SA Transcripts • Wed, Oct. 29
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Wed, Oct. 29, 7:42 AM
Fri, Oct. 10, 1:42 PM
- Following Microchip's warning and related prediction of a chip industry correction, Goldman's James Covello thinks there's 15%-20% downside in industry names.
- Covello, who lowered his industry view to Cautious in August: "The last time Microchip negatively preannounced was October 15, 2012 (3% sales miss). Between October 1 and December 31, Street 2013 sales estimates for the Semi group were revised down 6% on average."
- He adds several datapoints suggest the industry has been overheating. Among them: Semi revenue growth has outpaced end-market growth, and supply chain inventory dollars rose 3% more than their 3-year average in Q2.
- "Nobody will be spared," predicts Hedgeye's Craig Berger. Benchmark's Gary Mobley observes 5 of the 6 chip stocks to have made Q3 pre-announcements have thus done so to the downside.
- Worth noting: Mobile chipmaker Silicon Motion (SIMO -8.9%) is the one chipmaker to have positively pre-announced. It might not be a coincidence that Microchip has relatively low mobile exposure.
- Observing U.S. macro data remains positive even as China and Europe soften, Longbow's JoAnne Feeney remains bullish long-term on select names. However, she has cut her short-term rating on Linear (LLTC -3.8%) to Sell, and removed IDT (IDTI -7.1%) from her trading long list.
- In addition to the names previously mentioned, the following chip stocks are seeing steep losses: AMD -5.1%. FCS -13.6%. NXPI -11.2%. CODE -11%. LSCC -9.6%. SIMG -8.1%. IPHI -7.7%. ISIL -9.5%. CY -6.9%. RMBS -7.1%. QUIK -5.7%. SQNS -5.1%. IMOS -6.5%.
- Foundries and contract manufacturers are also selling off: TSM -3.9%. UMC -2%. SMI -2.4%. SANM -11.7%. FLEX -6.8%. JBL -4%.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Fri, Aug. 15, 6:27 PM
- With the company dedicating a large chunk of capacity to producing Apple's A8 CPU, TSMC's (NYSE:TSM) Q4 capacity is "almost fully booked," sources tell Digitimes. Clients short on capacity are reportedly being urged to book in advance.
- The site adds a number of clients, including Qualcomm, Himax, and MediaTek, have reported seeing tight supplies. Qualcomm has already struck a deal with China's SMIC (NYSE:SMI) to sidestep TSMC's supply constraints. UMC, which has been ceding share to TSMC in recent years, could also benefit.
Wed, Jul. 30, 7:18 AM
Wed, Jul. 16, 2:24 PM
- In addition to beating Q2 estimates, TSMC (TSM -6.4%) has guided for Q3 revenue of NT$206B-NT$209B ($6.8B-$6.9B), above a $6.58B consensus.
- However, on the CC (transcript), the foundry giant stated its next-gen 16nm FinFET (3D transistor) process won't see volume production until Q3 2015, and that its 2015 16nm share will be smaller than the 14nm share of "a major competitor."
- That's an apparent reference to Samsung and Globalfoundries, who are partnering to launch 14nm FinFET production next year, and have reportedly landed orders from Qualcomm and Apple.
- TSMC promises to regain 16nm/14nm share from 2016 onwards, and notes it will maintain a huge share of 20nm foundry output. The company also asserts its 16nm FinFET+ process will have performance and power advantages over Samsung/Globalfoundries' 14nm process.
- Also: Multiple analysts pressed TSMC about supply chain inventories - they're slightly above seasonal norms, and "cautious inventory management" is expected in 2H - and a forecast for its 20nm sales (boosted by Apple) to account for over 20% of Q4 wafer revenue, up from 10% in Q3. The outlook is being taken as a sign non-20nm sales will decline sharply in Q4.
- Gross margin rose 80 bps Y/Y in Q2 to 49.8%, and op. margin 160 bps to 38.6%. In Q3, GM is expected to be in a range of 48.5%-50.5%, and op. margin a range of 38.5%-40.5%.
- UMC (UMC -3.1%) is following TSMC lower ahead of its July 30 Q2 report.
