Arm, Cadence and Xilinx Introduce First Arm Neoverse System Development Platform for Next …

The Neoverse N1 SDP was developed jointly by Arm, Cadence and Xilinx on TSMC’s process technology, and includes Cadence IP for CCIX, PCI …

SAN JOSE, Calif.– March 12, 2019 — Arm, Cadence Design Systems, Inc. (NASDAQ: CDNS) and Xilinx, Inc. (NASDAQ: XLNX) today announced the delivery of a new development platform, silicon-proven on TSMC’s (TWSE: 2330, NYSE: TSM) 7nm FinFET process technology, for next-generation cloud-to-edge infrastructure based on the new Arm® Neoverse N1 platform. The Neoverse N1 System Development Platform (SDP) is also the industry’s first 7nm infrastructure development platform enabling asymmetrical compute acceleration via the CCIX interconnect architecture and is available to hardware and software developers for hardware prototyping, software development, system validation, and performance profiling/tuning.

The SDP includes a Neoverse N1-based SoC with an operating frequency of up to 3GHz, full-sized caches and generous amounts of memory bandwidth with the latest optimized system IP. The robustness of the SDP is ideal for development, debug, performance optimization and workload analysis on a wide range of applications including those for machine learning (ML), artificial intelligence (AI) and data analytics.

The Neoverse N1 SDP was developed jointly by Arm, Cadence and Xilinx on TSMC’s process technology, and includes Cadence IP for CCIX, PCI Express® (PCIe®) Gen 4 and DDR4 PHY IP. The SDP was implemented and verified using a full Cadence tool flow in TSMC’s 7nm FinFET process technology, the industry’s first and leading 7nm process technology in volume production, and provides connectivity to Xilinx Virtex UltraScale+ FPGAs over the CCIX chip-to-chip coherent interconnect protocol via the Xilinx Alveo U280 CCIX accelerator card. For customers with intense compute workloads, CCIX offers a significant accelerator usability improvement as well as improved data center performance/efficiency, lowering the barrier to entry into existing server infrastructure systems and improving the total cost of ownership (TCO) of acceleration systems.

Availability

The Neoverse N1 SDP will be available in limited quantities in Q2 2019 with wider availability in subsequent quarters. The software stack can be accessed through Linaro and GitHub open-source repositories, providing developers with an out-of-the-box Linux software experience. The Xilinx Alveo U280 accelerator card, which features a high-performance FPGA with integrated high-bandwidth memory (HBM) and a CCIX interface, is available now and can be purchased directly from Xilinx. Additionally, the full Cadence SoC implementation and verification flows, CCIX, PCIe Gen 4 and DDR4 IP, and the Neoverse N1 Rapid Adoption Kit (RAK) are available now, so customers can begin designing Neoverse N1-based SoCs on TSMC’s 7nm silicon immediately. For more information on the Neoverse N1 SDP, please visit https://www.arm.com/products/silicon-ip-cpu/neoverse/neoverse-n1.

Partner Quotes

“The new Neoverse platforms deliver the performance and efficiency required to enable the cloud-to-edge infrastructure for a world with a trillion connected devices. Our ongoing SDP collaboration with Cadence, TSMC, and Xilinx truly enables developers with the system development tools necessary to innovate and deliver optimized Neoverse-based designs.”

-Drew Henry, senior vice president and general manager, Infrastructure Line of Business, Arm

“Through our collaboration with Arm, TSMC and Xilinx, we are jointly working to advance next-generation cloud-to-edge infrastructure. By contributing our IP and EDA tools and flows to the development of the Neoverse N1 SDP, we’re enabling customers to use the full Cadence implementation and verification flows, infrastructure IP, and rapid adoption kit to develop their own devices today for machine learning, 5G, analytics and other evolving application areas that enable them to excel in their respective markets.”

