Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>1Q26 &amp; 2026 Guidance: 1Q26 (FX 31.3); Wafer +1-3% q/q; ASP decline by 3-5% q/q; GM 28%-30%.</li>
<li>In 2026, AI investment wave drives broad semiconductor demand, plus healthy inventory adjustments; mature process capacity squeezed by AI, leading to supply shortages.</li>
<li>Achievable at 30% GM if capacity fully loaded and ASP appropriately reflects cost increases.</li>
</ul>


1Q26 &amp; 2026 Guidance: 1Q26 (FX 31.3); Wafer +1-3% q/q; ASP decline by 3-5% q/q; GM 28%-30%.
In 2026, AI investment wave drives broad semiconductor demand, plus healthy inventory adjustments; mature process capacity squeezed by AI, leading to supply shortages.
Achievable at 30% GM if capacity fully loaded and ASP appropriately reflects cost increases.


Vanguard (5347.TT): 1Q26 Met Expectations, Kicking off a Strong Growth Year.

<ul>
<li>Stock price has surged and declined too quickly in a short time—worth checking if it needs a breather.</li>
<li>1Q26 is currently expected to see QoQ around -5% to +2%, hoping to outperform past seasonal performance.</li>
<li>Consumer demand might partially pull in from 2H26 to 1H26, especially TVs for H2 events or memory influences.</li>
</ul>


Stock price has surged and declined too quickly in a short time—worth checking if it needs a breather.
1Q26 is currently expected to see QoQ around -5% to +2%, hoping to outperform past seasonal performance.
Consumer demand might partially pull in from 2H26 to 1H26, especially TVs for H2 events or memory influences.


Vanguard (5347.TT): Stock Price Rose and Fell Sharply Short-Term; 1Q26 QoQ Expected At -5% to +2%.

<ul>
<li>Management expects 4Q25 wafer shipments to decline 6–8% QoQ, while ASP should rise 4–6% QoQ, mainly due to lower DDI shipments.</li>
<li>The AI revenue share has risen from a low-single-digit percentage in 2024 to a high-single-digit level in 2025.</li>
<li>The worst phase of mature-node overcapacity has passed, and pricing pressure should ease entering 2026. </li>
</ul>


Management expects 4Q25 wafer shipments to decline 6–8% QoQ, while ASP should rise 4–6% QoQ, mainly due to lower DDI shipments.
The AI revenue share has risen from a low-single-digit percentage in 2024 to a high-single-digit level in 2025.
The worst phase of mature-node overcapacity has passed, and pricing pressure should ease entering 2026. 


Vanguard (5347.TT): 3Q25 EPS Missed Expectations; 4Q25 and 1Q26 Decline Milder Than Seasonal Trend

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Foxconn Industrial Internet / Technical Analysis

<ul>
<li>Not much has changed since our latest Int'l Compass from May 31, 2024 titled "Buy the Pullback." </li>
<li>We were buyers of the pullback in global equities (MSCI ACWI, ACWI ex-US, EAFE, EM, Europe, Japan, Taiwan, etc.) with important supports holding, combined with ongoing healthy market dynamics.</li>
<li>Supports are holding, and our bullish outlook (since early-November 2023) remains intact. Continue to buy dips.</li>
</ul>


Not much has changed since our latest Int'l Compass from May 31, 2024 titled "Buy the Pullback." 
We were buyers of the pullback in global equities (MSCI ACWI, ACWI ex-US, EAFE, EM, Europe, Japan, Taiwan, etc.) with important supports holding, combined with ongoing healthy market dynamics.
Supports are holding, and our bullish outlook (since early-November 2023) remains intact. Continue to buy dips.


Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.</li>
<li>Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  </li>
<li>By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.</li>
</ul>


The oversupply of 8"/12" mature technology and price war especially within China for the next 5 years is inevitable, especially negative for SMIC and Hua Hong Semi.
Production moving out of China semi demand might increase to 65-70% in next five years to benefit Globalfoundries, UMC, Vanguard, Powerchip mitigating impacts from rising domestic replacement in China.  
By building up in-house fabs, Huawei and HiSilicon supply chain vendors will be benefited the most like semiconductor equipment, material, fab construction, CoWoS interposer, and CoWoS packaging vendors.


No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

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)

Vanguard (5347.TT): 1Q26 Met Expectations, Kicking off a Strong Growth Year.

Semiconductor industry faces supply shortages due to AI investment wave in 2026, with potential for 30% GM if capacity fully utilized and ASP...

Patrick Liao

Vanguard (5347.TT): Stock Price Rose and Fell Sharply Short-Term; 1Q26 QoQ Expected At -5% to +2%.

Stock price volatility signals potential need for a breather, while 1Q26 expected to outperform past seasonal performance with consumer demand...

Patrick Liao

Vanguard (5347.TT): 3Q25 EPS Missed Expectations; 4Q25 and 1Q26 Decline Milder Than Seasonal Trend

Management expects a decline in wafer shipments but an increase in ASP for 4Q25, with AI revenue share rising and pricing pressure easing in 2026.

Patrick Liao

Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Downgrading Europe to Market Weight $FEZ $STOXX; Europe Still Bullish From a Price Perspective; Bullish Outlook Intact on $ACWI $EEM; Supports...

Vermilion Research

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications; Huawei and HiSilicon supply chain vendors will be benefited the most

Andrew Lu

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Vanguard (5347.TT): 1Q26 Met Expectations, Kicking off a Strong Growth Year.

​Semiconductor industry faces supply shortages due to AI investment wave in 2026, with potential for 30% GM if capacity fully utilized and ASP...

Patrick Liao

Vanguard (5347.TT): Stock Price Rose and Fell Sharply Short-Term; 1Q26 QoQ Expected At -5% to +2%.

​Stock price volatility signals potential need for a breather, while 1Q26 expected to outperform past seasonal performance with consumer demand...

Patrick Liao

Vanguard (5347.TT): 3Q25 EPS Missed Expectations; 4Q25 and 1Q26 Decline Milder Than Seasonal Trend

​Management expects a decline in wafer shipments but an increase in ASP for 4Q25, with AI revenue share rising and pricing pressure easing in 2026.

Patrick Liao

Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Downgrading Europe to Market Weight $FEZ $STOXX; Europe Still Bullish From a Price Perspective; Bullish Outlook Intact on $ACWI $EEM; Supports...

Vermilion Research

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications

No Sign of Selling Advanced Scanners by ASML to China Customers, Implications; Huawei and HiSilicon supply chain vendors will be benefited the most

Andrew Lu

Semiconductor industry faces supply shortages due to AI investment wave in 2026, with potential for 30% GM if capacity fully utilized and ASP...

Stock price volatility signals potential need for a breather, while 1Q26 expected to outperform past seasonal performance with consumer demand...

Management expects a decline in wafer shipments but an increase in ASP for 4Q25, with AI revenue share rising and pricing pressure easing in 2026.