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

Equity Bottom-Up

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

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>Significant revenue guidance hike -- TSMC reported 2Q24 results, increasing 2024E revenue growth guidance to exceed 'mid-20's' percent, a significant hike from previous guidance.</li>
<li>Management is low-balling LT margins -- Latest figures and long-term margin color makes us believe that TSMC will be able to increase GM much higher than current official LT guidance.</li>
<li>Signs of Apple expecting strong iPhone 16 sales -- TSMC reported strength in smartphone end-applications and we believe this is reflective of Apple ramping up re: stronger iPhone volume expectations.</li>
</ul>


Significant revenue guidance hike -- TSMC reported 2Q24 results, increasing 2024E revenue growth guidance to exceed 'mid-20's' percent, a significant hike from previous guidance.
Management is low-balling LT margins -- Latest figures and long-term margin color makes us believe that TSMC will be able to increase GM much higher than current official LT guidance.
Signs of Apple expecting strong iPhone 16 sales -- TSMC reported strength in smartphone end-applications and we believe this is reflective of Apple ramping up re: stronger iPhone volume expectations.


We See TSMC's Margins Increasing Much Higher Than Guidance in Long-Term; 2Q24 Shows Apple Ramping Up

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>TSMC expects sales to grow by mid-20% YoY in USD in 2024, compared to low to mid-20% previously.</li>
<li>The N3/N5 capacity is very tight, and they are even working with customers for 2026 capacity requirements, while N2 is on track to enter MP in 4Q25.</li>
<li>A16 will enter MP in 2H26, and it's first process starts adopting backside power.</li>
</ul>


TSMC expects sales to grow by mid-20% YoY in USD in 2024, compared to low to mid-20% previously.
The N3/N5 capacity is very tight, and they are even working with customers for 2026 capacity requirements, while N2 is on track to enter MP in 4Q25.
A16 will enter MP in 2H26, and it's first process starts adopting backside power.


TSMC (2330.TT; TSM.US): The Outlook of 3Q24 Is Pretty Much In-Line, and GM Could Be Better.

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Sino American Silicon Products / Equity Bottom-Up

<ul><li>GlobalWafers secures $400M of CHIPS Act funding; boosting semiconductor production capacity and technological advancements.</li><li>Acer targets India's booming smartphone market with a white-label strategy; aiming to capitalize on the growing demand.</li><li>Qualcomm collaborates with Microsoft to revolutionize PCs in the AI era; promising groundbreaking advancements in affordable chip designs.</li></ul>

GlobalWafers secures $400M of CHIPS Act funding; boosting semiconductor production capacity and technological advancements.Acer targets India's booming smartphone market with a white-label strategy; aiming to capitalize on the growing demand.Qualcomm collaborates with Microsoft to revolutionize PCs in the AI era; promising groundbreaking advancements in affordable chip designs.

Tech Supply Chain Tracker (17-Jul-2024): GlobalWafers gets $400M CHIPS Act funding.

<ul>
<li>TSMC: +17.9% Premium; Rebounds After Brief Breakdown; Wait for Better Levels</li>
<li>UMC: +1.8% Premium; Can Consider Shorting the Premium at Current Level</li>
<li>ASE: +5.5% Premium Represents a Major Breakdown; Can Consider Going Long</li>
</ul>


TSMC: +17.9% Premium; Rebounds After Brief Breakdown; Wait for Better Levels
UMC: +1.8% Premium; Can Consider Shorting the Premium at Current Level
ASE: +5.5% Premium Represents a Major Breakdown; Can Consider Going Long


Taiwan Dual-Listings Monitor: TSMC Rebounds After Sharp Breakdown; ASE Major Premium Breakdown

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.</li>
<li>Consensus overweights in Brazil, Mexico and Indonesia proved costly, though Materials underweights, Saudi underweights and strong stock selection in South Korea stemmed relative losses.</li>
<li>Tencent and TSMC underweights costly: Both stocks are among the top underweights among active GEM investors. Strong performance this quarter contributed to underperformance.</li>
</ul>


Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.
Consensus overweights in Brazil, Mexico and Indonesia proved costly, though Materials underweights, Saudi underweights and strong stock selection in South Korea stemmed relative losses.
Tencent and TSMC underweights costly: Both stocks are among the top underweights among active GEM investors. Strong performance this quarter contributed to underperformance.


