This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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- Latest Performance: Taiwan AI Names Keep Flying; ASE & Mediatek Lose Steam After Reporting
- Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
- TSMC and Samsung Will Keep Their Most Advanced Chipmaking at Home
- UMC’s Q423 results in line with expectations. Q124 guidance, down 2-3% QoQ, demonstrates ongoing headwinds for foundry
- Intel, UMC foundry partnership helps the latter overcome their 14nm issues while giving them bargain basement access to US manufacturing capacity
- If Intel could have developed and deployed the proposed 12nm specialty process on their own, they would have….
- The 1Q24F outlook is still showing a decline, with a slightly increase in revenue of 2% QoQ. However, the GM is expected to decrease to 9-11% from 16.4% in 4Q23.
- Management predicts that there will be a double U-shaped recovery in 2024F. Revenue in 2024F is expected to grow annually by mid-single-digit.
- The main areas of growth for SMIC in 2024F will be in mobile phones, smart homes, IoT, and computing.
- Both SMIC & Hua Hong reported Q423 earnings in line with expectations and both guided Q124 flat to slightly down. SMIC expects FY24 mid single digit growth YoY.
- The downturn has exposed inherent weakness in China’s Semi Foundry segment relative to peers as exemplified by the significant GM disparity
- China’s two leading semi foundries have ~80% domestic dependence. Right now, that’s a headwind
5. Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
- Novatek reported over 20% YoY growth for 4Q23 and slightly beat expectations but the latest guidance implies growth to reverse to a sales contraction in the latter part of 1Q24E.
- Gross and operating margins are guided to contract; nevertheless, inventory dropped to one of the lowest levels since COVID and is expected to remain healthy.
- Novatek’s latest results appear to signal that while inventory levels are healthy, the demand growth rebound for display drivers that started in June 2023E could lose steam in 1Q24E.
- Annual sales growth has dropped from 20% or more in recent years to 12.5% in FY Dec-23. The operating margin ticked up last year, but is basically trending sideways.
- The share price has dropped by 35% since April 2023, bringing the projected P/E ratio down to the bottom of its 10-year range. Buy back in for the long term.
- Guidance, which is usually accurate, is for 12.7% sales growth this year and an operating margin of 12.5%. Growth should continue in future years with flat or better margins.
- KLA had a rare miss. The guidance was a bit light for the inspection execution machine.
- KLA rarely misses and is by far the best financially managed of the large-cap semicap companies.
- KLA reports Q2 EPS $6.16 ex-items vs FactSet $5.91
8. Novatek (3034.TT): It’s the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.
- 4Q23 surpassed the guidance for revenue, GM, and OPM. 4Q23 EPS reached NT$8.76, compared to NT$10.46 in 3Q23 and NT$6.64 in 4Q22.
- 1Q24F is typically the traditional low season for consumer electronics, and there are fewer working days during the Lunar New Year.
- It is expected that the dividend payout ratio this year will be similar to previous years, which has been higher than 80% in the past few years.
- Readthrough: Automotive Applications End-Demand — China Market Soft But Touch and Dimming Technology is Expanding
- Readthrough: Panel Makers Constraining Supply in 1Q24 to Protect Pricing
- Readthrough: Customers Are Restocking Notebooks in 1Q24E, PC Replacement Cycle is Coming