This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Tech Weekly: New China Tech Restrictions Monday; PC Demand Commercial Vs. Consumer Disconnect
- US Set to Unveil New Wave of Semiconductor Restrictions on China
- Hon Hai Subsidiary Says Progress for Nvidia GB200 Servers is Smooth, Mass Production in 2025E
- PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
2. Taiwan Dual-Listings Monitor: TSMC Spread Maintains Elevated Range; UMC Short Interest Rises Higher
- TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
- UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
- ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising
3. Delta Taiwan Vs. Thailand Monitor: Delta Thai Remains at Extreme Relative Value Even After Sell-Off
- Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
- Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
- Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform
4. Intel Finalises US CHIPS Funding But With Some Rather Unusual T&C’s
- Intel is now set to receive $7.86 billion in CHIPs Act funding, down from the $8.5 billion originally touted back in March 2024
- The funding comes with a raft of restrictions and caveats regarding what happens in the event of any changes in Intel’s organizational structure and/or ownership
- The US Department of Commerce also reserves the right to withhold funding and/or weigh in on decisions around outsourcing if Intel fails to meet key, critical milestones. Ouch!
5. Taiwan Semiconductor Industry Aggregate Analysis: Margins Challenged; Inventory Data Positive
- Gross Margins Aggregate Data – Shows Taiwan Semiconductor Companies Under Pressure
- How TSMC and GlobalWafers show two very different margin environments; However everyone needs to manage rising energy costs into 2025E
- Aggregate Inventory Levels — Inventory Days Declining Trend is a Positive Sign
6. PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump
- Soft PC Results from Dell and HPQ and Delayed Industry PC Upgrades into 2025E; Dell and HPQ Shares Fall Sharply
- Conclusion: Both Firms Confirm Relative Strength for Commercial and Weakness for Consumer; AI PCs and Windows 11 to Drive 2025E Upgrades
- Asia PC Makers Showing Stronger Growth; However, Dell & HPQ Share Rout May Weigh on Sentiment
7. Taiwan Dual-Listings Monitor: TSMC Spread Approaching Short Level; UMC Short Interest Soars Higher
- TSMC: +20.4% Premium; ADR Premium is Approaching a Short Level
- UMC: +0.7% Premium; Short Interest Soars to New Two-Year Highs
- ASE: +4.2% Premium; ADR Headroom Falls to 100% Maxed Out
8. Memory Monitor: Decoupling Trade Long SK Hynix Vs. Short Nanya Tech
- Memory Market Diverges: AI Demand Continues to Surges While Legacy Segments Struggle in November
- Diverging Demand Trends Highlight Market Decoupling — AI Driving HBM, Server DRAM, QLC NAND Demand
- Outlook for the Memory Market — Decoupling Trade: Long SK Hynix vs. Short Nanya Tech Trade
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. SUMCO Despairs On Legacy Rebound, EVs, China, Visibility Etc…
- The pace of recovery in 200 millimeters appears to have been very weak. Customers continue to respect LTA prices but we have to push out delivery timing which impacts volumes.
- China appears to have developed their own capability to fabricate wafers. Quality does not necessarily appear to be very good but there is strong pressure to comply with “Buy China”
- The recovery in legacy applications has been surprisingly slow. At this stage we don’t know whether it is a slow recovery or in fact that there won’t be a recovery.
