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Windows Phone 8 Review - The Elixir of Delight
February 21, 2013
The market is greatly underestimating Windows 8, which is fresh, fun, stable, well thought-out, innovative, and falls short of Android and iOS in very few areas, while surpassing them in many. Most of all, it has the secret ability every product desires, the ability to delight.

Rethinking the Technology Sector - Silos, Platforms, Clusters & Pipes
July 10, 2012
One key to investing in the technology sector is understanding the relationships among companies along the value chain. Traditional sector classifications are based on hardware, their constituent components, and software. However, these say nothing of how companies relate to one another. Rather than focus strictly on products, four constructs which better illustrate the relationship between companies are Silos, Platforms, Clusters & Pipes.

Investment Letter – Big Data Times

Apple Shows Warts but Keeps Beauty Crown

July 23, 2014
Apple's June quarter hit the mark, coming in-line with consensus, mainly due to gross margin which was 190bps above the midpoint of Apple's guidance. Although iPhone and iPad shipments disappointed, growth is expected to return in spades in late CY3Q14 as the iPhone 6 and 13" iPad are launched.… More

ARM Applies Artistic License to Growth

July 22, 2014
ARM reported 2Q14 results about in-line with expectations, although licensing revenue was about 10% above consensus while royalty revenue was 8% below. ARM makes the case that the surge in licensing revenue points to reacceleration in royalty growth in later years, however history shows that this isn't always the case.… More

Largan gets Richer in the Mix

July 17, 2014
Largan handily beat consensus in 2Q14, with net income rising 24% QoQ and 83% YoY. CEO Adam Lin painted an optimistic, if somewhat vague picture, of 3Q14 which calls for product mix to continue improving. Although challenges await, with iPhone 6 production ramping now and demand for high resolution lenses growing among the China brands, Largan is poised to sustain its growth for the foreseeable future.… More

Hon Hai & TSMC Coast in Apple’s Slipstream

July 10, 2014
Hon Hai put in a huge June, up 18.3% MoM. Although the iPhone is coming, shipments from Hon Hai aren't expected to begin until August, which means the strength in June came from elsewhere, most likely 4K2K TVs, PCs, and other consumer electronics. TSMC was down slightly in June, but fared much better than its Taiwanese customers, mainly because it has one thing they don't, the A8.… More

Compal Writes Profits in Notebooks

July 9, 2014
Compal's 2Q14 revenue beat expectations, primarily on stronger than expected notebook shipments, which in June alone jumped 25.7% MoM and 29.4% YoY. With its newly restructured customer base, and notebooks showing renewed vitality, after years of slumber Compal is back on the move.… More

Mediatek Temporarily Out of Bullets, Novatek Up on TV

July 7, 2014
Mediatek met expectations in June, despite revenue being down 19% MoM, because 2Q14 revenue came in at NT$54.1bn, at the higher end of Mediatek's guidance. Although 4G is only a small part of what Mediatek plans to ship in 2014, its late arrival will shave off some growth over the next few months. Novatek beat its 2Q14 revenue guidance as driver IC and SoC growth came in better than expected. In addition to stronger than expected notebook sales, the rising penetration of 4K2K in TVs is boosting both driver and SoC shipments, a trend which is likely to gain steam as the year unfolds.… More

HTC’s All Summer in a Day

July 3, 2014
HTC's 2Q14 EPS came in at the midpoint of guidance with revenue at the low-end of guidance. Although profitability was restored, it came at the expense of marketing as SG&A was slashed. Heading into 3Q14, revenue and margins are expected to roll back over as HTC's slug it out with the Chinese brands and the iPhone 6. Longer term, the decision to slash marketing is a sign that even HTC is giving up on growth.… More

TSMC Puts Love in Apple Pies

July 2, 2014
The market is chattering about Samsung and Global Foundries winning orders at 14nm from Apple and Qualcomm. Although Qualcomm will understandably continue to feed its 2nd largest baseband customer foundry orders, after years in the making it seems unlikely Apple's new marriage to TSMC will dissolve so quickly, particularly as its process roadmap is so strong.… More

