Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (2330 TT)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.</li>
<li>Faster ramp on N3, likely N3E, N3P than competitor's. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024. </li>
<li>TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12" mature technology despite better demand 8" specialty technology. </li>
</ul>


TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.
Faster ramp on N3, likely N3E, N3P than competitor's. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024. 
TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12" mature technology despite better demand 8" specialty technology. 


What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors

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?

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>It remains cautiously optimistic for the 2024 outlook despite limited order visibility.  </li>
<li>The Vanguard wafer shipment has decreased by 8-10% QoQ, with the ASP declining by 0-2% QoQ. The GM for 4Q23F is projected to be 22-24%. </li>
<li>The smartphone and computing/NB/TV sectors have returned to normal levels.</li>
</ul>


It remains cautiously optimistic for the 2024 outlook despite limited order visibility.  
The Vanguard wafer shipment has decreased by 8-10% QoQ, with the ASP declining by 0-2% QoQ. The GM for 4Q23F is projected to be 22-24%. 
The smartphone and computing/NB/TV sectors have returned to normal levels.


Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.

<ul>
<li>Vanguard's order visibility is about two months, and its order backlog is also about two months now.</li>
<li>Vanguard's goal is to establish a 12" wafer Fab, which we estimate will likely be viable around 2026F.</li>
<li>We believe that technology nodes below 28nm HKMG, specifically 40nm and below, would be suitable for transfer.</li>
</ul>


Vanguard's order visibility is about two months, and its order backlog is also about two months now.
Vanguard's goal is to establish a 12" wafer Fab, which we estimate will likely be viable around 2026F.
We believe that technology nodes below 28nm HKMG, specifically 40nm and below, would be suitable for transfer.


VIS (5347:TT): The Outlook Is a Bit Slower in 4Q23F

TSMC (Taiwan Semiconductor Manufacturing) (TSM US)

<ul>
<li>We estimate that TSMC’s revenue could grow by approximately 40%–43% YoY in 2026.</li>
<li>2027 growth remains dominated by AI and its the only Key Growth Driver  </li>
<li>The Key Question: What Will Happen in 2028? Investment Slightly Exceeds Near-Term Demand — Our Preferred Scenario</li>
</ul>


We estimate that TSMC’s revenue could grow by approximately 40%–43% YoY in 2026.
2027 growth remains dominated by AI and its the only Key Growth Driver  
The Key Question: What Will Happen in 2028? Investment Slightly Exceeds Near-Term Demand — Our Preferred Scenario


TSMC (2330.TT;TSM.US): Preferred Scenario Is: Investment Slightly Exceeds Near-Term Demand by 2028

Taiwan

Vanguard International Semiconductor Corporation offers integrated circuit foundry services.  The Company manufactures 0.18um logic, mixed-signal, analog, high voltage, low power, CMOS RF, flash, embedded memory, and bipolar CMOS DMOS semiconductors.

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Vanguard Intl Semiconductor (5347 TT)

What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors

What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors; TSMC expects 2024 semi sector in recovery with 20...

Andrew Lu

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

Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.

It remains cautiously optimistic for the 2024 outlook despite limited order visibility. The smartphone and computing/NB/TV sectors have returned...

Patrick Liao

VIS (5347:TT): The Outlook Is a Bit Slower in 4Q23F

Vanguard's order outlook is a bit slower in 4Q23F. Vanguard's goal is to establish a 12" wafer Fab, which we estimate will likely be viable with...

Patrick Liao

TSMC (2330.TT;TSM.US): Preferred Scenario Is: Investment Slightly Exceeds Near-Term Demand by 2028

TSMC’s revenue could grow by approximately 40%–43% YoY in 2026. 2027 growth remains dominated by AI. Investment Slightly Exceeds Near-Term Demand —...

Patrick Liao

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