Tech Hardware and Semiconductor

1. Taiwan Dual-Listings Monitor: TSMC Premium Near All-Time Highs; CHT Rare Discount Level

By Vincent Fernando, CFA, Zero One

• TSMC: +28.4% Premium; Near-All-Time High, Good Level to Short the Spread
• UMC: -0.4% Discount; Fifth Consecutive Month of Increase in ADR Headroom
• CHT: -0.9% Discount; Good Level to Go Long the Spread

2. TSMC Q424 Earnings Preview, 2025 & Q125 Look Ahead

By William Keating, Ingenuity

• December 2024 revenues of NT$278.16 billion, up 0.8% MoM and up a remarkable 57.8% YoY. It was the second highest monthly revenue in the company’s history.
• Q424 revenue amounted to NT$868,460. At the company’s forecasted exchange rate for Q4,  NT$32 to the US$, this amounts to $27.14 billion, the company’s highest quarterly revenue ever
• We expect 2025 to be another growth year for TSMC, likely in the mid to high teens range. Expect Q125 to be down ~5% QoQ based on normal seasonality.

3. Is Quantum Computing An Existential Threat To NVIDIA?

By William Keating, Ingenuity

• This is the claim made by an analyst covering IonQ after Jensen’s comments at CES 2025 last week, which tanked share prices of the top four QC proponents
• The CEO’s of both D-Wave and IonQ responded rapidly with press releases refuting his claims and sharing updated, positive news wrt their financials
• What exactly did he say that caused such a response, is he correct or is QC going to eat NVIDIA’s lunch? 

4. TSMC 4Q24 Results Signal Multi-Year Market Share Gains; Margin Strength; Sustainable Industry Growth

By Vincent Fernando, CFA, Zero One

• TSMC 4Q24 Gross Margin Comes In At High End of Range; Profit +57% YoY
• TSMC’s Latest Strong Capex Guidance is Good News for Industry Sentiment
• Long-Term Gross Margins — Will Recently High Gross Margins Become a “New Normal”?

5. TSMC (2330.TT; TSM.US): Will Rapidus Threaten TSMC’s 2nm Market? We Think It’s Too Early to Say.

By Patrick Liao

• There is a great opportunity for someone joining an advanced semiconductor manufacturing camp because there could be fewer players in the field.  
• For a long time, TSMC production staff have won better bonuses in the company, meaning they might be able to overcome the difficulties in production.  
• Rapidus might need another 5 years or more to become profitable if everything runs smoothly for 2nm technology. 

6. Taiwan Tech Weekly: TSMC Results; Earnings Preview; Delta Thailand Convertible

By Vincent Fernando, CFA, Zero One

• TSMC Results Today; Arizona Production of 4nm Started, Yield on Par with Taiwan
• TSMC Q424 Earnings Preview, 2025 Outlook & Q125 Look Ahead 
• Delta Taiwan Vs. Thailand Monitor: Convertible Sale; Delta Thailand Should Underperform Vs Parent Co 

7. TSMC (2330.TT; TSM.US): 4Q24 Results and 1Q25 Guidance; CoWoS Grows 45% CAGR; Setup of 10 Fabs WW.

By Patrick Liao

• Revenue reached USD$26.88 billion (compared to guidance of 26.1-26.9 billion USD) / NTD$868.46 billion  (+14.3% QoQ, +38.8% YoY); Gross margin at 59%,within the guided range of 57-59%.
• Revenue expected to be in the range of USD$25-25.8 billion (-5.5% QoQ) impacted by seasonal factors, offset by AI demand. Gross margin: 57-59%.   
• AI revenue is expected to double in 2025. With the advancement of AI technologies, the company anticipates mid-40s CAGR for AI accelerators within a five-year period (2024-2029),

