Tech Hardware and Semiconductor

Weekly Top Ten Tech Hardware and Semiconductor – Jun 23, 2024

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’s 3nm Shortage & Upcoming Price Hikes; Samsung Unveils AI Catch-Up Plan

By Vincent Fernando, CFA, Zero One

  • TSMC’s 3nm Shortage: Capacity Filled Until 2026 Amid Surging Demand; Strategic Price Hikes Coming Soon
  • Top Gainers/Losers: Taiwan Tech Rallies Alongside TSMC, Apple, Nvidia, ARM Strength
  • Samsung Unveils Pathway to Catch Up With TSMC in the AI Foundry Race

2. Micron’s HBM. Multiple Billions Incoming..

By William Keating, Ingenuity

  • HBM revenue on track to jump from a few hundred million in 2024 to “multiple” billions in 2025
  • Micron expects to become FCF positive in the second half of their fiscal 2024 and to have a record revenue year in their fiscal 2025. 
  • Micron’s is doing custom work on their HBM solutions. Customers are signing LTAs with defined pricing. This could easily spread to Micron’s non-HBM products also. 

3. Memory Monitor: Computex Showed Micron Leapfrog SK Hynix and Samsung; ‘Boring’ DRAM Could Now Hot Up

By Vincent Fernando, CFA, Zero One

  • Computex showed how Micron has successfully leap-frogged SK Hynix and Samsung in HBM DRAM for AI Servers.
  • Now, older ‘boring’ DRAM prices could surge as HBM DRAM production is voraciously consuming memory fab capacity.
  • Why Nanya Tech shares could surge higher — A DRAM memory trade for those who don’t want to chase steep 52-week highs in Micron and SK Hynix.

4. Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

By Patrick Liao

  • We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
  • Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
  • Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

5. Samsung, Nanya, Winbond. Watch This Space…

By William Keating, Ingenuity

  • Greatly reduced growth-related WFE CapEx, cannibalisation of legacy node WFE for leading edge transitions and surging demand for HBM will likely trigger mainstream memory shortages by EOY 2024 
  • Both Nanya and Winbond are well positioned to benefit from any industry-wide shortages
  • If Samsung can sort out its HBM woes, it will be line for a re-rating

6. MediaTek (2454.TT): 2Q24 Guidance Is Achievable; to Take Advantage of the AI PC Replacement Trend.

By Patrick Liao

  • Mediatek Inc (2454 TT)’s 3Q24 is expected to experience a quarter-on-quarter increase of about 5%.  
  • MediaTek is currently developing new processors based on Arm architecture and natively supporting the Microsoft Windows operating system.
  • It is believed that MediaTek will tape out with TSMC 3nm technology, targeting the 1H25 market.

7. UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

By Patrick Liao

  • United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
  • We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
  • UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

8. TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing

By Vincent Fernando, CFA, Zero One

  • We hosted a conference call with Elan Microelectronics management; We view the company as a Structural Long position for the AI PC upgrade cycle.
  • From the company’s perspective, significant impact from AI PC demand will come but not until 4Q24E or 1H25E. However, supply chain excess inventory improved and prepping for upcycle.
  • An estimated 90% of AI PC models launched at CES 2024 use Elan’s products in their design; Elan well positioned for the upcycle and entrenching its position. Maintain Structural Long.

9. Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

By Patrick Liao

  • We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.
  • Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
  • Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.

10. TechChain Insights: Q&A with TSMC Supplier Kinik; Diamond Capex Implies Industry Strength Visibility

By Vincent Fernando, CFA, Zero One

  • We conducted a Q&A with Kinik, who is a key supplier to companies including TSMC, UMC, and Micron.
  • Kinik is dramatically expanding its diamond disk capacity; these products are critical to the production of wafers for advanced semiconductor nodes.
  • We believe Kinik has high visibility into future industry demand. Gross margins are likely to expand in the coming years as advanced diamond products become increasingly important to wafer production.