2. Taiwan Tech Weekly: Taiwan Firms to Surge U.S. Investment Due to Trump?; AI PCs & Memory Expansion
- Hon Hai, Pegatron, and Quanta Gear Up for Potential U.S. Investment Surge Amid Trump Policy Speculation
- PC Monitor: Asustek & Lenovo Signal Strong PC Growth, AI PC Expansion in Process
- Semiconductor Memory Q324 Revenue Close To Historic Highs Even As Decoupling Intensifies
3. Taiwan Dual-Listings Monitor: Weakness Could Open TSMC Long Level; ASE Short Interest Keeps Surging
- TSMC: +16.7% Premium; Further Market Weakness Could Soon Open Up Good Long Level
- UMC: -2.1% Discount; Good Level to Go Long the ADR Spread
- ASE: -0.1% Discount; Premium Completely Broken Down & Local Short Interest Continues to Surge
4. PC Monitor: Asustek & Lenovo Signal Strong PC Growth, AI PC Expansion in Process
- Asustek Guides for 20%+ YoY PC Revenue Growth in 4Q24E; Lenovo Delivers 17% YoY PC Revenue Growth in CY3Q24
- AI PCs: A Multi-Year Upgrade Cycle with Rising Average Selling Prices; AI PCs 80% of the PC Market by 2027E
- Maintain Structural Long View for AI PC Up-Cycle; Asustek, Acer, & Lenovo Well-Positioned Through 2025E
5. NVIDIA Q3FY25 Growth Story Still On Track But Heed The Flaws In Jensen’s GenAI Vision
- NVIDIA this week reported Q3FY25 revenues of $35.082 billion, up 17% QoQ, up 94% YoY and a full $2.5 billion above the guided midpoint.
- Looking ahead, NVIDIA is forecasting revenues of $37.5 billion, up ~7% sequentially. Gross margins to decline slightly to 73%.
- Contrary to Jensen Huang’s vision, the existing $1 trillion worth of data centers do not need to be “modernized” into AI factories. This is pure fantasy.
6. NVIDIA: Waiting on Blackwell, and the Networking Question
- Nvidia posted earnings yesterday, and guidance was light of buy-side bogeys. I’m not going to step into the mind game of bogeys here, but there are some finer points to focus on.
- NVIDIA reports Q3 EPS $0.81 ex-items vs FactSet $0.75. Reports Q3: Revenue $35.08B vs FactSet $33.17B (2 billion beat like clockwork)
- Q4 Guidance: Revenue $37.5B +/- 2% vs FactSet $37.09B (a bit light). GAAP and non-GAAP gross margins are expected to be 73.0% and 73.5%, respectively, +/- 50 bps. (also light)
7. For Its WFE Q324 Season Finale, AMAT Returns ASML’s Favour & Sinks Semis Yet Again
- Revenues of $7.05 billion were marginally higher than midpoint of $6.93 billion, up 4% QoQ and up 5% YoY. Guided current quarter at $7.15 billion +1.5% QoQ , +10.5% YoY
- Most WFE share prices have retreated to early 2022 levels, matching with when annual revenues first exceeded the $100 billion level
- After a 44% growth spurt in 2021, we have had three years with mostly no growth. We expect the same in 2025. Invest accordingly
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. 2025 High Conviction: AI Chip Spend Slows
- AI spending is fueling today’s semiconductor market, as generative AI demand falls into place
- Hyperscale datacenters are doing the bulk of today’s spending as they invest in advance of demand
- These investments are falling into question, and spending is likely to level off or drop in 2025, leading to a dramatic semiconductor downturn
2. Earnings: ENTG, ALAB, LSCC, SITM, QCOM, MCHP, WOLF, ARM, ACLS, AAOI, ANET, LITE, COHR
- Entegris Inc (ENTG US) – Memory spending is happening next year, but MSI remains weak.
- Astera Labs (ALAB US) – This is now the second way to play a levered Trainium ramp, as they have extensive content with Amazon.com Inc (AMZN US).
- Lattice Semiconductor (LSCC US) – Standard kitchen sink; I like the stock long-term.
3. Silergy (6415.TT): It Will Grow in 4Q24, While Auto Is Expected to Grow to 15% by the End of 2025.
- In the 3rd quarter of 2024, revenue was NT$4,284 million, the gross margin (GM) was 55%, the operating profit margin (OPM) was 24%, and the net margin was 15%.
- The Gen-4 product line is ramping up and is expected to contribute around 4% of total revenue by the end of 2025.
- Chinese current economic stimulus programs may impact demand in the Consumer segment.