8. Delta Taiwan Vs. Thailand Monitor: Convertible Sale; Delta Thailand Should Underperform Vs Parent Co

By Vincent Fernando, CFA, Zero One

• Delta Thailand Weakness Amid Block Trade and Convertible Bond News
• Delta Taiwan Offering Convertible Bonds, Convertible into Delta Thailand Shares
• Delta Thailand Still Overvalued Relative to Delta Taiwan — Short Delta Thailand vs. Long Delta Taiwan

9. UMC (2303.TT; UMC.US): A Slightly Further Improvement 1Q25 Outlook

By Patrick Liao

• In 1Q25, there was a further improvement to -5% QoQ for UMC, and its gross margin is at around 26-28%.
• The extra improvement is from Novatek Microelectronics Corp (3034 TT), which has also received an additional order from Vivo.   
• The outlook remains unclear as Samsung Electronics (005930 KS) is facing uncertainties in 2025.

10. TSMC. The Juggernaut Accelerates!

By William Keating, Ingenuity

• AI related demand accounted for ~15% of revenue in 2024, i.e. ~$13.5 billion. This is set to double to $27 billion in 2025
• 5 year growth CAGR of 20%, at the top end of the previously guided 15-20% range
• On track for $100 billion revenue in 2025, and most likely, $200 billion by 2030

1. NVIDIA @ CES 2025. Forget The AIPC, We’ve Got A Supercomputer PC!

By William Keating, Ingenuity

• Project Digits is a supercomputer on everybody’s desk for $3000. Seems crazy but feels like 1977 Ken Olson moment “no reason anyone would want a computer in their home”
• Lack of data center revenue growth predictions likely spooked investors and triggered a ~10% pullback. Just buy the dip, you know you want to…
• Micron and MediaTek both jumped on news of their further involvement in NVIDIA’s AI acceleration hardware supply chain. 

2. TSMC (2330.TT; TSM.US): 1Q25 Outlook, TSMC Will Use 2nm in 4Q25, and Production Will Occur in 1Q26.

By Patrick Liao

• After the peak of 4Q24, Taiwan Semiconductor (TSMC) – ADR (TSM US)‘s  revenue will see a decline of about -5% QoQ in 1Q25.  
• TSMC is expected to use 2nm technology in 4Q25, and we believe Advanced Micro Devices (AMD US) and Apple (AAPL US) could present products around 1Q26.
• TSMC could be set to announce its 2nm production plans, expansion into the US, Germany, and Japan, mature technology quotations, and the Capex budget for 2025. 

3. 2025 AI & Semiconductor Outlook

By Douglas O’Laughlin, Fabricated Knowledge

• Last year, I called 2024 the year of AI’s adolescence, and that was quite a call. I “predicted” growing pains or a tremendous growth spurt, and the immense growth spurt happened all right.
• This last year was the year of AI through and through.
• There’s a deep irony because anything related to AI had a phenomenal year while everything else languished. Surprisingly, SOXX underperformed the SPY, which seemed unheard of for the year that SOXX’s largest components ripped 100%+.

4. Intel @ CES 2025. Doubling Down On The AIPC & Other Fantastical Tales

By William Keating, Ingenuity

• Intel is pinning much hope on the success of the AIPC, a venture in which they are tied at the hip with Microsoft, which calls it a CoPilot+ PC
• The AIPC/CoPilot+ PC concept is struggling to gain traction. They will sell in volume, but only because buyers will have limited alternatives available. Ultimately, we see AIPCs cannibalising non-AIPCs
• Intel’s performance was underwhelming to say the least, but at the same time, not in the least bit surprising. Earnings coming on January 23. 

