Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>1Q24 sales reached 96% of 4Q23, the recent low of sales, but GM upside 1% QoQ.   </li>
<li>Demand is gradually picking up in 2Q24F, but inventory adjustments for industrial and automotive applications are ongoing.  </li>
<li>Specifically speaking, in 2Q24 we expect to see a revival in demand, with QCOQ and MPS potentially beginning to place orders in Fab 5.</li>
</ul>


1Q24 sales reached 96% of 4Q23, the recent low of sales, but GM upside 1% QoQ.   
Demand is gradually picking up in 2Q24F, but inventory adjustments for industrial and automotive applications are ongoing.  
Specifically speaking, in 2Q24 we expect to see a revival in demand, with QCOQ and MPS potentially beginning to place orders in Fab 5.


Vanguard (5347.TT):  1Q24 Sales Did Reach the Bottom, and 2Q24F Rebounds ~15% QoQ in Sales.

<ul>
<li>The utilization rate for Vanguard in 1Q24F is at a recent low of 50-53%, indicating that the utilization rate is expected to increase from 2Q24 onwards.  </li>
<li>Vanguard should consider building a new 12" Fab in Singapore, aligning with our potential acquisition of Taiwan Semiconductor (TSMC) - ADR (TSM US)'s 40nm and above business.</li>
<li>In conclusion, the future outlook appears promising for the coming 3~4 years.  </li>
</ul>


The utilization rate for Vanguard in 1Q24F is at a recent low of 50-53%, indicating that the utilization rate is expected to increase from 2Q24 onwards.  
Vanguard should consider building a new 12" Fab in Singapore, aligning with our potential acquisition of Taiwan Semiconductor (TSMC) - ADR (TSM US)'s 40nm and above business.
In conclusion, the future outlook appears promising for the coming 3~4 years.  


Vanguard (5347.TT): A Consensus View to Build a New 12" Fab in Singapore.

<ul>
<li>We anticipate that the guidance upper limit for 1Q24F results may be reached.  </li>
<li>The outlook is expected to see approximately a 10% QoQ increase in 2Q24F.  </li>
<li>The recent stock market performance may reflect enthusiasm for Vanguard, despite temporary disregard for the name.</li>
</ul>


We anticipate that the guidance upper limit for 1Q24F results may be reached.  
The outlook is expected to see approximately a 10% QoQ increase in 2Q24F.  
The recent stock market performance may reflect enthusiasm for Vanguard, despite temporary disregard for the name.


Vanguard (5347.TT): 1Q24F Could Be the Recent Bottom, and 2Q24F Should Be an Upside 10% QoQ.

<ul>
<li>Revenue declined by a single-digit percentage quarter over quarter. However, it is expected to improve in the following quarters. </li>
<li>Automotive applications are currently undergoing inventory adjustments, while consumer applications are entering the low season. Electric Vehicle components are expected to continue growing.</li>
<li>It will still maintain the previous payout level of NTD$4.5.</li>
</ul>


Revenue declined by a single-digit percentage quarter over quarter. However, it is expected to improve in the following quarters. 
Automotive applications are currently undergoing inventory adjustments, while consumer applications are entering the low season. Electric Vehicle components are expected to continue growing.
It will still maintain the previous payout level of NTD$4.5.


Vanguard (5347.TT): 1Q24F In-Line with Our Expectation, Following a Upside Quarter over Quarter.

Asia and Global Semiconductor and Tech Research

Andrew Lu

<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

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.

Vanguard Intl Semiconductor (5347 TT)

Vanguard (5347.TT): 1Q24 Sales Did Reach the Bottom, and 2Q24F Rebounds ~15% QoQ in Sales.

1Q24 sales reached 96% of 4Q23, the recent low of sales. Demand is gradually picking up in 2Q24F, but inventory adjustments for industrial and...

Patrick Liao

Vanguard (5347.TT): A Consensus View to Build a New 12" Fab in Singapore.

Vanguard's utilization rate is low in 1Q24F but expected to rise in 2Q24, potential new Fab in Singapore and acquisition of TSMC's business point...

Patrick Liao

Vanguard (5347.TT): 1Q24F Could Be the Recent Bottom, and 2Q24F Should Be an Upside 10% QoQ.

Anticipated strong 1Q24F results may hit upper limit, with 10% QoQ increase expected in 2Q24F. Stock market reflects enthusiasm for Vanguard...

Patrick Liao

Vanguard (5347.TT): 1Q24F In-Line with Our Expectation, Following a Upside Quarter over Quarter.

Quarterly sales declined but is expected to improve. Auto application are adjusting inventory, while consumer applications are entering a low...

Patrick Liao

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): 1Q24 Sales Did Reach the Bottom, and 2Q24F Rebounds ~15% QoQ in Sales.

1Q24 sales reached 96% of 4Q23, the recent low of sales. Demand is gradually picking up in 2Q24F, but inventory adjustments for industrial and...

Patrick Liao

Vanguard (5347.TT): A Consensus View to Build a New 12" Fab in Singapore.

​Vanguard's utilization rate is low in 1Q24F but expected to rise in 2Q24, potential new Fab in Singapore and acquisition of TSMC's business point...

Patrick Liao

Vanguard (5347.TT): 1Q24F Could Be the Recent Bottom, and 2Q24F Should Be an Upside 10% QoQ.

​Anticipated strong 1Q24F results may hit upper limit, with 10% QoQ increase expected in 2Q24F. Stock market reflects enthusiasm for Vanguard...

Patrick Liao

Vanguard (5347.TT): 1Q24F In-Line with Our Expectation, Following a Upside Quarter over Quarter.

​Quarterly sales declined but is expected to improve. Auto application are adjusting inventory, while consumer applications are entering a low...

Patrick Liao

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's utilization rate is low in 1Q24F but expected to rise in 2Q24, potential new Fab in Singapore and acquisition of TSMC's business point...

Anticipated strong 1Q24F results may hit upper limit, with 10% QoQ increase expected in 2Q24F. Stock market reflects enthusiasm for Vanguard...

Quarterly sales declined but is expected to improve. Auto application are adjusting inventory, while consumer applications are entering a low...