3 divergent trends in the Foundry market. Legacy Foundry see a slow recovery. Chinese buyers are stockpiling. TSMC on its own cloud.

Legacy demand is recovering slowly for ex-China Foundries (Global Foundries, UMC, Vanguard). 1Q24 marked the bottom of the revenue cycle. Excess inventories are almost digested. 2H24 revenues will increase HoH but slowly, end-demand is lackluster. The positive is that margins have held up very well despite low utilization at ~70%. UMC stock is cheap, still. 

China Legacy (Hua Hong, SMIC) is booming, firms say that demand is great... really? Or Chinese Semi customers are worried about further embargos? It’s coming (BBRG: ASML’s China Business Faces New Curbs). Both Hua Hong and SMIC stocks are expensive. The positive is that… ? inventories in China are increasing.

TSMC is driven by EUV demand: AI boom NVDA and Broadcom, AMD share gains, Intel outsourcing, Smartphone chips upgrade.  EUV nodes are now 66% of revenues. On its own cloud.