5. Taiwan Tech Weekly: Latest TSMC Pricing for Apple Supports Bullish Margin Case; SK Hynix’s HBM Win

By Vincent Fernando, CFA, Zero One

• Latest TSMC Price Hike — Introducing the $18,000 Wafer; Supports The Case That Management Margin Guidance is Overly Conservative
• Mover Over Apple, Nvidia Could Become TSMC’s Largest Customer in 2025E
• SK Hynix(000660.KS): Insisting on HBM Technology and Continuing to Surpass Samsung in Net Earnings 

6. UMC (2303.TT; UMC.US): 1Q25 Outlook; Surprise Support of Taiwanese Fabless.

By Patrick Liao

• United Microelectron Sp Adr (UMC US) experiences approximately a 5-10% quarter-over-quarter (QoQ) decline in 1Q25. For the full year of 2025, we anticipate a modest year-over-year (YoY) decline of around 5%.
• We have observed some strength from Taiwanese Fabless companies, which could support the 1Q25 demand for UMC.  
• It has been noted that mature wafer demand is not solely driven by China and may help offset the impacts of the US-China Trade War, benefiting foundries outside of China.

7. Intel (INTC.US): Exploring a Tough Journey. (II)

By Patrick Liao

• Considering of current financial outcome of Intel Corp (INTC US), we cannot but favor Advanced Micro Devices (AMD US).
• Currently, Advanced Micro Devices (AMD US) has a more favorable competitive landscape compared to Intel Corp (INTC US).
• The competition in PC CPU emphasizes not only performance but also heat dissipation and other techniques related to supply management.    

1. Micron. So Long Legacy & Hello There HBM, Data Center & Leading Edge

By William Keating, Ingenuity

• Micron’s Q1F25 met expectations on key metrics but the ~9% downward guidance for the current quarter sent the share price into a tailspin
• Consumer-Related inventory issues and China competition were highlighted as the root causes for the surprise downward guide
• Micron is ok to cede legacy products to China competition and focus instead on the much more lucrative leading edge products, especially HBM. The transition could be rocky however

2. Memory Monitor: The Emerging Mass-Market Edge AI Need for Mobiles; Long Micron Vs. Short Nanya Tech

By Vincent Fernando, CFA, Zero One

• Micron’s Latest Outlook Disappoints & Shares Fall; Decoupling Trade Between SK Hynix & Nanya Tech Has Worked However
• Smartphone AI Insights — On-Device Local Search & Context-Aware Interfaces Emerging as Key Local AI Needs
• Conclusion — Consider Swapping In MICRON as the Long Side of the Memory Decoupling Trade

3. Nvidia (NVDA.US): To Establish Offshore Headquarter in Taiwan.

By Patrick Liao

• NVIDIA Corp (NVDA US) CEO Mr. Jensen Huang announced plans to establish an offshore headquarters in Taipei during his visit this June.
• From a geopolitical perspective, Taiwan is one of the focal points where the U.S. and China could potentially be in conflict. 
• Focusing on AI, NVIDIA Corp (NVDA US) is currently attracting significant attention, but the decision to establish an offshore headquarters in Taipei is raising curiosity.

4. Hamamatsu Photonics (6965 JP): Rebound Ahead

By Scott Foster, LightStream Research

• Profits and share price stabilizing after steep declines, although margins still under pressure from rising R&D and depreciation, and costs associated with recent acquisitions.
• Sales of medical equipment to recover from post-COVID decline. Semiconductor equipment driven by advanced logic and high-bandwidth memory. Lasers to become fourth major product division.
• Buy for the long-term. Risks include Trump tariffs, weak European economies, emergence of Chinese competition.

5. United Microelectronics: Key QCOM Advanced Packaging Win Signals Client Shift Away from TSMC

By Vincent Fernando, CFA, Zero One

• UMC Secures Key Qualcomm Advanced Packaging Order; Breakthrough in High-Growth Chip Supply Chain Segment
• Why TSMC Remains Critical for QCOM Manufacturing, Yet UMC Provides a Strong Strategic Counterbalance
• UMC Must Prove Itself, but QCOM Win Sparks Optimism for Sentiment and Outlook Recovery — Maintain TSMC as Structural Long & Rate UMC as Outperform

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

By Patrick Liao

• 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.

