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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.

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.

Investment Letter – Big Data Times

Largan Sees More in Next Gen iPhone

November 19, 2014
Unconfirmed reports are calling for the camera on the iPhone 6S to undergo significant upgrades, which if true, would spell good news for Largan in 2015.… More

Compal a Little Less Mobile than Hoped

November 14, 2014
Compal's 3Q14 results missed slightly, but were better than the market's worst fears, and 4Q14 guidance was positive. However, although Compal's outlook for 2015 still calls for robust growth, its lower than the market's existing elevated expectations.… More

Novatek Sees 2015 in High Def

November 7, 2014
Novatek beat on both 3Q14 results and 4Q14 guidance. The two forces driving growth are set to remain in place well into 2015; mobile screens getting larger and moving to full HD and TVs moving to ultra-HD.… More

Mediatek Comes to Terms with Lower Growth

November 6, 2014
Mediatek warned of gross margins falling in 1H15 due to pricing pressure and a rising proportion of two-chip solutions. Although, its late arrival to 4G is a miss-step which will hurt near-term growth, longer-term Mediatek is still well-positioned to keep taking market share.… More

Largan Rings in Holidays, eMemory has Memorable Month

November 5, 2014
Largan posted a very strong October which is expected to sustain through year-end on continued strength from the iPhone. eMemory's monthly revenue hit an all-time high as its embedded non-volatile solutions continue to take market share and move deeper into advanced logic areas.… More

Samsung Bounces off Pavement

October 31, 2014
Samsung is trying to keep the street's hope alive that earnings growth can return. However, with industry-wide smartphone margins under siege, and Apple unlikely to come to its rescue in LSI, the outlook for 2015 remains bleak. Although the counter is nominally cheap, the fundamentals remain broken.… More

Delta Flies Over Peaks

October 29, 2014
Delta guided for revenue in 4Q14 to decline across the board, and lowered its outlook for industrial automation in 2014. With passives peaking in the near term post the launch of the iPhone 6 and growth for IA moderating, in-line with China, Delta's lofty valuation is likely to be tested.… More

SPIL Navigates Overhang

October 27, 2014
SPIL beat slightly for 3Q14 but warned of a small inventory overhang for 4Q14. With a weak growth outlook and rich valuation, near term prospects for counter look limited.… More

ARM’s Phone is Losing its Charge

October 22, 2014
ARM's smartphone royalty growth continues to disappoint, and although guidance calls for it to improve in 4Q14, the longer term trend points to continued deceleration. With growth now in question, so too is the valuation.… More

Apple’s Worm has Turned

October 21, 2014
Apple has returned to growth, not only by reinvigorating demand for the iPhone, but by arresting the gradual decline in its ASP. With iPhones selling as fast as they can be made, margins secure for the foreseeable future, and growth having returned, the counter deserves to once again trade in line with its peers.… More

Sunny’s Wolf Finally Appears

October 20, 2014
Sunny 's lens production broke out in September, surpassing 15mn units and proving to investors that internal usage for modules and external shipments to customers are finally growing as promised. The increased lens production, rising resolutions, and the coming of OIS, all spell good news for margins.… More

TSMC Sounds the All-Clear, Largan Begins Climactic Finale

October 16, 2014
TSMC offered up two positive developments: 16nm is being pulled forward 1-2 quarters and inventory in the channel looks under control. In addition, CFO Lora Ho recommitted to a new five year target of pretax earnings maintaining a CAGR of 10% with ROE above 20%. Largan's margins disappointed slightly in 3Q14 due to rising pass-through revenue for Apple, but with the iPhone and iPad ramping in 4Q14 revenue and earnings momentum will be sustained through year-end.… More

Company/Strategy Reports

Casetek Hits the Big Leagues
November 11, 2014
After years of being cautiously reserved about expansion, Casetek has come roaring out its cage with plans to expand total capacity by 83% in 2015. Although, no order details were given the market suspects the iPhone 6S and the 12.9" iPad. With big league capacity, and big league customers, Casetek is now worthy of a big league valuation.
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%.
More Inside …

Model Updates

Compal Model Update
November 14, 2014
Raising 2014 EPS 8.6% and lowering 2015 EPS 4.2%.
Casetek Model
November 11, 2014
2015 and 2016 EPS forecast to grow 55% and 11% YoY.
Novatek Model Update
November 7, 2014
Raising 2014 and 2015 EPS by 3% each.
Mediatek Model Update
November 6, 2014
Lowering 2015 EPS by 8.6%.
Samsung Model Update
October 31, 2014
Raising 2014 and 2015  by 2.8% and 6.9%.
Delta Model Update
October 29, 2014
Lowering 2014 and 2015 EPS by 6% and 7%.
More Inside …