-Dr. Anirudh Devgan, president, Cadence

“This collaborative effort combines Arm, Cadence and Xilinx’s leading products, IP and tools with TSMC’s 7nm FinFET process technology and foundry services, enabling our customers to achieve faster and successful application development in areas including machine learning/AI, 5G and analytics, and creating greater value to the markets that will be fundamentally transformed by those applications.”

-Dr. Cliff Hou, VP Technology Development, TSMC

“The ARM Neoverse N1 CCIX-enabled SDP with the Alveo accelerator card is a highly-performant platform designed to enable the next generation of applications to be developed. The seamless data-sharing among the heterogeneous devices demonstrates the successful integration of CCIX IP from multiple vendors and the expanding reach of CCIX technology.”

-Gaurav Singh, corporate vice president, Silicon Architecture and Verification, Xilinx

About Arm

Arm technology is at the heart of a computing and connectivity revolution that is transforming the way people live and businesses operate. Our advanced, energy-efficient processor designs have enabled intelligent computing in more than 130 billion chips. More than 70% of the world’s population are using Arm technology, which is securely powering products from the sensor to the smartphone to the supercomputer. This technology combined with our IoT software and end-to-end connectivity, device and data management platform enables customers to derive real business value from their connected devices and data. Together with our 1,000+ technology partners we are at the forefront of designing, securing and managing all areas of compute from the chip to the cloud.

About Cadence

Cadence enables electronic systems and semiconductor companies to create the innovative end products that are transforming the way people live, work and play. Cadence’s software, hardware and semiconductor IP are used by customers to deliver products to market faster. The company’s System Design Enablement strategy helps customers develop differentiated products—from chips to boards to systems—in mobile, consumer, cloud datacenter, automotive, aerospace, IoT, industrial and other market segments. Cadence is listed as one of Fortune Magazine’s 100 Best Companies to Work For. Learn more at cadence.com.

About TSMC

TSMC is the world’s largest dedicated semiconductor foundry, providing the industry’s leading process technology and the foundry segment’s largest portfolio of process-proven libraries, IPs, design tools and reference flows. The Company’s owned capacity in 2019 is expected to reach above 12 million (12-inch equivalent) wafers, including capacity from three advanced 12-inch GIGAFAB® facilities, four eight-inch fabs, one six-inch fab, as well as TSMC’s wholly owned subsidiaries, WaferTech, TSMC China, and TSMC Nanjing. TSMC is the first foundry to provide 7-nanometer production capabilities. Its corporate headquarters are in Hsinchu, Taiwan. For more information about TSMC please visit http://www.tsmc.com.

About Xilinx

Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies – from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.

Contact Arm Ltd

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TSMC sees February revenues fall 22 per cent.

To be fair, TSMC did predict that things were going to get worse. It had estimated previously first-quarter revenues at US$7-7.1 billion, a downward …

TSMC disclosed its cumulative 2019 revenues through February decreased 3.7 per cent from a year earlier.

To be fair, TSMC did predict that things were going to get worse. It had estimated previously first-quarter revenues at US$7-7.1 billion, a downward revision from its original estimation of US$7.3-7.4 billion.

At the time it said that its downward revision was due to a larger-than-expected number of wafers affected by defective photoresist materials which disrupted an advanced production site for Nvidia, Huawei Technologies and other big semiconductor companies.

TSMC said the production problems will cut revenue by as much as $550 million for the quarter ending in March. The company now expects revenue of $7 billion to $7.1 billion — the lowest since the first quarter of 2016 — compared with the previous projection of up to $7.4 billion.

TSMC’s senior corporate communications director Elizabeth Sun said at the time: “To ensure the quality of our wafers delivered to customers, we have decided to scrap a higher number of wafers than our earlier estimate … and that resulted in our revision of the financial projection.”

The trouble discovered by TSMC on 19 January involved a photoresist chemical — a crucial material for etching circuits onto silicon wafers. The defective material caused a deviation from the normal yield rate in wafer production.

Shin-Etsu Chemical and JSR of Japan supplied the material to TSMC. The chipmaker remained silent about the source of the defective chemical.

