Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>Markets always act erratically, but I thought I would highlight one aspect that disproportionately impacts semiconductors.</li><li>Factor investing is not new, but we are in a unique period where Momentum has quite a period of outperformance and short-term outperformance.</li><li>This matters because semiconductors are (as far as my memory holds) the most significant weight in Momentum I’ve ever witnessed. </li></ul>

Markets always act erratically, but I thought I would highlight one aspect that disproportionately impacts semiconductors.Factor investing is not new, but we are in a unique period where Momentum has quite a period of outperformance and short-term outperformance.This matters because semiconductors are (as far as my memory holds) the most significant weight in Momentum I’ve ever witnessed. 

Asia and Global Semiconductor and Tech Research

Andrew Lu

<ul>
<li>Continuous weaknesses to be seen in industrial and general non-AI server semi demand starting 3Q23 and lasting into 1Q24 and some weaknesses in digital consumer semi demand starting 4Q23.</li>
<li>Memory semiconductor vendors see strengths in 4Q23 and continuous improvement in DRAM/NAND price in 1Q24.</li>
<li>We see a healthy mid single digit q/q and y/y decline on 4Q23 MOI but suggest vendors to avoid in next 1-2 months before they guide down the market.</li>
</ul>


Continuous weaknesses to be seen in industrial and general non-AI server semi demand starting 3Q23 and lasting into 1Q24 and some weaknesses in digital consumer semi demand starting 4Q23.
Memory semiconductor vendors see strengths in 4Q23 and continuous improvement in DRAM/NAND price in 1Q24.
We see a healthy mid single digit q/q and y/y decline on 4Q23 MOI but suggest vendors to avoid in next 1-2 months before they guide down the market.


First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

<ul>
<li>There are signs of a recovery in the chip sector</li>
<li>Memory spot prices are up, and revenues have risen for six consecutive months</li>
<li>Growth is higher than average, indicating the start of another super-cycle</li>
</ul>


There are signs of a recovery in the chip sector
Memory spot prices are up, and revenues have risen for six consecutive months
Growth is higher than average, indicating the start of another super-cycle


Equity Bottom-Up

<ul>
<li>Micron's Sept 29 4QF22 earnings call met the company's low guidance for the quarter</li>
<li>The company's current-quarter outlook is for a significantly worse 4QF22</li>
<li>This phenomenon will impact the earnings for all of Micron's competition in upcoming calls</li>
</ul>


Micron's Sept 29 4QF22 earnings call met the company's low guidance for the quarter
The company's current-quarter outlook is for a significantly worse 4QF22
This phenomenon will impact the earnings for all of Micron's competition in upcoming calls


Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> is the second-largest Dynamic Random-Access Memory (DRAM) semiconductor Integrated Device Manufacturer (IDM) in the world and is set to become a major player in the global NAND industry following the acquisition of <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a>’s NAND business. Based on the compelling demand outlook for the industry, the significant increase in spot memory prices this year, and the expected revenue uplift in 2022 from the closure of the Intel NAND acquisition there looks to be room for an upside surprise to current earnings expectations which could sustain the earnings upgrade cycle, for a stock that is trading on valuation multiples that are below historical average levels as well as that of global peers. This insight is also a natural follow up from an idea generated through our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index: <a href="https://www.smartkarma.com/insights/screening-for-gems-july-2021" target="_blank" data-smartkarma-citation="insights:53931" rel="noopener">Screening for GEMs: July 2021</a>.

SK Hynix (000660 KS) is the second-largest Dynamic Random-Access Memory (DRAM) semiconductor Integrated Device Manufacturer (IDM) in the world and is set to become a major player in the global NAND industry following the acquisition of Intel Corp (INTC US)’s NAND business. Based on the compelling demand outlook for the industry, the significant increase in spot memory prices this year, and the expected revenue uplift in 2022 from the closure of the Intel NAND acquisition there looks to be room for an upside surprise to current earnings expectations which could sustain the earnings upgrade cycle, for a stock that is trading on valuation multiples that are below historical average levels as well as that of global peers. This insight is also a natural follow up from an idea generated through our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index: Screening for GEMs: July 2021.

SK Hynix: Leading DRAM IDM, Trading at Discount Multiples, in a Strong Demand Environment

United States

Western Digital Corporation is a global provider of solutions for the collection, storage, management, protection and use of digital content, including audio and video. The Company's products include hard drives, solid-state drives, and home entertainment and networking products.

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Western Digital (WDC US)

Factors and Semiconductors

A friendly warning. Momentum is outperforming all factors this year, and Semiconductors are a large part of that. Markets always act erratically,...

Fabricated Knowledge

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid; Weaknesses to be seen in industrial, general non-AI server semi,...

Andrew Lu

Are Semiconductors Finally Recovering?

The chip sector is beginning to recover with rising memory prices and six consecutive months of above-average revenue growth, suggesting the onset...

Jim Handy

Micron FYQ4: Bad, and About to Get Worse

Micron announced revenues down 23% Quarter on Quarter and guided down another 36% Q/Q for the current quarter. This shows what upcoming results...

Jim Handy

SK Hynix: Leading DRAM IDM, Trading at Discount Multiples, in a Strong Demand Environment

In this insight, we take a closer look at SK Hynix, the 2nd largest DRAM IDM in the world and its potential for re-rating driven by a continuation...

Wium Malan, CFA

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Factors and Semiconductors

A friendly warning. Momentum is outperforming all factors this year, and Semiconductors are a large part of that. Markets always act erratically,...

Fabricated Knowledge

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid

First Run of Tech/Semis' Guidance Tells Us What Industries and Companies to Avoid; Weaknesses to be seen in industrial, general non-AI server semi,...

Andrew Lu

Are Semiconductors Finally Recovering?

​The chip sector is beginning to recover with rising memory prices and six consecutive months of above-average revenue growth, suggesting the onset...

Jim Handy

Micron FYQ4: Bad, and About to Get Worse

Micron announced revenues down 23% Quarter on Quarter and guided down another 36% Q/Q for the current quarter. This shows what upcoming results...

Jim Handy

SK Hynix: Leading DRAM IDM, Trading at Discount Multiples, in a Strong Demand Environment

In this insight, we take a closer look at SK Hynix, the 2nd largest DRAM IDM in the world and its potential for re-rating driven by a continuation...

Wium Malan, CFA

The chip sector is beginning to recover with rising memory prices and six consecutive months of above-average revenue growth, suggesting the onset...