4. Silicon Wafers Q324 Area Shipments, Revenue, EBIT, Outlook & More
- Silicon wafer area shipments in Q324 amounted to 3,214 million square inches (MSI), up 5.9% QoQ and up 6.8% YoY,
- Q324 saw the combined revenues from the top four players in the segment reaching $2.5 billion, up 0.5% QoQ and up 6.5% YoY
- Top 4 EBIT amounted to just $337 million, up 1.5% QoQ but down 38.9% YoY.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Premium Holding Up; ASE & CHT See Sharp Drops
- TSMC: +15.6% Premium; Relatively Aggressive Trade is to Long Premium
- ASE: -3.0% Discount; Good Level to Go Long the Premium
- CHT: -2.8% Discount; Good Level to Go Long the Premium
2. TSMC Q324 Earnings Key Takeaways
- Q424 revenue forecast of $26.5 billion, up 13% QoQ and the highest Q3 to Q4 revenue jump since Q4 2017
- Demand for AI acceleration is real and just beginning. According to a key customer of theirs, “demand right now is just insane”
- Overseas fabs progressing well with Arizona yielding well and on track for high volume production in early 2025
3. ASML Tanks Semis On Tepid 2025 Outlook
- ASML reported revenues of €7.5 billion, +19% QoQ and +11.9% YoY. This was €200 million above the high end of the guided range. Q424 guided to €9 billion
- Logic Fab delays and a collapse in sales to China caused ASML to reduce their 2025 forecast to the low end of the €30 -€40 billion guided in November 2022
- Despite these challenges, ASML’s latest forecast still implies 16% YoY growth in 2025
4. TSMC 3Q24: Capex & Margin Guidance Remains Strong; Explains Why AI Demand Not Overhyped; Stay Long
- TSMC Delivers Strong 3Q24 Revenue and Margin Growth; Margin Guidance Climbs
- Management Says Believes AI Demand is Not Hyped… Companies Extracting ROIs
- TSMC – Structural Long Rating Maintained; NT$1,515 Price Target Suggests 46% Upside
5. Semis Just Broke a Record. Why Did Nobody Notice?
- August’s WSTS semiconductor revenues registered a record high of more than $53 billion
- Nobody seemed to notice, including the organization making the announcement
- There’s valid concern that the market is on the verge of a collapse, and this may be overshadowing record sales
6. TSMC (2330.TT; TSM.US): 4Q24 Outgrowth; Co-Work with Almost AI Innovators.
- 4Q24 Guidance: Sales will be US$26.1-26.9bn, up 13%; GM outlook will be 57-59%; and OPM outlook is 46.5-48.5%
- AI revenue contribution will triple and reach mid-teens sales contribution this year. Almost every AI innovator cooperates with TSMC.
- APT will grow above the corporate average in the next five years.GM is approaching the corporate average, but it’s not the same currently.
7. KYEC (2449.TT): 4Q24 Outlook Brightening; NVDA Will Become #1 Client in 2025
- We expect King Yuan Electronics Co, Ltd. (2449 TT)‘s 4Q24 outlook to be a seasonal uptrend with a slight increase quarter-over-quarter.
- NVIDIA Corp (NVDA US) will become the top client at KYEC, and Mediatek Inc (2454 TT) is expected to become the second-largest client in the outlook for 2025.
- The focus will primarily be on currently available sources, particularly KYEC for production.
8. Taiwan Tech Weekly: IPhone 16 Sales Surge in China; Samsung’s Strength Diluted Against TSMC’s Focus
- Hua-Where? Hua-Who? Report: Apple’s iPhone 16 Pro & Pro Max Sales Surge 44% in China; A Strong Start Amidst Competition
- Samsung Under Siege: Facing Major Challenges Across Verticals as TSMC Tightens Foundry Grip
- TSMC 3Q24: Guidance Remains Strong; Explains Why AI Demand Not Overhyped; Stay Long… TSMC is Working with All AI Innovators
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Tech Weekly: TSMC Taking More Samsung Customers; Hon Hai Unveils Major AI Projects
- Samsung’s foundry business is losing more customers to TSMC, who is perceived as lower risk.
- TSMC, UMC Monthly Sales: TSMC up strong but plateauing, UMC lackluster, confirming 2 big trends.
