Tech Hardware and Semiconductor

Weekly Top Ten Tech Hardware and Semiconductor – Mar 17, 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 Surge Leads Taiwan Stocks Higher; Advanced Chip Packaging in Focus

By Vincent Fernando, CFA, Zero One

  • Massive TSMC Rises 13.8% in Just a Week; Mediatek a Top 10 Gainer for Second Week in a Row
  • TSMC (2330.TT; TSM.US): Sales Should Be Gradually Increasing QoQ in 2024F; IPhone 16 Is on Schedule. 
  • PC Monitor: Long Dell Vs. Short Acer Update; Dell & HPQ Results Indicate Opportunity in Asus 

2. Advantest (6857 JP): AI Speculation Discounted

By Scott Foster, LightStream Research

  • Advantest has dropped back 11.5% from its recent high but is still up 43% year-to-date and up 2.3X from a year ago. Consolidation is likely to continue.
  • Demand for High Bandwidth Memory (HBM) for use with AI processors could lift sales, profits and profit margins to new highs within the next two years.
  • That could bring the projected P/E ratio down from 75.5x FY Mar-24 EPS guidance to 31x FY Mar-26 EPS in a favorable but not unreasonably optimistic scenario. 

3. Semiconductor 2023 Key Indicators In Review, 2024 Forecasts

By William Keating, Ingenuity

  • Forecasting PC & Smartphone unit shipments to increase 5% YoY on the back on “AI Enablement”
  • Server unit shipments declined ~20% in 2023 but overall revenues remained flat, a consequence of higher ASPs associated with AI-accelerated servers
  • Server shipments will return to growth in 2024, likely +10% YoY. Server ASPs will increase yet again YoY as AI-server mix grows. 

4. NEC (6701 JP): Generative AI Is the Spark, Not the Driver

By Scott Foster, LightStream Research

  • The P/E ratio has risen above 20x this fiscal year from no more than 13x in the previous four years, reflecting successful restructuring and investor enthusiasm for AI. 
  • Profit margins are rising, but remain moderate in absolute terms with room for further improvement. The shares may consolidate, but they do not look overvalued.
  • Management is aiming for generative AI sales of ¥50 billion in three years time. This is less than 2% of total sales, but a positive indicator for NEC’s software business.

5. Factors and Semiconductors

By Douglas O’Laughlin, Fabricated Knowledge

  • Markets always act erratically, but I thought I would highlight one aspect that disproportionately impacts semiconductors.
  • Factor investing is not new, but we are in a unique period where Momentum has quite a period of outperformance and short-term outperformance.
  • This matters because semiconductors are (as far as my memory holds) the most significant weight in Momentum I’ve ever witnessed. 

6. Silergy (6415.TT): Expecting a Seasonal Decline In 1Q24F, and Likely Another Growth Year in 2024F.

By Patrick Liao

  • The short-term recovery momentum observed in China and consumer markets.
  • The Gen 3 in 4Q23 accounts for about 50% of the production, expected to increase to around 60-70% in 4Q24F.
  • Expecting to improve quarter by quarter after reaching the bottom in 1Q24F, and the growth is expected to recover to around 20%+ YoY in 2024F.

7. Hon Hai: Beat & Raise; Further Valuation Upside; AI Server Product Announcements Next Week

By Vincent Fernando, CFA, Zero One

  • Hon Hai’s 4Q23 profit beat consensus and management has become more bullish on 2024E revenue thanks to demand for AI servers.
  • Guided 40% YoY growth expected for AI servers; Separately, Hon Hai reportedly could have won a major AI server order from HP Enterprise according to Digitimes.
  • Hon Hai shares are finally moving; We see room for continued upside based on re-rating of the company’s valuation. Positive news flow potential through Nvidia’s GTC conference next week.

8. Vanguard (5347.TT): 1Q24F Could Be the Recent Bottom, and 2Q24F Should Be an Upside 10% QoQ.

By Patrick Liao

  • We anticipate that the guidance upper limit for 1Q24F results may be reached.  
  • The outlook is expected to see approximately a 10% QoQ increase in 2Q24F.  
  • The recent stock market performance may reflect enthusiasm for Vanguard, despite temporary disregard for the name.