The incident was the second production disruption linked to suppliers in less than six months for the key provider of Apple core processor chips. TSMC has already seen its bottom line kicked by poor on iPhone sales.

The production site in the southern Taiwanese city of Tainan, dubbed Fab 14B, supplies chips to customers including Apple, Huawei semiconductor arm HiSilicon Technologies, Nvidia, MediaTek, Xilinx, Broadcom and AMD.

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NXP Semiconductors NV (NXPI) Trading at $93.43 after Upsurge

NXP Semiconductors N.V. (NASDAQ:NXPI) increased significantly to $93.43. Barchart.com reported the move on Mar, 7. NXP Semiconductors N.V. …

NXP Semiconductors N.V. (NASDAQ:NXPI) Corporate Logo

NXP Semiconductors N.V. (NASDAQ:NXPI) increased significantly to $93.43. Barchart.com reported the move on Mar, 7. NXP Semiconductors N.V. (NASDAQ:NXPI) has $27.61B market cap. The company’s valuation will be $2.21 billion more at $100.90 target.

On May, 1. Investors expect NXP Semiconductors N.V. (NASDAQ:NXPI) to publish its quarterly earnings, Zacks reports. Analysts forecast 31.58 % diference or $1.25 from the $0.95 EPS from 2018. If $1.25 is reported, NXPI’s profit will be $369.38 million for 18.69 P/E. -39.02 % negative EPS growth is what analysts predict. $2.05 EPS was announced for previous quarter.

NXP Semiconductors N.V. (NASDAQ:NXPI) Ratings Coverage

A total of 11 analysts rate NXP Semiconductors (NASDAQ:NXPI) as follows: 5 “Buy”, 5 “Hold” and 1 “Sell”. Тherefore 45% are bullish. (NASDAQ:NXPI) has 11 ratings reports on Mar 7, 2019 according to StockzIntelligence. On Thursday, January 17 Nomura upgraded the shares of NXPI in report to “Buy” rating. On Friday, November 2 the company was maintained by Citigroup. On Friday, February 8 the stock of NXP Semiconductors N.V. (NASDAQ:NXPI) earned “Neutral” rating by Mizuho. In Wednesday, September 12 report Stifel Nicolaus downgraded the stock to “Sell” rating. In Monday, September 17 report Bank of America upgraded it to “Buy” rating and $120 target. On Friday, November 2 the firm has “Market Perform” rating by BMO Capital Markets given. In Wednesday, October 3 report Morgan Stanley maintained the stock with “Equal-Weight” rating. On Tuesday, October 23 the stock of NXP Semiconductors N.V. (NASDAQ:NXPI) earned “Overweight” rating by Barclays Capital. On Thursday, October 18 Goldman Sachs upgraded NXP Semiconductors N.V. (NASDAQ:NXPI) to “Buy” rating.

For more NXP Semiconductors N.V. (NASDAQ:NXPI) news posted briefly go to: Globenewswire.com, Nasdaq.com, Nasdaq.com, Nasdaq.com or Seekingalpha.com. The titles are as follows: “Multiple NXP Edge Processors Now PSA Certified – GlobeNewswire” posted on February 25, 2019, “NXP Semiconductors’ (NXPI) Q4 Earnings: What’s in Store? – Nasdaq” on February 01, 2019, “Noteworthy Wednesday Option Activity: FLNT, NXPI, IRBT – Nasdaq” with a publish date: February 06, 2019, “NXP Teams with Green Hills Software on its Platform for Safe Autonomous Driving – Nasdaq” and the last “NXP Semi -3% after CFO warning on China – Seeking Alpha” with publication date: February 26, 2019.

NXP Semiconductors N.V., a semiconductor company, provides high performance mixed signal and standard product solutions for radio frequency , analog, power management, interface, security, and digital processing products worldwide.The company has $27.61 billion market cap. It offers products for audio and visual head-end unit applications, such as single-chip radio solutions, audio amplifiers and power analog products, and i.MX applications processors; and in-vehicle networking products, two-way secure entry products, and various sensors and microcontrollers, as well as power management solutions.The P/E ratio is 13.9. The firm also provides secure identification solutions comprising passive RF connectivity devices; microcontroller devices; and secure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems.