Thu, Jul. 3, 3:39 PM
- Qualcomm (QCOM +1%) has struck a deal with SMIC (SMI +2.5%) to have the Chinese foundry to produce 28nm Snapdragon processors. SMIC has previously manufactured (less demanding) power management and connectivity ICs for Qualcomm.
- The deal comes ahead of Apple/Samsung's fall hardware refreshes, and undoubtedly has much to do with tight 28nm capacity at main foundry partner TSMC (TSM +1.5%). Digitimes has reported Qualcomm and MediaTek (among others) are looking to secure 28nm capacity from SMIC, UMC, and Globalfoundries due to TSMC's supply constraints.
- Digitimes states Qualcomm has booked over half of SMIC's 28nm capacity, and that MediaTek will be placing orders of its own. The site has also reported Qualcomm has placed orders with Globalfoundries and Samsung for their next-gen 14nm process (set to go live in early 2015).
- TSMC's efforts to ramp 20nm production for Apple could be contributing to its 28nm crunch. JPMorgan expects TSMC to produce 120k-130k 20nm wafers for Apple in Q3, up from just 30K-40K in Q2. It sees Apple respectively making up 13% and 15% of TSMC's Q3 and Q4 revenue vs. just 4% of Q2 revenue.
- Yesterday: Qualcomm buys WiGig chipmaker Wilocity
Fri, Jan. 24, 6:38 AM
Mon, Jan. 6, 9:46 AM
- First Solar (FSLR -6.3%) has been cut to Sell by Goldman, and SolarCity (SCTY +11.2%) has been upgraded to Conviction Buy.
- eBay (EBAY -2.7%) has been cut to Equal Weight by Morgan Stanley.
- Riverbed (RVBD -0.6%) has been cut to Hold from Strong Buy by Needham.
- JinkoSolar (JKS +7.6%) and Trina (TSL +5.9%) have been started at Buy by Jefferies
- SolarWinds (SWI +1.7%) has been upgraded to Overweight by Evercore.
- Manhattan Associates (MANH +3.2%) has been upgraded to Outperform by Raymond James.
- UMC (UMC +0.5%) has been upgraded to Overweight by UBS.
- Ingram Micro (IM +0.6%) has been upgraded to Overweight by Barclays.
- Dupont Fabros (DFT +0.9%) has been upgraded to Outperform by Baird.
- Rambus (RMBS -3.6%) has been cut to Hold by Jefferies.
- Arris (ARRS -2.5%) has been cut to Equal Weight by Barclays.
- Geospace Technologies (GEOS -4%) has been cut to Sell by BWS Financial.
- Trimble (TRMB -2.1%) has been cut to Hold by Craig-Hallum.
- Autohome (ATHM -9.6%) has been started at Neutral by Deutsche and Piper, and at Sell by Goldman, on underwriter coverage day.
Dec. 20, 2013, 7:57 AM
- Capex-conservative United Microelectronics' (UMC) board approves an additional capex budget of NT$18.18B ($609M) for expanding the foundry's 28nm manufacturing capacity.
- The company said its capacity has reached a capacity of 10K wafers on the size, with plans to expand it gradually in 2014 according to demand.
- Digitimes reports that industry experts see 28nm tech contributing only 1%-2% of UMC's revenue in 2013, but the "proportion is expected to climb substantially in 2014."
Dec. 12, 2013, 2:58 PM
- TSMC (TSM -1.8%), estimated to have ~50% of the global chip foundry services market, thinks the market's growth will slow to 9% in 2014 from 11% in 2013. At the same time, the company thinks total chip industry growth will increase to 5% from 2013's 4%. Trade association WSTS has forecast 4.4% 2013 growth and 4.1% 2014 growth.
- Foundries have been steadily growing their share of chip industry output for years, as the exorbitant cost of building new fabs leads more and more chipmakers to outsource manufacturing. But with dozens of major chipmakers already fully relying on foundries, the market could be hard-pressed to significantly outpace broader industry growth going forward.
- Other foundries: UMC, SMI, TSEM
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 31, 2013, 9:59 AM
- Atmel (ATML +9.1%) has been upgraded to Outperform by Wedbush after beating Q3 revenue estimates and adding $300M to its buyback plan.
