Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)</li>
<li>Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  </li>
<li>Cooperation with <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> is progressing well, targeting MP for 14nm in 2027.</li>
</ul>


3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)
Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  
Cooperation with Intel Corp (INTC US) is progressing well, targeting MP for 14nm in 2027.


UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>Hong Kong's secular bull market continues this year with record buying from mainland investors through the Southbound Connect platform.</li>
<li>
<a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> announced a positive profit alert of of 150% increase in profit for 2024.  The AI, phone and auto segments saw value content increases.
</li>
<li>
<a href="https://www.smartkarma.com/entities/hua-hong-semiconductor-ltd" target="_blank" data-smartkarma-citation="entities:7201:1" rel="noopener">Hua Hong Semiconductor (1347 HK)</a> is well-positioned to cater to China's increasing demand for locally designed and produced chips, especially in the EV, smart home appliances and wearables industries.
</li>
</ul>


Hong Kong's secular bull market continues this year with record buying from mainland investors through the Southbound Connect platform.

AAC Technologies Holdings (2018 HK) announced a positive profit alert of of 150% increase in profit for 2024.  The AI, phone and auto segments saw value content increases.


Hua Hong Semiconductor (1347 HK) is well-positioned to cater to China's increasing demand for locally designed and produced chips, especially in the EV, smart home appliances and wearables industries.



BUY/SELL/HOLD: Hong Kong Stock Update (February 20)

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>UMC Secures Key Qualcomm Advanced Packaging Order; Breakthrough in High-Growth Chip Supply Chain Segment</li>
<li>Why TSMC Remains Critical for QCOM Manufacturing, Yet UMC Provides a Strong Strategic Counterbalance</li>
<li>UMC Must Prove Itself, but QCOM Win Sparks Optimism for Sentiment and Outlook Recovery -- Maintain TSMC as Structural Long &amp; Rate UMC as Outperform</li>
</ul>


UMC Secures Key Qualcomm Advanced Packaging Order; Breakthrough in High-Growth Chip Supply Chain Segment
Why TSMC Remains Critical for QCOM Manufacturing, Yet UMC Provides a Strong Strategic Counterbalance
UMC Must Prove Itself, but QCOM Win Sparks Optimism for Sentiment and Outlook Recovery -- Maintain TSMC as Structural Long &amp; Rate UMC as Outperform


United Microelectronics: Key QCOM Advanced Packaging Win Signals Client Shift Away from TSMC

<ul>
<li>Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.</li>
<li>Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.</li>
<li>If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.</li>
</ul>


Given UMC's partnership with Intel to produce chips using Intel's 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
Intel's Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn't have leading edge fabs nor the balance sheet to build them.
If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.


United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

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

<ul>
<li>TSMC: +15.9% Premium; Sales Rose 33% YoY in August &amp; Headroom Increased</li>
<li>UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May</li>
<li>ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium</li>
</ul>


TSMC: +15.9% Premium; Sales Rose 33% YoY in August &amp; Headroom Increased
UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium


Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium

Taiwan

United Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs) and related electronic products.  The Company's main products are consumer electronic ICs, memory ICs, personal computer peripheral ICs, and communication ICs.

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United Microelectronics Corp (2303 TT)

UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

BUY/SELL/HOLD: Hong Kong Stock Update (February 20)

Mainland investors are buying record amounts in HK during secular bull mkt. AAC Tech reported positive earnings surprise and Hua Hong is rapidly...

David Mudd

United Microelectronics: Key QCOM Advanced Packaging Win Signals Client Shift Away from TSMC

UMC secures key Qualcomm order, providing strategic counterbalance to TSMC in chip supply chain segment. Optimism likely to improve for UMC's...

Vincent Fernando, CFA

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium

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

Vincent Fernando, CFA

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UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

BUY/SELL/HOLD: Hong Kong Stock Update (February 20)

Mainland investors are buying record amounts in HK during secular bull mkt. AAC Tech reported positive earnings surprise and Hua Hong is rapidly...

David Mudd

United Microelectronics: Key QCOM Advanced Packaging Win Signals Client Shift Away from TSMC

​UMC secures key Qualcomm order, providing strategic counterbalance to TSMC in chip supply chain segment. Optimism likely to improve for UMC's...

Vincent Fernando, CFA

United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely

​UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.

Vincent Fernando, CFA

Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium

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

Vincent Fernando, CFA

UMC secures key Qualcomm order, providing strategic counterbalance to TSMC in chip supply chain segment. Optimism likely to improve for UMC's...

UMC's partnership with Intel could lead to Intel Foundry taking a stake in UMC due to Intel's latest developments and UMC's foundry experience.