The March of the Wearables

July 1, 2014
Last Wednesday, Google launched its Android Wear OS, and showcased three devices based on it, the LG G Watch, the Samsung Gear Live, and Moto 360. It's early days for wearables, as the developer community needs time to play with the SDKs to figure out if any truly valuable functionality can be extracted from them. Ultimately, the market will most likely see multiple device and software iterations before wearables find a mass market. Until then, some of the winners will once again include the shovel makers instead of the miners themselves.… More

It’s Sunny in the Amazon

June 20, 2014
Sunny put in a strong May with modules up 14% MoM and lenses up 7.7% MoM. The launch of the Amazon Fire has the market talking about the four front cameras for which Sunny is a supplier. However, with a summer slow down in the cards and valuations rich, Sunny may start to appear overcast.… More

VNET Levers Up to Break In

June 18, 2014
VNET piled on an additional RMB 1bn in debt, mainly to acquire a 50% stake in China's 2nd largest ISP, Aipu. It's not exactly clear how the new business will tie into VNET's existing operations, although it could help in VNET's bid to win a fixed line broadband license, which would greatly enhance both its and Aipus' profitability.… More

Compal Returns like John Travolta, Raising 2014 PC Forecast

June 11, 2014
Compal put in a strong May with notebook shipments up 30% MoM. In addition to gaining market share in notebooks as brands rally around the larger ODMs, the four deals put in place over the last 2-3 year with strategic partners will further aid growth in products spanning tablets, smartphones and TVs. Notebook sales are coming in stronger than expected and as a result GTI is raising its global PC sales forecast for 2014.… More

Company/Strategy Reports

TSMC Meets the Fruit Ninja
July 18, 2014
Comments out of TSMC and ASML have clouded the outlook for foundry growth and brought into question TSMC's Apple business beyond the A8. With utilization set to peak in 3Q14, and inventory at or above seasonal levels, 2014 will be a hard act to follow next year.
2Q14 Strategy: The Road to One
April 21, 2014
The tech food chain is gearing up for Apple's latest bushel of new products, which according to whisperings out of Asia have the potential to reorganize both the mobile and PC market. At the same time, the smartphone market is grappling with its new slow growth reality.
Model Portfolio - 1Q14
April 19, 2014
ARM Sells More of Less
February 7, 2014
ARM's end markets continue to grow quickly in unit terms, but the average value of semiconductor content per unit is falling causing ARM's royalty growth to decelerate rapidly. Although solid earnings growth awaits driven by the continued growth of mobile and non-mobile devices, including the internet of things, the counter warrants a lower valuation more suitable for its slowing growth prospects.
GTI’s 2013 Year in Review – Smartphones Jump the Shark
January 3, 2014
21 longs were up 30.1% since initiation with an average holding period of 316 days and an annualized return of 41.5%, and 18 shorts were down 6.9% since initiation with an average holding period of 358 days and an annualized return of up 10%.
CES 2013 – Six Major Trends Emerge
January 17, 2013
The show had a noticeably sleepier feel than last year, with seemingly less attendees and exhibitors. Even so, six major trends for 2013 emerged including rising resolutions, touch everywhere, W8’s latent potential, the return of integrated mfrs, Intel’s challenges, and HTC’s absence.
More Inside …

Model Updates

Apple Model Update
July 23, 2014
Lowering FY14 EPS by 0.8% and raising FY15 EPS by 2.9%.
ARM Model Update
July 22, 2014
2014 and 2015 EPS raised 1.2% and 5.5% to GBP 23.7 and 27.4 pence.
TSMC Model
July 18, 2014
GTI launches its forecast with 2014 and 2015 BVPS forecast at NT$39.6 and NT$47.3.
Compal Model Update
July 9, 2014
2014 and 2015 EPS raised 2.4% and 2.8% to NT$2.37 and NT$2.72.
Novatek Model Update
July 7, 2014
Raising 2014 and 2015 EPS to NT$10.98 and NT$12.24.
VNET Model Update
June 18, 2014
Raising 2014 and 2015 EPS by 4% and 5% to US$0.55 and US$1.09.
More Inside …