M UpdateTaiwan Tech – Monthly Revenue Tracker | Asia PacificDecember Revenue Wrap – Divergent Initial 2024 OutlookMorgan Stanley Taiwan Limited+Charlie ChanEquity Analyst Charlie.Chan@morganstanley.com +886 2 2730-1725 Sharon ShihEquity Analyst Sharon.Shih@morganstanley.com +886 2 2730-2865 Daniel Yen, CFAEquity Analyst Daniel.Yen@morganstanley.com +886 2 2730-2863 Derrick YangEquity Analyst Derrick.Yang@morganstanley.com +886 2 2730-2862 Howard KaoEquity Analyst Howard.Kao@morganstanley.com +886 2 2730-2989 Ray Wu, CFAEquity Analyst Ray.Wu@morganstanley.com +886 2 2730-2871 Dylan LiuEquity Analyst Dylan.Liu@morganstanley.com +886 2 2730-1723 Kevin ChiuehResearch Associate Kevin.Chiueh@morganstanley.com +886 2 2730-2860 Samantha ChenResearch Associate Samantha.Chen@morganstanley.com +886 2 2730-2876 Tiffany YehResearch Associate Tiffany.Yeh@morganstanley.com +886 2 7712-3032 Irene YenResearch Associate Irene.Yen@morganstanley.com +886 2 2730-2869 Morgan Stanley Asia Limited+Andy Meng, CFAEquity Analyst Andy.Meng@morganstanley.com +852 2239-7689 Daisy Dai, CFAEquity Analyst Daisy.Dai@morganstanley.com +852 2848-7310 Betty ChenResearch Associate Betty.H.Chen@morganstanley.com +852 2239-7213 Morgan Stanley appreciates your support in the 2024 Institutional Investor All-Asia Research Team Survey. Request your ballot here. We saw a better outlook for thermal solution and panel makers, while smartphone restocking has been stabilizing. We expect a bumpy recovery for memory players such as Nanya Tech.Taiwan tech companies' December revenue fell 18% MoM and 16% YoY: Overall, 50% of Taiwan tech companies under our coverage beat our December revenue forecasts, with TFT-LCD, VR, and LED/Optical companies outperforming the most. Meanwhile, 35% of Taiwan tech companies under our coverage missed MSe, including Data Center Hardware, Memory, and Power Supply. In aggregate, December revenue declined 18% MoM, weaker than the month's historical average of a 1% MoM rise over 2016-22.Upstream – focus on smartphone demand and memory recovery: Smartphone semi companies enjoyed strong restocking demand in 4Q. Inventory restocking is being gradually fulfilled, and finished goods inventory increased to 7 weeks (vs. 4 weeks exiting 3Q23). We think a potential China smartphone inventory correction could dent stock sentiment in the near term, but we would view that as an opportunity further accumulate shares. Nanya Tech has released 4Q results that indicate weaker-than-expected price and margin improvements. We attribute this to less exposure to high ASP/margin products such as HBM and DDR5, and expect a bumpy recovery for the company into 2Q. (please see Nanya Tech 4Q23 update).Downstream – better than seasonal 1Q performance for thermal players, panel price stabilization, and potential price hike: There were some performance discrepancies between AVC (3017.TW) and Auras (3324.TWO) in December, as the latter faced a shor...