- Memory Monitor: Nanya results miss; highlights weakness in non-AI demand.
2. TSMC (2330.TT; TSM.US): The Productivity and Profitability Are the Essential Competitiveness.
- For 2nm technology, Taiwan Semiconductor (TSMC) (2330 TT) should start Apple (AAPL US) iPhone 17 production in the middle of 2025, most likely.
- TSMC’s competitors, Samsung Electronics (005930 KS) and Intel Corp (INTC US) are running foundry business and keeping owning manufacturing business at the same time, which is contradictory to purely foundry business.
- To making the advanced chip in the US, we consider the main main concern still the cost.
3. TSMC Q324 Earnings Preview
- September 2024 revenues of NT$251.87 billion, an increase of 0.4% MoM and an increase of 39.6% YoY.
- Year to date revenue through September 2024 now totals NT$2,025.85 billion, an increase of 31.9% YoY.
- Anticipating Q4 revenue forecast of $25.7 billion, up 10% QoQ. This would mean full year 2024 revenues of $88.8 billion, a 28.3% YoY increase
4. Cerebras Files Intent To IPO. This Will Be Interesting
- Cerebras presently derives up to 87% of its revenue from G42
- Microsoft gatecrashed Cerebras party with a $1.5 billion investment in G42 to “accelerate AI development and global expansion”
- G42 “severed its ties” with China in advance of the Microsoft investment
5. Graphene. Wonder Material Or Hype Magnet?
- Two decades ago, graphene hit the headlines after two professors at University of Manchester managed to isolate a slice of the just one-atom thick substance using scotch tape
- Marketed as being 200 times stronger than steel, graphene rapidly gained “wonder material” status and spawned a tidal wave of graphene based products, companies and investment opportunities
- At least four “Graphene” companies listed on London’s AIM, collectively once worth north of $1 billion, have either delisted or been reduced to penny stock status.
6. UMC (2303.TT; UMC.US): 4Q24 Outlook Blurred; QCOM Opens up a New Chance; Considering Selling Fab 8S.
- United Microelectron Sp Adr (UMC US)’s outlook for 4Q24 is expected to show a decrease of around -5% QoQ, with a minimum gross margin of 30%.
- Qualcomm Inc (QCOM US) moving out of Semiconductor Manufacturing International Corp (SMIC) (981 HK) and has opened up opportunities for UMC.
- UMC is considering selling its 8″ Fab, known as 8S, due to its consistently poor performance.
7. Nuclear Zeitgeist Part 1: A Reactor Primer
- Last month, the DOE published a paper about the commercial liftoff of Advanced Nuclear.
- Larry Ellison mentioned that SMRs (Small modular reactors) will power data centers in the future, and Microsoft will unshutter 3 Mile Island for one last puff of a half-smoked cigarette. Just a few years ago, it was closed for economic reasons.
- This is going to be the first in a series about Nuclear Power. Today, I’ll talk about Nuclear Reactors and the basics.
8. Taiwan Semi Monthly Tracker Red Flags Double MoM In September 2024
- Seven Taiwan semi companies from our list of sixteen are now showing negative YoY monthly growth as of September 2024, up from just three a month earlier
- Companies with a strong exposure to the AI Acceleration market are on track for strong revenue growth YoY in 2024. ASPEED is on track to double revenues this year.
- For many of the remainder, what tepid growth they had been experiencing may be starting to stall. Watch this space.
9. Taiwan Dual-Listings Monitor: TSMC Spread Back to Elevated Range; ASE Short Interest Spikes Higher
- TSMC: +18.6% Premium; Spread Has Returned to Previous Elevated Trading Range
- UMC: +1.5% Premium; Wait for Higher Level Before Shorting the Spread
- ASE: +4.2% Premium; Can Consider Going Long the Spread at Current Level
10. Memory Monitor: Nanya Results Miss; Highlights Weakness in Non-AI Demand
- Nanya Tech’s 3Q24 results missed expecations by a wide margin, coming in with a net loss instead of the consensus expectation for a profit.