Active GEM Fund Q2 Performance Update.  Mexico & Indonesia Overweights Cost Investors

Taiwan

Taiwan Semiconductor Manufacturing Company Ltd. manufactures integrated circuits based on its proprietary designs.  The Company offers a comprehensive set of integrated circuit fabrication processes to manufacture CMOS logic, mixed-mode, volatile and non-volatile memory and BiCMOS chips.  Taiwan Semiconductor is an affiliate of Philips Electronics N.V.

TSMC (Taiwan Semiconductor Manufacturing) - ADR (TSM US)

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TSMC (Taiwan Semiconductor Manufacturing) - ADR (TSM US)

We See TSMC's Margins Increasing Much Higher Than Guidance in Long-Term; 2Q24 Shows Apple Ramping Up

TSMC raises revenue guidance significantly for 2024E. We also see many signs that TSMC can earn higher LT margins than it is guiding. TSMC shows...

Vincent Fernando, CFA

TSMC (2330.TT; TSM.US): The Outlook of 3Q24 Is Pretty Much In-Line, and GM Could Be Better.

TSMC anticipates mid-20% sales growth in USD for 2024, with tight N3/N5 capacity and plans for N2 to enter MP in 4Q25. A16 set to enter MP in 2H26...

Patrick Liao

Tech Supply Chain Tracker (17-Jul-2024): GlobalWafers gets $400M CHIPS Act funding.

GlobalWafers secures $400M from CHIPS Act, Samsung targets wearable sales, ASML sees high demand, Acer eyes India market, Qualcomm/Microsoft...

Tech Supply Chain Tracker

Taiwan Dual-Listings Monitor: TSMC Rebounds After Sharp Breakdown; ASE Major Premium Breakdown

We analyze the premium and discount levels of dual-listed Taiwan companies, suggesting potential spread trading levels based on historical trends.

Vincent Fernando, CFA

Active GEM Fund Q2 Performance Update. Mexico & Indonesia Overweights Cost Investors

Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.

Steven Holden

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

We See TSMC's Margins Increasing Much Higher Than Guidance in Long-Term; 2Q24 Shows Apple Ramping Up

​TSMC raises revenue guidance significantly for 2024E. We also see many signs that TSMC can earn higher LT margins than it is guiding. TSMC shows...

Vincent Fernando, CFA

TSMC (2330.TT; TSM.US): The Outlook of 3Q24 Is Pretty Much In-Line, and GM Could Be Better.

​TSMC anticipates mid-20% sales growth in USD for 2024, with tight N3/N5 capacity and plans for N2 to enter MP in 4Q25. A16 set to enter MP in 2H26...

Patrick Liao

Tech Supply Chain Tracker (17-Jul-2024): GlobalWafers gets $400M CHIPS Act funding.

GlobalWafers secures $400M from CHIPS Act, Samsung targets wearable sales, ASML sees high demand, Acer eyes India market, Qualcomm/Microsoft...

Tech Supply Chain Tracker

Taiwan Dual-Listings Monitor: TSMC Rebounds After Sharp Breakdown; ASE Major Premium Breakdown

We analyze the premium and discount levels of dual-listed Taiwan companies, suggesting potential spread trading levels based on historical trends.

Vincent Fernando, CFA

Active GEM Fund Q2 Performance Update. Mexico & Indonesia Overweights Cost Investors

Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.

Steven Holden

TSMC raises revenue guidance significantly for 2024E. We also see many signs that TSMC can earn higher LT margins than it is guiding. TSMC shows...

TSMC anticipates mid-20% sales growth in USD for 2024, with tight N3/N5 capacity and plans for N2 to enter MP in 4Q25. A16 set to enter MP in 2H26...