- Microchip (MCHP +5.8%) has been upgraded to Buy by Mizuho in the wake of its FQ2 beat.
- Cavium (CAVM +6.5%) has been upgraded to Outperform by Oppenheimer following its Q3 beat.
- Arris (ARRS +2.7%) has been upgraded to Overweight by Stephens after beating Q3 estimates and issuing solid guidance.
- UMC (UMC -1.9%) has been cut to Neutral by BofA a day after posting its Q3 report.
- MTS (MBT -2%) has been cut to Neutral by Citi, and to Sell by UBS.
- Jabil (JBL -0.9%) has been cut to Buy from Strong Buy by Needham.
- Itron (ITRI -5.6%) has been cut to Neutral by Janney, and upgraded to Hold by Brean, following its Q3 miss.
- Garmin (GRMN -4.2%) has been cut to Sector Perform by Raymond James a day after posting its Q3 results.
- MagnaChip (MX -1.2%) has been cut to Neutral by UBS two days after delivering mixed Q3 results.
- Digital Realty (DLR -2.2%) has been cut to Hold by Stifel two days after providing soft guidance. Raymond James downgraded shares yesterday.
- Carbonite (CARB -9.1%) has been cut to Sector Perform by Pac Crest after providing below-consensus revenue guidance to go with a Q3 beat.
Oct. 9, 2013, 11:41 AM
- TSMC (TSM -1.2%) reports September sales of NT$55.4B ($1.88B), +0.5% Q/Q and +27.6% Y/Y. That means the chip foundry's Q3 sales totaled NT$162.6B ($5.52B), in-line with a guidance range of NT$161B-NT$164B and slightly above a $5.49B consensus.
- Smaller foundry rival UMC (UMC -2.3%) has September sales of NT$10.85B ($368M), -1.4% M/M but +14.7% Y/Y. Q3 sales amounted to NT$33.4B ($1.13B), above a $1.05B consensus.
- TSMC has been taking share from rivals over the last two years thanks to strong mobile exposure and a lead in ramping 28nm chip production. But the company has begun seeing tougher 28nm price competition lately from Samsung and GlobalFoundries. UMC has also begun ramping 28nm output following delays.
- TSMC plans to begin volume production for its next-gen 20nm process early next year.
Sep. 23, 2013, 9:14 AM
Aug. 14, 2013, 9:56 AM
- Cree (CREE -20.3%) has been cut to Neutral by Northland, Susquehanna, and D.A. Davidson following its FQ4 revenue miss and soft FQ1 guidance.
- Millennial Media (MM -15.8%) has been cut to Neutral by Canaccord and Northland after posting a Q2 revenue miss, announcing it's buying rival Jumptap, and providing pro forma full-year guidance for the two companies.
- Sina (SINA +1%) has received a two-notch upgrade to Buy from Citi in response to Monday's Q2 beat and strong Q3 guidance.
- UMC (UMC -1%) has been cut to Sell by Goldman.
- Cincinnati Bell (CBB +1.6%) has been upgraded to Neutral by BofA.
- Proofpoint (PFPT +1.3%) has been started at Outperform by Imperial Capital.
Jun. 27, 2013, 9:13 AM
May. 8, 2013, 11:19 AMUMC (UMC +3.6%) rallies after delivering its Q1 report, and takes bigger rival TSMC (TSM +4%) higher with it. Though EPS of $0.09 missed consensus by $0.03, revenue of NT$27.8B ($931M) beat consensus by NT $1.4B ($47M). More importantly, UMC is guiding for a 12%-14% Q/Q increase in wafer shipments, and for a flat ASP; that suggests revenue should soundly beat a consensus of NT$28.8B. Q1 gross margin was 16.2%, +500 bps Q/Q and +90 bps Y/Y. UMC has trailed TSMC in ramping 28nm chip production. (PR) (slides) | Comment!
UMC vs. ETF Alternatives
United Microelectronics Corp manufactures advanced process integrated circuits wafers & related electronic products. The Company is also engaged in developing, manufacturing, and providing solar energy and new generation light-emitting diode.
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