- Nanya highlighed weakness in non-AI end applications for memory and cut its 2024E Capex guidance by nearly 25%, signaling caution towards the current market cycle.
- While the company’s new DDR5 capacity ramp-up should support stronger margins into 2025E, Nanya has yet to show a signifcant margin upturn in the cycle.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging
- TSMC: +14.2% Premium; Can Consider Going Long at Current Level
- UMC: +1.8% Premium; The ADR Headroom Has Decreased Yet Again
- ASE: +5.4% Premium; Short Interest Surging for The Local Shares
2. Ibiden (4062 JP): Once Again a Long-Term Buy
- Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.
- Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.
- Management’s long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.
3. The Cerebras IPO Stucture Sucks
- I’m not going to write about the technical side at all, as I expect Dylan Patel’s team at SemiAnalysis to do a much better job than I can do alone.
- However, I want to note some of the funniest aspects because landmines are everywhere for this IPO. Of course, it’s driven by G42, but it’s much worse than you think. Here’s the prelim S-1.
- G42 is pretty much the only customer.
4. Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?
- Key iPhone components suppliers’ share prices have substantially underperformed Apple, particularly Largan Precision, Genius Electronic Optical, and Zhen Ding.
- There are reasons for iPhone 16 upgrade optimism. We also note that key suppliers failed to rally with Apple shares post-Fed rate cut.
- Apple suppliers’ 2025E forecasts haven’t fallen much so far, despite the negative stock market reaction. If negative iPhone 16 reports prove exaggerated, Largan, Genius, and Zhen Ding could rebound.
5. Taiwan Tech Weekly: Apple Shifting AR Strategy After Meta Orion Showcase; Apple Supply Chain Monitor
- Apple Set to Launch iPhone SE 4 and Updated iPad Air in Early 2025: Key Developments to Watch
- META’s Orion AR Glasses: Next Major Computing Platform After the Smartphone?
- Apple Supply Chain Monitor: Key IPhone Suppliers Didn’t Rally With Apple; Opportunity for Rebound?
6. GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?
- Tier 2 foundry revenue recovery is taking far longer than most expected.
- Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.
- Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. United Microelectronics: Intel Foundry Should Take a Stake; Latest News Makes This More Likely
- Given UMC’s partnership with Intel to produce chips using Intel’s 12nm fab capacity, we believe latest Intel developments increase the opportunity for Intel Foundry to take a stake in UMC.
- Intel’s Foundry business makes a strong partner for UMC who has deep foundry experience and talent, but doesn’t have leading edge fabs nor the balance sheet to build them.
- If Intel Foundry Services spins out or Intel strengthens its balance sheet through a deal with Qualcomm/Apollo, the potential for a deeper UMC-Intel Foundry partnership becomes even more compelling.
2. Memory Monitor: Micron Results Show Clear Signs of Memory Market Upswing; DRAM Growth Upgraded
- Micron’s latest results show a clear improvement in the Memory cycle. The company’s gross margin increased and guided for a further strong margin increase next quarter.
- Micron increased its overall DRAM industry growth forecast while maintaining its NAND flash forecast. Micron reiterated expectations for FY2025E to deliver record revenue for the company, with improving profitability.
- Positive news for fallen Memory industry shares — Within our Memory universe we have Structural Long ratings for Micron Technology (MU US), SK Hynix (000660 KS), and Silicon Motion Technology (SIMO US).
3. Memory Monitor: Upcoming Micron Results & Outlook Key Amid Reports of Inventory Liquidation
- Memory stocks underperformed the market, falling sharply with the recent overall market rout and failing to rebound sufficiently with the latest market rally.
- Leading Memory names Micron, SK Hynix, Samsung are all substantially below their 52-week highs after market reports of slowing memory demand from PC and mobile industries and inventory liquidation.
- Taiwan names Nanya Tech, Silicon Motion, Phison are all we below their highs. Micron results on September 25th MT will provide a major outlook update for the market.
4. Micron. Zoom, Zoom, Zoom, We’re Going To The Moon…
- Q424 revenue $7.8 billion which was $200 million above the guided midpoint, up 14% QoQ and up 93% YoY.
