Greater China Technology Semiconductors_ PC Semis_ Stick to the Share Gainer

Summary of Conference Call Notes on ASMedia Technology Inc Industry Overview - Industry: Greater China Technology Semiconductors, specifically focusing on PC Semiconductors - Current Demand: Demand remains lukewarm, but US tariffs may lead to inventory restocking [1][3] Key Company Insights - Company: ASMedia Technology Inc (5269.TW) - Top Pick: ASMedia is reiterated as a top pick due to its anchor customer's ongoing share gain [1][3] - Revenue Expectations: - Realtek expected to see a 20% quarter-over-quarter revenue increase in 1Q25 - Elan and Parade also expected to show sequential growth in 1Q25 [3] - Potential Risks: Sell-through may decline by 5-10% quarter-over-quarter in 1Q25, indicating possible inventory accumulation and weaker seasonality in 2Q25 [3] Market Dynamics - Windows 10 Support: The end of support for Windows 10 may not significantly accelerate the replacement cycle, as older PCs may still be usable with software workarounds [4] - AI PC Development: The rollout of Windows on ARM (WoA) AI PCs is delayed, which may hinder the replacement cycle in the first half of 2025 [5] Competitive Landscape - CPU Market Share: ASMedia is expected to benefit from AMD's growth, with AMD potentially becoming the largest CPU supplier in two years due to issues faced by competitors [6][10] - New Product Development: The PCI-E gen 4 switch is set to tape out soon, contributing to revenue in 2025 [6] Financial Projections - Earnings Estimates: - 2024-2026 EPS estimates for ASMedia have been increased by 2%, 7%, and 7% respectively due to better-than-expected 4Q preliminary revenue [16] - Revenue projections for 2025 are set at NT$10,091 million, with net income expected to reach NT$4,927 million [42] - Price Target: The price target for ASMedia has been raised from NT$2,200 to NT$2,350, reflecting changes in earnings estimates [21][26] Investment Drivers - Market Opportunities: The total addressable market (TAM) is expected to double, with new business opportunities arising from the PCI-E gen 5 switch [11] - AMD's Influence: ASMedia is likely to benefit from AMD's ongoing share gain in the desktop market, with multiple growth drivers anticipated in 2025 [32] Risks and Considerations - Potential Risks: - Supply chain issues could impact ASMedia's earnings if AMD faces substrate supply challenges [41] - Competition from Intel adopting TSMC's technologies could pose a threat [41] Conclusion - ASMedia is positioned to capitalize on market dynamics and AMD's growth, with a positive outlook for 2025 driven by new product launches and inventory management strategies. The raised price target reflects confidence in the company's ability to navigate challenges and leverage opportunities in the semiconductor market [21][32]