NXP Semiconductors N.V. (NASDAQ:NXPI) Analyst Ratings Chart

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Global and regional analysis of System on A Chip (SOC) Market by Market Insights, dynamics …

This System on A Chip (SOC) market report presents a comprehensive overview, market shares, and growth opportunities of System on A Chip (SOC) …

This System on A Chip (SOC) market report presents a comprehensive overview, market shares, and growth opportunities of System on A Chip (SOC) industry by product type, application, key manufacturers and key regions and countries. . System on A Chip (SOC) market research report likewise canters on to potential chances of market, showcase patterns, benchmarking of products and vital examination. In a word, this report will help you with setting up new business trends in System on A Chip (SOC) Market.

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    NXP

    Atmel

    Dialog Semiconductor

    Broadcom Limited

    Cypress Semiconductor

    Silicon Laboratories

    CEL

    Nordic Semiconductor

    Apple, Inc

    Freescale Semiconductor

    Infineon Technologies AG

    Intel Corporation

    Qualcomm, Inc

    Samsung

    Taiwan Semiconductor Manufacturing

    STMicroelectronics NV

    Toshiba Corporation

    MediaTek Inc

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  • Aviation & Military Industry

    Communications Industry

    Electronics Industry

    Automobile Industry

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  • Digital SOC

    Analog SOC

    Mixed Signa SOC

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South America [Brazil, Argentina, Columbia, Chile, Peru])

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No of Table Mentioned in System on A Chip (SOC) Market: 157

Time Period: 2018-2023

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Key Node Speaker: TSMC And This Investable Tech Recession

Taiwan Semiconductor Manufacturing Company Limited (TSM), branded as TSMC, may be a solid source of long term alpha while paying out more …

Twin theses of this article

These are:

1. Taiwan Semiconductor Manufacturing Company Limited (TSM), branded as TSMC, may be a solid source of long term alpha while paying out more regular dividends during a potential wait for the tech sector to revive. At least in the US, TSM has to be the most obscure $200 B market cap tech stock around. Yet it is gaining in importance in the global tech ecosystem. Analysts parse its comments to the last detail (see below for one important recent example), but in part because no products are advertised as “Taiwan Semi inside,” TSM remains anonymous to users of products its chips control. But, increasingly, as GloFo backs away from cutting-edge technologies, all of a sudden, we are down to three cutting-edge large chip manufacturers. From an IEEE Spectrum article last year:

In a major shift in strategy, GlobalFoundries is halting its development of next-generation chipmaking processes. It had planned to move to the so-called 7-nm node, then begin to use extreme-ultraviolet lithography (EUV) to make that process cheaper. From there, it planned to develop even more advanced lithography that would allow for 5- and 3-nanometer nodes. Despite having installed at least one EUV machine at its Fab 8 facility in Malta, N.Y., all those plans are now on indefinite hold, the company announced Monday.

The move leaves only three companies reaching for the highest rungs of the Moore’s Law ladder: Intel (INTC), Samsung (OTC:SSNLF), and TSMC.

And INTC has a distance to go to catch TSM in the cutting-edge nodes, quite the change of places between these two companies.

And, the broader point:

2. When TSM sees as big a downturn in business as it is now seeing, then “tech” is in a sense in a recession – though defining tech these days is not easy and therefore defining a tech recession is not simple any longer.

That said, I propose that tech companies that are sailing through what TSM sees as a significant recession could be superior performers.

Now for a few comments on TSM’s ascent.

TSM – becoming a quasi-monopoly in foundries?

In its 2017 annual report, TSM reported (PDF Slide 9):

TSMC is the worldwide semiconductor foundry leader for both advanced and specialty process technologies, commanding a 56% market share in 2017.

