Weekly Top Ten Tech Hardware and Semiconductor – Feb 18, 2024

1. Taiwan Dual-Listings Monitor: High Spreads Persist After CNY Break

By Vincent Fernando, CFA, Zero One

• TSMC: +16.6% ADR Premium, Still High After CNY Multi-Day Taiwan Market Close
• UMC: 1.3% ADR Premium, Still Historically High After CNY Break
• ChipMOS: +4.2% Premium, Very Rare & High Level, Not Sustainable

2. Taiwan Tech Weekly: TSMC Playing Post-CNY Catch-Up; All Eyes on Upcoming Nvidia Results

By Vincent Fernando, CFA, Zero One

• Taiwan Market Surges in Post-CNY Catch-Up, TSMC a Top Gainer Locally
• Key Events Ahead: Nvidia Results Next Week, Key Taiwan Names Reporting
• Taiwan Dual-Listings Monitor: High Spreads to Persist After CNY Break 

3. Silicon Motion Memory Readthrough: NAND Flash to Remain In Shortage; Up-Cycle to Persist

By Vincent Fernando, CFA, Zero One

• Silicon Motion reported results last week that beat consensus; Moreover, the company expects strong growth not just in 2024E, but also in 2025E.
• The company’s growth will significantly exceed PC and mobile phone market growth thanks to strong memory demand trends within these segments.
• The company sees NAND Flash in shortage into 2025E based on visibility into its client ecosystem. We continue to view SIMO as a next-wave play on the Memory recovery.

4. Globalfoundries. Pressure Grows As Customer Penalties Soar

By William Keating, Ingenuity

• Globalfoundries (GFS) reported Q423 revenues of $1.854 billion, marginally above the midpoint of the guidance range, down 12% YoY and essentially flat sequentially.
• Guided Q124 down 18% QoQ with Gross Margin set to fall from 29% to 23%
• SMIC will outspend GFS 10x in CapEx terms this year

5. Renesas (6723 JP): Two More Strategic Acquisitions

By Scott Foster, LightStream Research

• Renesas has acquired PCB electronic design company Altium and Gallium Nitride power device maker Transphorm. Its tender offer for Sequans Communications has been extended.
• These are positive developments in our view, but sales and profit margins were down in 4Q of FY Dec-23 and are expected to decline this quarter as well.
• On the other hand, inventory adjustment is proceeding and the share price has dropped 12.6% since last Tuesday. Buy on weakness for the longer term. 

6. Automotive (NXPI, IFX) Optics (FN, COHR), MKSI, MPWR, ACLS, SLAB, RMBS, ARM

By Douglas O’Laughlin, Fabricated Knowledge

• Welcome to this week’s earnings. My spark notes are the NXPI and IFX did better than I feared, but I continue to be unconstructive on automotive.

• Fabrinet and Coherent both achieved good results, but Fabrinet disappointed expectations for Nvidia’s pluggable revenue. Is this a weak read-through? Unlikely. Marvell should have an amazing year if Coherent’s TAM is remotely correct.

• MKSI put up the exact results I was looking for, and this continues to be my favorite idea. As WFE increases, inventory builds will happen, and then financial and operational leverage will take care of the rest.

7. WTF Is Going on at SuperMicro? (SMCI)

By Douglas O’Laughlin, Fabricated Knowledge

• I want to talk about Supermicro. The stock has gone parabolic; some say it’s emblematic of the coming Semiconductor and AI bubble.
• I think it is to a certain extent, but I want to point out a particular aspect that has been happening.
• Given the high volume of options expiring today, I believe there is an ongoing gamma squeeze. It created huge buying pressure that has led to today. This was the run-up until Thursday.