20231117-招银国际-Global_fabless_IDM_3Q23_wrap__PC_SP_recovery,_auto_industrial_mixed__Eye_on_Edge_AI_as_new_growth_driver_8页_1mb

Report Summary: CMBI Global Markets Equities Research - China Technology Sector Update (17 Nov 2023)

Sector Outlook: China Technology Sector maintained 'OUTPERFORM' rating.

Global Fabless/IDM 3Q23 Earnings Analysis

• PC/SP Recovery: Computing (QCOM, MTK, INTC, AMD) and smartphone segments showed improvement, driven by new product launches and inventory restocking, supported by AI chip demand. 4Q guidance generally positive.
• AI Edge Potential: Edge AI identified as a key new growth driver, particularly relevant to PC/NB/SP replacements and cloud infrastructure.
• Auto/Industrial Weakness: Analog/power sector (TI, INFN, STM, ON) faced headwinds due to weakened auto/industrial demand, with cautious/falling 4Q guidance. Inventory drawdown/normalization noted.
• 4Q Expectations:
  • Computing/wireless suppliers expected continued QoQ sales growth driven by AI and normalized server inventory.
  • Analog/power firms anticipated pressure due to cyclical weakness.
  • Margin expansion expected for AI-focused supply chains despite inventory corrections elsewhere.
• Company Highlights:
  • NVIDIA (NVDA): Guided significant QoQ revenue growth (+18% vs AMD Datacenter +21%).
  • Texas Instruments (TXN): Reported pressure from China slowdown but expected ongoing destocking in industrials.
  • ASML/Lam Research: Results released, contributing to the positive outlook on the lithography equipment cycle nearing a bottom.
  • Impact of US chip restrictions: Discussed but not analyzed in detail.

Forward Look & Valuation

• Valuation tables provided for key players (NVIDIA, AMD, Intel, QCOM, Broadcom, Infineon, STMicro) showing market caps, prices, P/E/P/B ratios, ROE, and performance.
• CMB INT'L 'BUY/HOLD/SELL' ratings provided alongside the sector outlook.
• Analyst certification confirms independence and non-trading of covered securities for the responsible analysts in the preceding 3 months.

Conclusion

The analysis indicates that while a challenging inventory cycle persists, a recovery in PC/server and wireless markets, particularly driven by the adoption of AI capabilities (edge and data center), provides countervailing support. Analog/power faces near-term headwinds.