The company then goes on to point out its strengths in 4 key growth areas:

Mobile platform [primarily smartphones]: TSMC offers leading process technologies such as 7nm FinFET, 10nm FinFET, 16nm FinFET Plus technology, and 20nm SoC logic process technologies, as well as comprehensive IPs for premium product applications to further enhance chip performance, reduce power consumption, and decrease chip size…

High-performance computing platform: TSMC provides customers with leading process technologies such as 7nm FinFET and 16nm FinFET, as well as comprehensive IPs, including high-speed interconnect IPs…

Automotive electronics platform: TSMC offers leading 7nm FinFET, 16nm FinFET, 28nm, and 40nm logic process technologies, various leading and competitive specialty technologies in RF, embedded flash memory, sensors, multiple power management technologies that pass the AEC-Q100 qualifications.

IoT platform: TSMC provides industry’s leading and comprehensive ultra-low power technology platform to support innovations for IoT and wearable applications. TSMC’s leading offerings… have been widely adopted by various IoT and wearable applications. TSMC extends its offering with Near-Vt technology for extreme low power applications…

Probably the most important point is that in 2017 (the 2018 annual report is not out as of Sunday March 3), TSMC was already offering 7 nm node FinFETs. Whereas, in the latest conference call, INTC’s CEO, Mr. Swan, could only say this about INTC’s 10 nm node (which is considered functionally very similar to TSM’s 7 nm node):

Our 10 nanometer yields continue to improve and Ice Lake [i.e., the 10 nm chips] remains on track to be in volume systems on retail shelves for the 2019 holiday selling season.

While INTC is moving toward acceptable yields, TSM has progressed beyond N7 (7 nm node), reporting in the conference call that (emphasis added):

Customer tape-out activities at N7 continue to be strong despite the cautious macro outlook. We are actually seeing an increase in silicon content for AI and 5G-related product designs. We expect that 7-nanometer to contribute more than 25% of our wafer revenue in 2019.

Our N7+ yield rate is progressing well and comparable to N7. N7+ volume production is scheduled to begin in second quarter this year. As I have stated before, we are working with several customers on N7+ to support their second and third wave product designs, and we expect the N7+ price contribution to the 7-nanometer family will grow increasingly larger over the next few years.

In addition, and perhaps crucially in defining TSM’s lead relative to INTC:

Our N5 technology development is well on track, with customer tape-out schedule for first half 2019 and volume production ramp in first half 2020.

So, while INTC will be doing volume production of its 10 nm node “Ice Lake” chips in H2 this year, TSM will be scaling up chips a full two generations more advanced (remember, TSM’s 7 nm designation compares to INTC’s 10 nm node).

In a key part of the Q&A, an analyst wanted to make sure he heard correctly re this back-and-forth:

Roland Shu

…when you will see your CPU revenue reach 1% of your total revenue and when you will see the CPU foundry also coming from multiple customers?

C.C. Wei

That’s very specific – 1% – but just say that we started working with the CPU customers…

Roland Shu

Okay. Just to clarify, C.C., you said that you start to work with a CPU customer or customers.

C.C. Wei

Customers.

That AMD (AMD) has TSM produce CPUs for it is known. Does the use of the plural term imply INTC?

I therefore continue to think that TSM is going to win long term. Now, short term, we need to look at the following commentary.

TSM – struggling for now

In its Q4 earnings release, TSM projected Q1 revenues of $7.35 B, which is down sharply from $8.5 B booked in Q1 last year. TSM must have been gloomy, giving this exchange with an analyst:

Sebastian Hou

Thank you. Is it fair for us to assume that the UTR [utilization rate] is not as slow as in the 2009 yet, but there is already lower than what we have seen in 2011, ’12 that cycle and 2015 cycle?

C.C. Wei

You are right. You are right.

Causes: primarily sluggish iPhone sales, crypto mining collapse, and a digestion period for data centers in general and TSM’s important niche in high-performance computing.

But, are conditions already improving?