- Q125 revenue of $8.7 billion with gross margin 39.5%. This will be the company’s highest ever quarterly revenue
- On track for ~20% share of a $25 billion HBM market in 2025
5. Micron and WFE
- Just two weeks ago, I wrote about how I thought this was a mid-memory cycle.
- I mainly supported the memory companies if you didn’t read between the lines (ChatGPT o1 (Strawberry) and Memory)
- Fast-forward a week, and it seems that the calls for the end of memory were a bit premature.
6. Silergy (6415.TT): Positive Optimistic Future Outlook
- China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
- Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
- While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Taiwan Dual-Listings Monitor: TSMC Returning to Higher Trading Range? ASE’s Two Upcoming Events
- TSMC: +16.6% Premium; Returning to the 15 – 20% Trading Range?
- UMC: +0.5% Premium; Near the Middle of the Historical Trading Range
- ASE: +5.2% Premium; Participating in Two Investor Conferences in Next Two Weeks
2. Lattice Semiconductor
- It’s an exciting time when your favorite semiconductor CEO comes out of “retirement” to return as a CEO.
- Mine is personally Ford Tamer, who drove Inphi to ship the best DSP in the market against much larger competitors at a much faster pace.
- In my opinion, Inphi was almost a miracle story in semiconductors. It was a literal David versus Goliath, and the man who led the team was Ford.
3. Intel. US DoD & AWS Deals Are Distractions While The Head Remains Firmly In The Sand
- US DoD & AWS deals are little more than distractions from the main event
- Making Intel Foundry a subsidiary won’t make one whit of a difference but may just be the next step in its eventual spin-off
- The core issue, the GM collapse in Q224, was not addressed in the BM update from the CEO. That’s a problem.
4. Taiwan Tech Weekly: TSMC Apple Arizona Production Milestone, Samsung 3nm Yield Still Weak Vs. TSMC
- TSMC’s U.S. Production Strategy Achieves Major Milestone – Begins Production of Apple A16 Chips in Arizona
- Reports of Apple’s Disappointing Initial iPhone 16 Sales Data; Key Taiwan Suppliers Top Losers Recently
- Samsung Falling Behind TSMC – New Report of Low Yields Continuing to Plague Samsung’s 3nm AI Processors
5. Hezbollah’s Pager Explosions and South Korea’s Security Breach – Implications for Tech Supply Chains
- Explosive pagers linked to Hezbollah attacks spark controversy for a Taiwanese brand.
- Not just Lebanon – today it was reported that the South Korean military removed Chinese-made CCTV cameras after secret backdoors were detected.
- A counter-intuitive conclusion: Despite recent news, is the trend ultimately positive for Taiwanese tech hardware makers?
6. PC Monitor: Microsoft Copilot Wave 2 Unveils Major AI Boost; Reiterate Structural Long for PC Makers
- Microsoft today announced a major Copilot update, called “Wave 2”, introducing a new collaborative interface and enhanced Copilot capabilities across all major Office apps.
- Copilot continues to gain momentum with large corporations, as Microsoft announced today that Vodafone has adopted it for 68,000 employees.
- We remain Structurally Long PC Makers – We continue to believe Microsoft’s Copilot will drive PC upgrades as users recognize the productivity benefits of faster ‘AI PCs’.
7. Current Semi Surge Still Strong
- The semiconductor market is currently enjoying an AI-driven demand surge
- The past two demand-driven surges have turned into collapses as growth returned to the long-term trend
- When we compare the past two cycles to the current one, it appears that a collapse could occur relatively soon
8. ChatGPT o1 (Strawberry) and Memory
- Strawberry was a breakthrough. Some people ask, “What’s the big deal?” but feasibly, there is a new scaling law working in tandem with training, and that’s the Chain of Thought / Inference.
- The chart below is a bit confusing, but the conclusion is the longer the model “thinks,” the better the answer.
- The new model has another log-linear scaling law. It pretty much computes, and the Bitter Lesson wins again.