7. Taiwan Tech Weekly: Rapidus’s Challenge Vs. TSMC for 2nm; Hon Hai Hunting for Automaker Acquisition

By Vincent Fernando, CFA, Zero One

• Rapidus vs. TSMC: Can Japan’s Newcomer Compete in the 2nm Race?
• Memory Monitor: The Emerging Mass-Market Edge AI Need for Mobiles; Long Micron Vs. Short Nanya Tech 
• Hon Hai Pauses Nissan Pursuit Amid Honda Talks — A Japanese Savior for Nissan is Likely But This Confirms Hon Hai’s EV Ambitions Remain High

8. Taiwan Dual-Listings Monitor: TSMC ADR Spread Near All-Time Highs; UMC at Upper End of Range

By Vincent Fernando, CFA, Zero One

• TSMC: +25.4% Premium; At Historical Highs, Good Level to Short the Spread
• UMC: +2.1% Premium; Upper Level of Historical Range, Short Level
• ASE: +5.4% Premium; Near-Term High However Likely Best to Wait for Higher Levels

9. Nidec (6594 JP): Acquisition of Makino Milling Would Add Value

By Scott Foster, LightStream Research

• Nidec has announced its intention to acquire Makino Milling Machine (6135 JP) for ¥11,000 per share, a 42% premium over Thursday’s closing price.
• The stock market liked the idea. Nidec’s share price rose 4% on Friday. Makino’s jumped 19%. The pice looks high, but at 17.7x Makino’s EPS guidance, it is not unreasonable.
• The acquisition would be accretive to earnings and bring greater scale and competitiveness to Nidec’s machine tool business. It should support our Buy recommendation. 

10. SK Hynix(000660.KS): Insisting on HBM Technology and Continuing to Surpass Samsung in Net Earnings

By Patrick Liao

• SK Hynix (000660 KS)‘s key turning point is its dedication to developing High Bandwidth Memory (HBM) technology, which has finally paid off.
• In the third quarter of 2024, SK Hynix (000660 KS) continued to surpass Samsung Electronics (005930 KS) net earnings based on their financial results.   
• Samsung Electronics (005930 KS) is reportedly exploring partnership opportunities with Taiwan Semiconductor (TSMC) – ADR (TSM US) in the realm of HBM, aiming to strengthen its ties with NVIDIA.

1. Mediatek: Google Reportedly Dropping QCOM & Adopting Mediatek for Pixel 10 Modem; Structural Long

By Vincent Fernando, CFA, Zero One

• Report — Google Drops QCOM, Shifts to MediaTek for Pixel 10’s 5G Modems
• Strong “Double” Indication for Mediatek’s Competitiveness — Combined with Recent Reports that Mediatek Won Apple to Provide Modems for the Apple Watch
• Mediatek’s Opportunity to Deliver a Big Win for Google; Maintain Our Structural Long Rating for Mediatek.

2. Taiwan Tech Weekly: Apple’s TSMC 2nm Power Move Beats Samsung; Himax Ascends with TSMC/Nvidia Halos

By Vincent Fernando, CFA, Zero One

• Apple’s 2nm Power Move with TSMC — Beating Samsung Yet Again
• Why TSMC’s 2nm Will be Huge — Extending Tech Lead vs. Samsung & Major AI/Power Consumption Benefits for Customers
• The Memory Decoupling Trade is Working — Nanya Tech Underperforms SK Hynix

3. TSMC (2330.TT; TSM.US): 2025 Could Achieve 25% Yearly Growth.

By Patrick Liao

• We anticipate Taiwan Semiconductor (TSMC) – ADR (TSM US) can achieve a 25% growth in 2025.  
• It is unsurprising for TSMC to dominate in AI, including the assembly and testing segments.  
• Chinese companies are also involved in AI, but there hasn’t been a recent spread as a result of U.S. sanctions.  