The recent broad-based upturn in tech stocks (QQQ) makes me take note of the following. As noted above, in late January TSM was guiding for $7.35 B in Q1 revenues. Subsequently, it reported a major supplier issue as follows:

Hsinchu, Taiwan, R.O.C., February 15, 2019 — TSMC (TWSE: 2330, NYSE: TSM) today updates its first quarter 2019 guidance following the completion of the assessment of all the wafers affected by a batch of problematic photoresist material.

TSMC discovered that a batch of photoresist from a chemical supplier contained a specific component which was abnormally treated, creating a foreign polymer in the photoresist. The foreign polymer created an undesirable effect on 12/16-nanometer wafers at Fab 14B. This effect was detected later on when the wafers deviated from normal yield.

To ensure the quality of our wafers delivered to customers, we have decided to scrap a higher number of wafers than our earlier estimate.

TSMC expects the financial impact from the photoresist incident to be as follows:

● This incident is expected to reduce Q1 revenue by about US$550 million… [which will be made up in Q2].

That should have lowered revenues from $7.35 B to $6.8 B. Yet the revised guidance is for $7.05 B (midpoint of the range for all guidance numbers).

So: has business already improved by $250 MM this quarter over what was expected in late January?

In addition to all the above…

TSM is becoming more investable

TSM’s ADRs remain subject to Taiwan’s 20% withholding tax, but the company is moving to quarterly payouts, which may lead to more shareholders buying and holding rather than trading a stock which has been dividend-less almost the entire year. This is the relevant text from the 2/19/19 board meeting:

Subject to the 2019 AGM’s approval of the amendments, the Board of Directors plans to approve each quarter’s dividend in the following quarter’s Board Meeting, after which the dividend will be distributed within six months. Therefore, the Board of Directors plans to approve a NT$2.0 [i.e. two New Taiwan dollars] per share cash dividend for first quarter 2019 in the second quarter, and the dividend will be paid in the fourth quarter of 2019. All shareholders of TSMC common shares will receive a NT$8 per share cash dividend in July 2019, and a NT$2 cash dividend per share in the fourth quarter, for a total of NT$10 cash dividend per share.

In the future, TSMC intends to continue its stable dividend policy and return about 70% of free cash flow to shareholders every year. As the Company’s business continues to grow and generates greater amounts of free cash flow, it expects to maintain a sustainable quarterly cash dividend, and to distribute the cash dividend each year at a level not lower than the year before.

Each ADR (or, ADS) is worth 5 ordinary shares, so NT$10 per share equals NT$50 per ADR. The current exchange rate is 30.8 (TWD/USD), so if TSM pays out NT$10 in dividends this year, I estimate about $1.62 USD in dividends per ADR, or a 4.1% dividend yield at Friday’s closing price of $39.39. This is not adjusted for the withholding tax, which I expect to receive via the IRS. (Please let me know if any of this analysis is off.)

In order to recoup the withheld dividend, I do not own TSM in a tax-deferred account such as an IRA.

Some implications for Big Tech

The obvious negative from comments TSM made is that it is not bullish on high-end smartphone sales. It does foresee making more money in aggregate even if unit sales decline, due to higher silicon content per phone. So I would continue to be cautious on Apple (NASDAQ:AAPL), which I scaled out of last year given what I saw as market saturation in its most important edge devices.

Where in tech has business remained strong while TSM is seeing weakness? The most obvious place to look is where sales and EPS estimates have been rising. Here, it’s clearly not AAPL, but it’s also not Microsoft (MSFT) for the first time in many quarters, and Amazon (AMZN) did not guide sales for Q1 upwards. I am also seeing Alphabet (GOOGL) EPS estimates downtrending a bit for 2019 and 2020.

However, Cisco (CSCO) has seen EPS estimates for FY 2019 rise since its Q2 report last month from $3.04 to $3.07, and for FY 2020 from $3.31 to $3.38 (per Yahoo! Finance). CSCO commented on its Q2 conference call last month that it simply was not seeing a slowdown in business, and its order intake beat expectations. At $51.41, CSCO has broken out to its highest price since December 2000. It may be regaining a good part of its former glory.

