Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

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

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>The US-China trade war has shaped a new trend: Advanced and Matured Technologies led by <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-sp-adr" target="_blank" data-smartkarma-citation="entities:8587:1" rel="noopener">Taiwan Semiconductor (TSMC) - ADR (TSM US)</a> and <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a> respectively.</li>
<li>Notably, construction of semiconductor fabs in Singapore seems to be of lesser concern at the moment.</li>
<li>The emergence of AI offers new hope, not only for advanced semiconductor technology but also for lagging technologies.</li>
</ul>


The US-China trade war has shaped a new trend: Advanced and Matured Technologies led by Taiwan Semiconductor (TSMC) - ADR (TSM US) and Semiconductor Manufacturing International Corp (SMIC) (981 HK) respectively.
Notably, construction of semiconductor fabs in Singapore seems to be of lesser concern at the moment.
The emergence of AI offers new hope, not only for advanced semiconductor technology but also for lagging technologies.


The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Synnex Technology International / Index Rebalance

<ul>
<li>There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.</li>
<li>Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.</li>
<li>An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.</li>
</ul>


There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.


TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

Technology / Semiconductor / Internet Research

Nicolas Baratte

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>Chinese Foundries (HuaHong, SMIC) have outgrown ex-China (GlobalFoundries, UMC, Vanguard) very significantly. Reacting to US sanctions, Chinese Chip Designers have shifted to domestic Foundries. China / ex-China supply-chains have decoupled.</li>
<li>End-Demand diverged up to 2Q24. Chinese Foundries were mentioning end-demand recovering, customers restocking, tight capacity. Ex-China Foundries mentioning the opposite: weak end-demand, customers destocking, low utilization. </li>
<li>Change of direction in 3Q24. Chinese Foundries become cautious, we see an obvious inventory problem on overblown end-demand growth expectations. Ex-China end-demand is stabilizing, destocking coming to an end.</li>
</ul>


Chinese Foundries (HuaHong, SMIC) have outgrown ex-China (GlobalFoundries, UMC, Vanguard) very significantly. Reacting to US sanctions, Chinese Chip Designers have shifted to domestic Foundries. China / ex-China supply-chains have decoupled.
End-Demand diverged up to 2Q24. Chinese Foundries were mentioning end-demand recovering, customers restocking, tight capacity. Ex-China Foundries mentioning the opposite: weak end-demand, customers destocking, low utilization. 
Change of direction in 3Q24. Chinese Foundries become cautious, we see an obvious inventory problem on overblown end-demand growth expectations. Ex-China end-demand is stabilizing, destocking coming to an end.


Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>The 4Q24 outlook shows a decline of 12% in revenue, 3% in GM, and 15% in OPM compared to the previous quarter.</li>
<li>AI-Related demand is an ongoing trend, with AI smartphones, PCs, and NBs expected to drive replacement demand.</li>
<li>Mass production of expected OLED TDDI is set to begin in 2Q25 and is progressing smoothly with customers.</li>
</ul>


The 4Q24 outlook shows a decline of 12% in revenue, 3% in GM, and 15% in OPM compared to the previous quarter.
AI-Related demand is an ongoing trend, with AI smartphones, PCs, and NBs expected to drive replacement demand.
Mass production of expected OLED TDDI is set to begin in 2Q25 and is progressing smoothly with customers.


Novatek (3034.TT): 4Q24 Revenue Downside of More than 10% QoQ.

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>Due to reduced seasonal demand, 4Q24 shipments will decrease by 10% to 12% (QoQ, while the average selling price (ASP) will increase by 3% to 5% QoQ.</li>
<li>Vanguard's investment in <a href="https://www.smartkarma.com/entities/episil-holdings-inc" target="_blank" data-smartkarma-citation="entities:7688:1" rel="noopener">Episil Holdings (3707 TT)</a> is focused on the 8" SiC process, indicating Vanguard's ventures into the 8" SiC foundry sector in the near future.</li>
<li>Vanguard is confident in maintaining a minimum DPS policy of NT$4.5</li>
</ul>


Due to reduced seasonal demand, 4Q24 shipments will decrease by 10% to 12% (QoQ, while the average selling price (ASP) will increase by 3% to 5% QoQ.
Vanguard's investment in Episil Holdings (3707 TT) is focused on the 8" SiC process, indicating Vanguard's ventures into the 8" SiC foundry sector in the near future.
Vanguard is confident in maintaining a minimum DPS policy of NT$4.5


Vanguard (5347.TT): 4Q24 Outlook Is a Bit Better, but Investment in EPISIL Isn't a near Term Payback

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)

The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.

US-China trade war drives shift towards Advanced and Matured Technologies led by TSMC and SMIC, with AI offering hope for semiconductor and...

Patrick Liao

TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

There are 15 changes a side for the TIP Taiwan Value High Dividend Index in November. Estimated one-way turnover is 26% and there are 16 stocks...

Brian Freitas

Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

Nicolas Baratte

Novatek (3034.TT): 4Q24 Revenue Downside of More than 10% QoQ.

4Q24 outlook shows decline in revenue, GM, and OPM. AI-related demand driving replacement demand. OLED TDDI mass production set for 2Q25.

Patrick Liao

Vanguard (5347.TT): 4Q24 Outlook Is a Bit Better, but Investment in EPISIL Isn't a near Term Payback

4Q24 shipments to decrease by 10-12% due to reduced demand, while ASP will increase by 3-5%. Vanguard's investment in Episil focuses on 8" SiC...

Patrick Liao

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52-week Range

Market Cap (USDm)

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The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.

​US-China trade war drives shift towards Advanced and Matured Technologies led by TSMC and SMIC, with AI offering hope for semiconductor and...

Patrick Liao

TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week

There are 15 changes a side for the TIP Taiwan Value High Dividend Index in November. Estimated one-way turnover is 26% and there are 16 stocks...

Brian Freitas

Foundries. China (Hua Hong, SMIC) Has Outperformed but on Poor Margins & Inventory Risk.

​Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

Nicolas Baratte

Novatek (3034.TT): 4Q24 Revenue Downside of More than 10% QoQ.

​4Q24 outlook shows decline in revenue, GM, and OPM. AI-related demand driving replacement demand. OLED TDDI mass production set for 2Q25.

Patrick Liao

Vanguard (5347.TT): 4Q24 Outlook Is a Bit Better, but Investment in EPISIL Isn't a near Term Payback

​4Q24 shipments to decrease by 10-12% due to reduced demand, while ASP will increase by 3-5%. Vanguard's investment in Episil focuses on 8" SiC...

Patrick Liao

US-China trade war drives shift towards Advanced and Matured Technologies led by TSMC and SMIC, with AI offering hope for semiconductor and...

Chinese foundries have overgrown ex-China counterparts, but now face inventory issues. Ex-China foundries are stabilizing, destocking coming to an...

4Q24 outlook shows decline in revenue, GM, and OPM. AI-related demand driving replacement demand. OLED TDDI mass production set for 2Q25.

4Q24 shipments to decrease by 10-12% due to reduced demand, while ASP will increase by 3-5%. Vanguard's investment in Episil focuses on 8" SiC...