4. General Motors Abruptly Pulls The Plug On Cruise

By William Keating, Ingenuity

• GM announced it will no longer continue to fund its loss making Cruise subsidiary, effectively ending its RoboTaxi ambition. Market reaction? Nothing.
• Microsoft has already announced it will write off its $800 million investment made back in 2021 when Cruise was valued at $30 billion
• Root cause? The tsunami that was triggered by Cruise’s botched response to an accident in October 2023. 

5. Taiwan Dual-Listings Monitor: TSMC Spread at Short Level; UMC and CHT Short Interest Spikes

By Vincent Fernando, CFA, Zero One

• TSMC: 22.7% Premium; Good Level to Short the Spread Given Historical Trading Range
• UMC: +0.2% Premium; Middle of Historical Trading Range; Short Interest Rises to New High
• CHT: +0.5% Premium; Major Spike in Short Interest for the Local Taiwan Shares

6. MediaTek (2454.TT): Google Pixel 10 Will Use MediaTek’s Modem

By Patrick Liao

• Alphabet (GOOGL US) Pixel 10 will use the Mediatek Inc (2454 TT) T9000 modem.  
• The shipment quantity to the smartphone market is small, and we see this as a small triumph for Mediatek Inc (2454 TT).
• Samsung Electronics (005930 KS) is facing a 3nm process issue and lacks the capacity to support its own smartphone CPU Exynos 2400.

7. Scaling Laws Meet Economics, but Adoption is still Accelerating

By Douglas O’Laughlin, Fabricated Knowledge

• Technological model scaling is not dead, but we are clearly at a critical moment when the definitions will shift.
• Pre-training, the original scaling law, might hit its first diminishing return. The piece SemiAnalysis used the analogy that pre-training was like the end of Dennard’s law.
• However, multi-core scaling led to another decade of scaling transistors. Technology progresses, just not in the same way.

8. Intel (INTC.US): Exploring a Tough Journey.

By Patrick Liao

• Regardless of the circumstances, Intel Corp (INTC US) must select a new CEO and hope that a new strategy will turn the situation around.  
• A possible decision to spin off Altera could signal the possibility of Intel further breaking into several parts.
• For the near term, Intel must overcome financial and management challenges, and laying off 1/10 of its workforce is a short-term and necessary step.  

1. Taiwan Tech Weekly: TSMC 2NM Yield Jump Rumors; Seeing Taiwan’s Starlink Alternative Firsthand in KS

By Vincent Fernando, CFA, Zero One

• TSMC’s N2 Progress Sparks Buzz Amid Yield Improvement Rumors; If True Then 2nm Will Become Even More Successful Than 3nm
• Hon Hai & TASA Showcase Homegrown Space Technologies Including an Alternative to Starlink
• Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing 

2. Intel Ex-CEO Calls For 24 Hours Of Prayer & Fasting For Intel’s Remaining 100k Employees

By William Keating, Ingenuity

• Pat Gelsinger took to X to invite us to join him in 24 hours of “praying and fasting” for Intel’s 100k employees to help them navigate “this difficult period”
• This is an unprecedented move never before seen in the semiconductor world, albeit we suspect that IBM may have dabbled in something similar to resurrect their 2nm process prowess
• This coming Thursday is the proposed date. Don’t expect miracles, this could take until the following Monday for the full impact to manifest itself in terms of share price appreciation

3. Taiwan Dual-Listings Monitor: TSMC Spread At Decent Short Level; UMC Short Interest Rises Again

By Vincent Fernando, CFA, Zero One

• TSMC: +23.5% Premium; Decent Level to Short Relative to Historical Trading Range
• UMC: +0.1% Premium; Middle of the Historical Trading Range; Short Interest Rises Again
• ASE: +3.5% Premium; Near Middle of Recent Range, Wait for Better Levels

4. AMD’s Lisa Su Named Time CEO Of The Year

By William Keating, Ingenuity

• AMD’s Lisa Su has been honoured as Time’s CEO of the year, a fitting tribute to a leader who  pulled off what many thought to be impossible
• Despite flawless execution and carving out a brand new $5 billion market segment within AI Acceleration, AMD’s share prices is down 44% from its 52 week high
• AMD will ultimately face headwinds from Arm but, for the time being, their growth will come from continuing to take market share from Intel and building on their Instinct platform 

5. Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing

By Vincent Fernando, CFA, Zero One

• Last Week: Himax Buyback Program Announced; Likely a Strong Use of Cash
• Himax Strengthening Automotive Display Leadership; Progress with Korea Display Companies
• Himax LCOS Microdisplay Technology Deepening Entrenchment in Designs of Major AR Glasses Players — Maintain Structural Long Rating.

