Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>Y/Y improvement for LCD, PMIC, GaAs RF, gaming card, cooling system, semi equipment&amp;material, semi fab construction, memory, and foundry vendors but more y/y deterioration for WiFi and CMOS sensor vendors</li>
<li>After 6 vendors beating consensus, we might see AI server supply chain, large panel LCD driver, WiFi/networking, and NAND flash vendors in US to report a better than expected 1Q24.</li>
<li>We might see 8"/12" raw wafer (like Shin Etsu, SUMCO , National Silicon Industry, Siltronic AG) vendors in Japan, China, and Germany to report a worse than expected 1Q24.</li>
</ul>


Y/Y improvement for LCD, PMIC, GaAs RF, gaming card, cooling system, semi equipment&amp;material, semi fab construction, memory, and foundry vendors but more y/y deterioration for WiFi and CMOS sensor vendors
After 6 vendors beating consensus, we might see AI server supply chain, large panel LCD driver, WiFi/networking, and NAND flash vendors in US to report a better than expected 1Q24.
We might see 8"/12" raw wafer (like Shin Etsu, SUMCO , National Silicon Industry, Siltronic AG) vendors in Japan, China, and Germany to report a worse than expected 1Q24.


Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales

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

<ul>
<li>Silicon wafers area shipments (in MSI) declined by 14.3% YoY in 2023</li>
<li>Wafer revenues also declined by 10.9% to $12.3 billion over the same period</li>
<li>We expect Q124 revenues to be down ~20% QoQ and anticipate a further 5% YoY decline in full year 2024 shipments</li>
</ul>


Silicon wafers area shipments (in MSI) declined by 14.3% YoY in 2023
Wafer revenues also declined by 10.9% to $12.3 billion over the same period
We expect Q124 revenues to be down ~20% QoQ and anticipate a further 5% YoY decline in full year 2024 shipments


Silicon Wafers Area Shipments Decline 14.3% YoY in 2023

Equity Bottom-Up

<ul>
<li>SUMCO reported Q225 revenues of ¥102.9 billion, flat sequentially and roughly 3% higher than guidance.</li>
<li>Operating profit of ¥1.5 billion was also slightly better than the forecasted breakeven, but dramatically down from its peak of ¥30.2 billion in Q322.</li>
<li>A projected further increase in depreciation charges for the current quarter is forecasted to drive operating profit to negative ¥3.5 billion. Yikes!</li>
</ul>


SUMCO reported Q225 revenues of ¥102.9 billion, flat sequentially and roughly 3% higher than guidance.
Operating profit of ¥1.5 billion was also slightly better than the forecasted breakeven, but dramatically down from its peak of ¥30.2 billion in Q322.
A projected further increase in depreciation charges for the current quarter is forecasted to drive operating profit to negative ¥3.5 billion. Yikes!


SUMCO Q225. Operating Profit Tanks As Depreciation Soars

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Capacity utilization at Sumco's largest customer, TSMC, jumped 10% in Q2, with another core customer, Renesas, showing consecutive improvements.</li>
<li>Surging AI chip demand and geopolitical shifts favoring non-Chinese suppliers are set to boost demand for high-end silicon wafers.</li>
<li>The stock trades at 0.7x book and 4.9x EV/EBITDA. These are levels we think the stock can make a meaningful upward advance from if the improvement in customer inventories broadens.</li>
</ul>


Capacity utilization at Sumco's largest customer, TSMC, jumped 10% in Q2, with another core customer, Renesas, showing consecutive improvements.
Surging AI chip demand and geopolitical shifts favoring non-Chinese suppliers are set to boost demand for high-end silicon wafers.
The stock trades at 0.7x book and 4.9x EV/EBITDA. These are levels we think the stock can make a meaningful upward advance from if the improvement in customer inventories broadens.


<ul>
<li>Global semiconductor sales for the month of January 2025 hit $56.5 billion, an increase of 17.9% YoY, but down 1.7% MoM</li>
<li>TSMC is also off to an excellent start in 2025. YTD revenues through February are up 39.2%.</li>
<li>2025 Semi forecast? Think 2024 without the memory boom and way more volatility</li>
</ul>


Global semiconductor sales for the month of January 2025 hit $56.5 billion, an increase of 17.9% YoY, but down 1.7% MoM
TSMC is also off to an excellent start in 2025. YTD revenues through February are up 39.2%.
2025 Semi forecast? Think 2024 without the memory boom and way more volatility


Semiconductors. Key Indicator Updates, 2024 In Review, 2025 Forecasts

Germany

Siltronic AG manufactures hyperpure silicon wafers. The Company offers products including non-polished and epitaxial coated wafers with different diameter sizes. Siltronic caters its products worldwide for use in computers, smartphones, flat-panel displays, navigation systems, automotive engine control systems, and many other applications.

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Siltronic AG (WAF GR)

Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales

Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales; we might see AI server, WiFi/networking, and NAND vendors in US to beat 1Q24 but...

Andrew Lu

Silicon Wafers Area Shipments Decline 14.3% YoY in 2023

Silicon wafers area shipments declined by 14.3% YoY in 2023 while revenues also declined by 10.9% to $12.3 billion. Q124 revenues will be down ~20%...

William Keating

SUMCO Q225. Operating Profit Tanks As Depreciation Soars

A projected further increase in depreciation charges for the current quarter is forecasted to drive operating profit to negative ¥3.5 billion. Yikes!

William Keating

Sumco (3436): So, This Is How Slumps Die

Unprecidented growth in customer inventory is what started Sumco's slump, but now customers are reporting increased capacity utilization, driven by...

Michael Allen

Semiconductors. Key Indicator Updates, 2024 In Review, 2025 Forecasts

2025 Semi forecast? Think 2024 without the memory boom and way more volatility. Chaos will ultimately beget opportunity, just not yet...

William Keating

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