Tech Hardware and Semiconductor

Weekly Top Ten Tech Hardware and Semiconductor – Jun 30, 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 Dual-Listings Monitor: TSMC & ASE Premiums Drop Sharply; ChipMOS Extreme Discount

By Vincent Fernando, CFA, Zero One

  • TSMC: +16.1% Premium, After Sharp Drop, Will Be Interesting to See If Spread Will Remain Within the Recent ~15-25% Range
  • ASE: +7.4% Premium; Can Consider Going Long the Spread Given Recent Trading Range
  • ChipMOS: -2.4% Discount Repesents Extreme Low of End of Range; Can Consider Going Long the Spread

2. Memory Monitor: Micron’s Shares May Be Falling But Results’ Industry Implications Are Positive

By Vincent Fernando, CFA, Zero One

  • Data Centers — Traditional Data Center Recovery Starting; In Addition to HBM Demand, SSD Memory Seeing Strength for AI Applications
  • PCs — Upcycle to Accelerate “Late CY2024E”, Driven by Windows 12 and End of Windows 10
  • Mobile Devices — Moderate Growth in CY2024E; Potential for Smartphone Upgrade Cycle Acceleration

3. Micron Earnings – What to Expect

By Jim Handy, Objective Analysis

  • Expect Micron to report strength in AI, highlight the company’s HBM efforts, and quote McKinsey’s trillion-dollar forecast in their earnings call tomorrow
  • Although Nvidia’s growth has really helped the DRAM market, along with 2023 CapEx cuts, there are important concerns of double-ordering which could lead to a collapse soon
  • Semiconductor market revenues have leveled off since December 2023, hinting a return to more normal growth for the rest of the year

4. Taiwan Tech Weekly: Declines With Nvidia; Taiwan’s Vietnam Shift Continues; UMC’s Outlook Improves

By Vincent Fernando, CFA, Zero One

  • Taiwan Shares Fall With Nvidia… SK Hynix HBM DRAM with Global Unichip? Taiwan’s Vietnam Shift Continues… Broadcom Developing an AI Chip with Bytedance
  • TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing 
  • UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ. 

5. Delta Taiwan Vs. Thailand Monitor: Taiwan’s Nvidia Solutions Show Why TW Better Value Than Thailand

By Vincent Fernando, CFA, Zero One

  • Delta Taiwan has outperformed Delta Taiwan recently. The parent vs. subsidiary market cap ratio is now trading consistently over 1.0x. and can go higher in our view.
  • Nvidia opportunities and other similar cutting edge technologies will first go to Delta Electronics Taiwan (2308 TT) and not to Delta Electronics Thailand (DELTA TB).
  • Conclusion — Expect further Delta Taiwan outperformance over the long-term vs. Delta Thailand.

6. IHI (7013 JP): 30% Upside Potential as Aerospace and Defense Rebound

By Scott Foster, LightStream Research

  • Japan’s rising defense budget and military collaboration with the US and Europe should support a high level of orders for the foreseeable future.
  • Defense is the growth driver, but other divisions should hold up well due to the ongoing rationalization of operations.
  • Profits should rebound this year and rise further in FY Mar-26, bringing the P/E down to 9X or less. The weak yen is a large positive. 

7. Semiconductor WFE Q124 Revenues, China’s Share & What Are They Doing With All Those Tools?

By William Keating, Ingenuity

  • Global semiconductor equipment billings amounted to $26.4 billion in Q124, down 6% QoQ and down 2% YoY
  • China’s annual WFE spending has roughly doubled between 2020 and 2023 to $36.6 billion
  • A combination of China’s WFE customers including new entrants and a high failure rate among semi startups means that spending has not yet translated into corresponding increase in semi output

8. TechChain Insights: Call with TSMC Partner Global Unichip; Potential to Outpace TSMC Revenue Growth?

By Vincent Fernando, CFA, Zero One

  • We hosted a conference call with Global Unichip (GUC); GUC is 34.8% held by TSMC and a key provider of semiconductor design services to companies aiming to manufacture with TSMC.
  • GUC’s Revenue Prospects are Linked to TSMC’s Growth, However the Success of Its Customers’ Chips Also a Factor — Lagged Strong Revenue Growth Likely
  • Conclusion: GUC a Second-Derivative Play on TSMC’s Structural Drivers with Potential to Surprise the Market and Catch Up to TSMC’s Share Performance

9. KYEC (2449.TT): AI Highly Growth Potential may exceed Expectation.

By Patrick Liao

10. Taiwan Dual-Listings Monitor: TSMC Premium Rangebound; UMC Hits Upper End of Range

By Vincent Fernando, CFA, Zero One

  • TSMC: +16.7% Premium, Has Remained Rangebound; Watching for Over 20% or Under 15%
  • UMC: +2% Premium, Upper End of Trading Range, Can Consider Shorting
  • ASE: +9.9% Premium; Spread Could Have Further Room to Bounce Higher