9. Global Semi Sales Strength Continues In July. How Long Can It Last?
- Global semiconductor sales for the month of July 2024 amounted to $51.3 billion, representing an increase of 18.7% increase YoY and a 2.7% increase MoM
- The July revenue number was the second highest monthly semiconductor revenue ever recorded, the highest being $51.7 billion in May 2022
- Increasing memory prices along with modest recoveries in both PC and Smartphone unit shipments will continue to drive semi sales higher through EOY 2024.
10. Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity
- Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management’s guidance looks conservative.
- KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
- The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Advantest (6857 JP): High Valuation, Low Visibility
- Visibility is poor. Following excellent 1Q results, management raised FY Mar-25 sales guidance by 14%, operating profit guidance by 53% and net profit guidance by 57%.
- Strong demand for AI processors and memory should support more than 35% growth in IC tester revenues and a doubling of operating profit in the two years to Mar-26.
- The shares have dropped to the bottom of their recent trading range, but are still selling at more than 30x our EPS estimate for next fiscal year.
2. Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium
- TSMC: +15.9% Premium; Sales Rose 33% YoY in August & Headroom Increased
- UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
- ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium
3. Taiwan Tech Weekly: TSMC Becoming More Dominant; Apple’s AI Opportunity; Taiwan Market Hammered
- TSMC Extends Global Foundry Dominance Amid 33% Sales Surge – A Buy on Weakness Despite Market Concerns
- Apple ‘Glowtime’ AI Announcements: Mixed Analyst and Media Reactions May Overlook Key Advantage — Apple Is Best Positioned to Seamlessly Integrate AI Into Your Smartphone Experience
- Taiwan Market Gainers & Losers: Consumer Electronics & Memory Names Some of the Hardest Hit
4. Silicon Wafers. Recovery Is Nigh Yet Valuations Have Slumped To 5 Year Lows. But Why?
- During Q224, the top 4 silicon wafer manufacturers saw their revenues increase 12.3% QoQ to ~$2.5 billion. This was down 3% YoY.
- Silicon wafer area shipments in Q224 amounted to 3,035 million square inches (MSI), an increase of 7.1% QoQ but a decline of 8.9% YoY.
- The Silicon wafer segment is entering a recovery phase. Yet, you can buy the key players today for the same price you would have paid 5 years ago. That’s nice..
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1. Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
- The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
- Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock
2. Intel Cancels 20A. Now Why Would They Go & Do That?
- Intel’s CFO says the company is going to “kind of skip over productizing 20A”
- This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
- The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp
3. TSMC (2330.TT; TSM.US): Benefiting from Intel (INTC.US) Skipping 20A Process.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.
- Intel plans to stick with the 18A process and has identified about 5 potential customers.
- As of now, TSMC remains the primary source for technology deliveries.
4. Taiwan Tech Weekly: Nvidia’s SG Revenue Red Flag; Rise of Custom Silicon; SEMICON Taiwan This Week
- Latest Industry Signals — Nvidia Crashed While Marvell Soared… Custom Silicon a Threat to Nvidia’s Monster Growth? Taiwan AI/Server Exposed Names Were a Mixed Bag of Performance
- Key Events to Watch — SEMICON Taiwan This Week, We Will Be Attending
- Perspective — NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
5. Hotchips Conference Sparknotes
- Hot Chips this year was primarily about AI chips (per the theme of every semiconductor conference as of late).
- The most impactful presentation by far was the Broadcom CPO presentation, SuperMicro water cooling, MTIA, and some honorable mentions to Enfabrica and Dojo/Mojo from Tesla.
- The biggest disappointment was AMD, which presented nothing incremental and, of course, the CPU announcements.
6. Vanguard (5347.TT): The Outlook of 4Q24 Seems a Bit Softer.
- The 4Q24 is slightly on the downside, and we are currently adopting a somewhat conservative approach.
- Visibility extends for no more than 3 months, and any increase in demand is primarily driven by urgent orders.
- As for the upcoming 12″ Fab, which is in collaboration with Nxp Semiconductors Nv (NXPI US), it has commenced local recruitment efforts in Singapore.