6. Mediatek: Apple Watch Win Highlights Smartwatch Market Opportunity; Apple Supply Chain Breakthrough

By Vincent Fernando, CFA, Zero One

• Mediatek’s Apple Watch Win Highlights Smartwatch Market Opportunity; Breakthrough Into Apple’s Supply Chain
• MediaTek’s Role in Apple Watch Connectivity; Mediatek’s TSMC Relationship to Provide a Lasting Advantage
• Mediatek Rallied But Remains Below Highs; Significant Upside Remains — Maintain Structural Long

7. MediaTek (2454.TT): D9400 Success Will Extend into 2025. Prepare to Re-Qualify IPad and IWatch.

By Patrick Liao

• Although the outlook for 1Q25 might be somewhat negative, we believe that it is a reasonably typical result.
• We understand that MediaTek did not succeed in qualifying its Apple iPad and iWatch CPUs originally, but we believe it is now preparing for a re-qualification process.
• Looking ahead to 2025, we anticipate a more favorable outlook for MediaTek.

8. Nidec (6594 JP): India & Nvidia Point the Way Forward

By Scott Foster, LightStream Research

• Shipping the first water-based cooling systems for servers equipped with Nvidia’s new Blackwell GPUs and building two new motor factories in India.
• Moving beyond excessive dependence on China while restructuring operations to reduce costs. Sales short of 1H guidnce, but operating profit up. 
• Share price down 30% since May and close to its 52-week low. Selling at 17.5x this fiscal year’s EPS guidance, the lowest P/E multiple in a decade. 

9. Intel. Laser Focus & No More Meaningless Life-Time Value Foundry Deal Updates

By William Keating, Ingenuity

• Laser focus, transparency and adoption of a “say do” approach to measuring success are now the order of the day at Intel
• Data Center roadmap not in good shape and if IFS can’t deliver, MJ won’t hesitate to outsource DC products to TSMC alongside existing Client products.
• Gaudi is not a mass market product, Falcon Shores won’t be great either but we will listen, learn, iterate and fail quickly. Watch out NVIDIA !

1. Understanding Kioxia, A Worthwhile IPO?

By Jim Handy, Objective Analysis

• Kioxia is planning to offer its IPO on 18 December 2024.  This Insight profiles Kioxia and its market.
• NAND flash, Kioxia’s product, is a commodity, and that results in dramatic price, revenue, and margin swings.
• Kioxia is in a joint venture that provides excellent scale economies which are offset by a supply agreement that amplifies troubles caused by oversupplies

2. Intel CEO Shock Resignation. What’s Going On?

By William Keating, Ingenuity

• No stated reason for Mr. Gelsinger’s shock resignation as Intel’s CEO. 
• CFO and CCG leaders named as interim co-CEO’s with the latter also assuming a newly created role as CEO of Intel’s Products (CCG, DCAI & NEX)
• It’s the beginning of the end for Intel as we used to know it

3. ASML. Class Action Lawsuit Looms As Share Price Declines 37% From Peak

By William Keating, Ingenuity

• A case against ASML being brought by the Hollywood Firefighters Pension Fund (HFPF) is now opening up into a class action lawsuit
• Claims that ASML withheld crucial information from investors in the Jan-Oct 2024 time period, e.g. impact of US sanctions, strength of the semi recovery, order backlog etc. 
• In reality, ASML warned in October 2023 that 2024 would be a zero growth year. Did the HFPF think they were kidding?

