Company Reports

Sumco, Sino-American Silicon, and its subsidiary GlobalWafers all said artificial intelligence applications are driving up wafer demand, filling up 300mm capacity and mildly supporting 200mm ones. GlobalWafers inked a 10-year long-term agreement with Micron and said more are being discussed.

Share prices of Sino-American Silicon and its subsidiary GlobalWafers surged after earnings, amid upbeat management comments on the 2026 and 2027 outlook. These echo industry commentary on recovery in non-artificial intelligence demand, adding to the vibrant AI demand.

Sino-American Silicon Products has 46.64% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

Share prices of Sino-American Silicon and its unit GlobalWafers sank 7% and 9%, respectively, after management guided for flat to modest year-on-year growth in 2026 revenue. The light capital expenditure outlook suggests more caution than earlier press remarks on customers' hunger for capacity.

Sino-American Silicon Products has 46.64% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

September-quarter gross margin of Sino-American Silicon plunged 512 basis points sequentially to 20.2% as its subsidiary GlobalWafers' incurred heavy ramp-up costs for new fabs in cost of sales. Revenue from GlobalWafers marked a new low at 76% of the total. Shares fell 7% on Nov. 10.

Second-quarter operating margins of GlobalWafers, its parent Sino-American Silicon, and competitor Sumco all dropped sequentially. All three firms were hurt by the strong US dollar and incurred ramp-up costs for their new facilities. The trio expects sales to be flattish or slightly up half on half.

Sino-American Silicon Products has 46.64% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

First-quarter 2025 operating margins of GlobalWafers, its parent Sino-American Silicon, and competitor Sumco all declined sequentially. All three firms suffered from tepid 200 mm wafer shipments and incurred ramp-up costs for their new facilities.

Sino-American Silicon Products has 46.64% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

GlobalWafers' fourth-quarter revenue grew 3% sequentially as some customers started restocking, but its parent Sino-American Silicon's sales dipped 1% due to slowdown in gallium arsenide operations. Gross margin of both firms improved marginally to 30% as silicon wafer factory utilization improved.

Sino-American Silicon Products has 46.64% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

We keep our fair value estimates on GlobalWafers, its parent Sino-American Silicon, Sumco, and National Silicon Industry Group, at TWD 620, TWD 255, JPY 1,760, and CNY 3.70 per share, respectively. Because of lower-than-expected utilization, we have cut our 2024 gross margin and EPS forecasts for all these names but leave our afteryears forecasts intact. All wafer names except NSIG are undervalued as we believe the market is still split on the outlook of automotive and industrial semiconductor demand and underestimates the boost on wafer demand from artificial intelligence applications.

Sino-American Silicon Products has 51% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

We trim our fair value estimates on GlobalWafers, its parent company Sino-American Silicon (SAS), and Sumco to TWD 620 from TWD 710, TWD 255 from TWD 281, and JPY 1,760 from JPY 1,940, respectively, after factoring in softer 2024 and 2025 outlooks, while afteryears’ growth rates are largely unchanged. Both SAS and GlobalWafers are undervalued, in our view, with SAS attractive to investors looking for dividends and GlobalWafers attractive to those timing cyclical lows of the wafer sector. We remain skeptical about Sumco’s long-term profitability as the firm’s dominant position on cutting-edge wafers does not translate into higher operating margins, but we find the stock fairly valued amid lower expectations of a recovery in 2025.

Sino-American Silicon Products Inc., or SAS, has 51% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.

We maintain our fair value estimate for Sino-American Silicon Products at TWD 281 per share after aligning our forecasts with its subsidiary GlobalWafers. SASP is our top pick in the semiconductor silicon wafer sector as it trades at a more than 25% discount to GlobalWafers. Compared with other peers, it is likely to enjoy a monopoly in the US once its new plant in Texas is completed in 2025.

We retain our fair value estimates on Taiwanese technology companies in our coverage following a powerful earthquake and multiple strong aftershocks near the eastern city of Hualien on April 3, namely: Advantech at TWD 337; Delta Electronics at TWD 331; GlobalWafers at TWD 710; Largan at TWD 3,000; MediaTek at TWD 1,400; Sino-American Silicon at TWD 281; Taiwan Semiconductor Manufacturing Co at TWD 950 (USD 151 per ADR); United Microelectronics Corp at TWD 70; and Win Semiconductors at TWD 245 per share.

After raising our long-term forecasts, we lift our respective fair value estimates for GlobalWafers and its parent Sino-American Silicon, or SAS, to TWD 710 per share from TWD 590, and to TWD 281 from TWD 227. Our long-term view is more bullish as the group has a clearer plan for financing its US expansion—making it more likely to enjoy a monopoly in US advanced wafer supply while rivals balk at having new US sites. SAS is undervalued and is our favorite in the sector, while GlobalWafers is fairly valued, in our view. We think the market remains worried about the current inventory correction and has overlooked the prospects regarding artificial intelligence beyond the cutting edge. The group’s expansion in the US and Japan remains on schedule.

Sino-American Silicon Products Inc., or SAS, has 51% stake in GlobalWafers, which grew to become the third-largest semiconductor silicon wafer producer via more aggressive expansion than peers. It is the only wafer producer to operate factories in Europe, Asia, and the US. Such diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s track record to acquire distressed competitors in previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, and it will offer faster and more reliable supply to customers like Samsung and Texas Instruments.