY at CMB International with a +48% 12-month upside target price.  The company is transitioning to international and AI sectors for growth.



BUY/SELL/HOLD: Hong Kong Market Update (September 2026)

Equity Long-Short

Mo Aziz

SMIC (Semiconductor Manufacturing International Corp) / Equity Bottom-Up

SMIC (Semiconductor Manufacturing International Corp) (981 HK)

SMIC (Semiconductor Manufacturing International Corp)

<ul>
<li>China's only advanced-node foundry — China's chipmakers relies on SMIC heavily and have no real alternative domestic manufacturer. The structural moat is real, but the Premium is over-streched. </li>
<li>CNY9.5B Southbound surge on 25 June is a Micron results read-through, not a re-rating. Momentum will likely fade in 3–7 sessions. Fundamentals sets the floor.</li>
<li>
Fair Value HKD 82 (-6% DOWNSIDE Potential). Global rival Foundries (UMC, GlobalFoundries) are way cheaper on every metric. Stay on the sidelines until sharer prices retracts to HKD72–76.</li>
</ul>


China's only advanced-node foundry — China's chipmakers relies on SMIC heavily and have no real alternative domestic manufacturer. The structural moat is real, but the Premium is over-streched. 
CNY9.5B Southbound surge on 25 June is a Micron results read-through, not a re-rating. Momentum will likely fade in 3–7 sessions. Fundamentals sets the floor.

Fair Value HKD 82 (-6% DOWNSIDE Potential). Global rival Foundries (UMC, GlobalFoundries) are way cheaper on every metric. Stay on the sidelines until sharer prices retracts to HKD72–76.


SMIC (00981.HK / 688981.SH): China's Indispensable Foundry

China

Semiconductor Manufacturing International Corporation operates as a semiconductor foundry. The Company provides integrated circuit foundry and technology services including the testing, development, design, manufacturing, packaging, and sale of integrated circuits. Semiconductor Manufacturing International offers its products and services around the world.

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SMIC (Semiconductor Manufacturing International Corp) (981 HK)

HHGrace. Yikes! Things Just Got Really Ugly

A surprise loss-making Q323, ASPs down ~16% YTD and set to decline further, inventory write-downs and gross margin collapsing to the 2-5% range....

William Keating

Why Is Vanguard Semi Becoming to a Bad Student, Cyclical or Structural?

Why Is Vanguard Semi Becoming to a Bad Student? Some Cyclical or some Structural reasons for the weaknesses coupled with three reasons suggested...

Andrew Lu

HSTECH Index: Market Consultation Conclusions, Updated Potential Adds & The Borderline Names

Introduction/tightening of revenue/liquidity criteria changes the list of potential adds. Estimated one-way turnover at the Dec rebalance is 14.2%...

Brian Freitas

BUY/SELL/HOLD: Hong Kong Market Update (September 2026)

The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.

David Mudd

SMIC (00981.HK / 688981.SH): China's Indispensable Foundry

China's chipmakers heavily rely on SMIC, but the premium is over-stretched. Micron results drive surge, but fundamentals set the floor. Fair value...

Mo Aziz

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52-week Range

Market Cap (USDm)

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HHGrace. Yikes! Things Just Got Really Ugly

A surprise loss-making Q323, ASPs down ~16% YTD and set to decline further, inventory write-downs and gross margin collapsing to the 2-5% range....

William Keating

Why Is Vanguard Semi Becoming to a Bad Student, Cyclical or Structural?

Why Is Vanguard Semi Becoming to a Bad Student? Some Cyclical or some Structural reasons for the weaknesses coupled with three reasons suggested...

Andrew Lu

HSTECH Index: Market Consultation Conclusions, Updated Potential Adds & The Borderline Names

Introduction/tightening of revenue/liquidity criteria changes the list of potential adds. Estimated one-way turnover at the Dec rebalance is 14.2%...

Brian Freitas

BUY/SELL/HOLD: Hong Kong Market Update (September 2026)

The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.

David Mudd

SMIC (00981.HK / 688981.SH): China's Indispensable Foundry

​China's chipmakers heavily rely on SMIC, but the premium is over-stretched. Micron results drive surge, but fundamentals set the floor. Fair value...

Mo Aziz

China's chipmakers heavily rely on SMIC, but the premium is over-stretched. Micron results drive surge, but fundamentals set the floor. Fair value...