4. The Death of Intel: When Boards Fail

By Douglas O’Laughlin, Fabricated Knowledge

• If you haven’t heard the news, Pat Gelsinger is “retiring.” The reality is this was not a retirement but a firing of Pat.
• His brief stint of 1386 days was surprising because not only was he the most technically competent CEO of the last few bad apples at Intel, but he was also among the shortest.
• Pat has by no means been perfect, and the conference at UBS kind of showed the frustrations that the board likely had with Pat.

5. Intel CFO @ UBS Global Technology Conference “Core Strategy Remains Intact”

By William Keating, Ingenuity

• Earlier this week, at the UBS Global Technology Conference, Intel CFO and co-interim CEO David Zinsner declared that the company’s “core strategy remains intact”
• Recently onboarded GM of IFS Dr. Naga Chandrasekaran, explained that while 18A remains on track, there are still “many milestones” to be met before it ramps in H225
• He also admitted that 18A is more geared towards HPC, is skewed in favour of Intel Products and that 14A will likely be more suitable for the broader semiconductor ecosystem

6. Happy Thanksgiving Semicap & Semiconductors

By Douglas O’Laughlin, Fabricated Knowledge

• This is a very light note, given time constraints. It’s rumored that on Monday, we will have new export controls, which seem to be massively light.
• Importantly, they are going to exclude CXMT altogether.
• History is a pretty good guide. Almost every single export restriction has led to bad returns prior, bad returns on the week off, and positive returns almost 100% of the time 6 months after for SOXX. This applies doubly to Semicap.

7. How Important Are China Gallium, Germanium, and Antimony Bans to the US?

By Jim Handy, Objective Analysis

• China has boycotted sales of Gallium, Germanium, and Antimony, three important elements, to the US
• All three are used in the production of semiconductors, but in very small quantities.  They are also widely available from sources outside of China.
• The net impact of this boycott to the US semiconductor market should be negligible.

8. Intel’s Next CEO Will Have To Deal With An Unholy Mess. But Who Will It Be?

By William Keating, Ingenuity

• Gelsinger’s IDM 2.0 strategy will be up for debate by Intel’s BoD. Most likely it will be largely scaled back 
• The new CEO’s options will be limited by the legal agreements in place with Brookfield & Apollo, along with the restrictions imposed by the US DOC 
• Possible CEO candidates are the current Globalfoundries CEO, Tom Caulfield, former Intel board member Lip-Bu Tan and former Intel executive Stacy Smith, who recently joined Intel’s BoD

9. Taiwan Tech Weekly: Taiwan’s Space Tech Conference This Week; AI Driving New Humanoid Robot Industry

By Vincent Fernando, CFA, Zero One

• Taiwan’s Largest Space Technologies Conference Is Happening This Week– Hon Hai Is Title Sponsor Showcasing Its Satellites; We Are Also Attending
• TSMC’s 2nm Breakthrough: Kaohsiung Fab Ahead of Schedule, Apple and AMD Poised as Early Adopters
• AI Driving the Emergence of a US$2bn Humanoid Robot Market by 2027E

1. Taiwan Tech Weekly: New China Tech Restrictions Monday; PC Demand Commercial Vs. Consumer Disconnect

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By William Keating, Ingenuity

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

1. SUMCO Despairs On Legacy Rebound, EVs, China, Visibility Etc…

By William Keating, Ingenuity

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By Vincent Fernando, CFA, Zero One

• 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

By William Keating, Ingenuity

• 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

By Douglas O’Laughlin, Fabricated Knowledge

• 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

By William Keating, Ingenuity

• 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

1. 2025 High Conviction: AI Chip Spend Slows

By Jim Handy, Objective Analysis

• 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

By Douglas O’Laughlin, Fabricated Knowledge

• 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.

By Patrick Liao

• 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

By William Keating, Ingenuity

• 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.