But there are parts of tech that are not simply managing well through challenging times, as CSCO may be; they are ignoring smartphone weakness and some data center hardware sales indigestion. For example:

Software and security are sailing along

Network security stocks, such as Palo Alto Networks (PANW), are strong operationally and their stocks are feeling no pain. The same for data analytics star Splunk (SPLK). Among large cap software/cloud names, Salesforce (CRM) and Workday (WDAY) are also in gear both operationally and on the charts. Many smaller companies have similar charts and improving results, such as CRM licensee with a life sciences focus Veeva (VEEV).

Whether any of these have valuations that make sense, or whether they are primarily momentum stocks with lots of fundamental downside risk, is an open question. But: could some of these sorts of names be like buying CSCO or MSFT in 1995, with years of explosive growth ahead?

Risks are significant

Central banks in both the US and EU have pulled back on stimulus, and the Fed has also “de-stimulated” by raising rates. With Fed Chairman Powell acknowledging that rate hikes work with lags that tend to last more than one year, it may be a full 12 months before last December’s rate hike drops out as a negative to growth. In addition, as investors, we should recognize the effect that QE has had in pumping up financial asset prices, even if the effects on the real economy of that monetary inflation have been uncertain.

In addition, tech has had quite the multi-year run, and it could be normal for it to take an extended rest.

Please see the company’s disclosures for a fuller listing of risks associated with owning TSM shares or ADRs.

Concluding comments – TSM prevailing, other techs looking strong

TSM mentioned in the Q&A that it has improved its client list. As time passes and GloFo’s lack of effort in cutting-edge nodes becomes more relevant to market share, my expectation is that TSM will be seen as a clear long term winner in the advanced semiconductor and specialty manufacturing space; for the latter see CEO Wei’s prepared remarks and his response to a follow-up question from Charlie Chan.

So long as, over the next several years, tech continues to increase its share of wallet of the global economy, I’m hopeful that TSM will outperform tech. Adding in a quarterly dividend policy returning 70% of free cash flow to shareholders, I’m comfortable thinking of a multi-year holding period with returns stemming from 3-4% dividend yield and 6-7% EPS growth with relatively stable multiples. Given what is again a richly-valued S&P 500 (SPY), I would expect that to provide alpha with moderate risk, and without the need to bet on any one retail customer-facing company or any one capital goods supplier.

Beyond TSM, since I have viewed it for years as a core part of the tech industry, I’m encouraged to continue holding CSCO for capital appreciation as well as, secondarily, dividend growth, given its recent results. Of course, if the world is going into a significant recession, CSCO will be affected, but how many of its competitors have its staying power? Regarding INTC, which I purchased and said good things about its sell-off in the summer in the high $40s, it has provided, it is trading strongly at the $53.30 level, despite having lowered guidance. I am considering lightening up on INTC, but the stock of this dominant player may be a little too cheap to sell.

In the security space, where CSCO and so many other companies compete, I am impressed with how PANW has performed since describing in early June my reasons for buying it around $200. Now it’s at $245, and if anything I am more bullish on it now than before.

Finally, the Cloud is living up to its billing. Several players are seeing rapid growth, and judging what a fair value is for some fast-growing names is not an easy task. Now that the Fed has relented about drastic reduction of liquidity, I am again comfortable taking on some risk and own some of these high flyers, understanding there is gambling going on here.

Thus I think that to the extent tech, or important parts of it, are in recession or something akin to that, the companies and sectors within tech that are forging ahead operationally – and preferably being recognized by Mr. Market – could provide alpha in the months and years ahead despite various risks.

Thanks for reading and sharing any thoughts you have on the broad topic of tech in today’s world and today’s markets.

Disclosure:I am/we are long TSM,INTC,PANW,VEEV,SPLK.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Not investment advice. I am not an investment adviser.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

SeekingAlpha

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