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.

GlobalWafers 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 a diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s record of acquiring distressed competitors during previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, as it will offer faster and more reliable supply to customers like Samsung and Texas Instruments. We estimate new-built factories near customers will give GlobalWafers a 5% edge in freight costs.

GlobalWafers 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 a diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s record of acquiring distressed competitors during previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, as it will offer faster and more reliable supply to customers like Samsung and Texas Instruments. We estimate new-built factories near customers will give GlobalWafers a 5% edge in freight costs.

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.

GlobalWafers' September-quarter gross margin plunged 738 basis points to 18.4% due to ramp-up costs at multiple new sites. Management acknowledged misjudging accounting treatments when commenting on the margin outlook during the August earnings call. The shares tanked 10% on Nov. 5.

GlobalWafers 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 a diversified footprint is profitable due to a combination of having customers in all three regions and the firm’s record of acquiring distressed competitors during previous industry troughs. We view GlobalWafers’ new plant in Texas as a continuation of its boldness, as it will offer faster and more reliable supply to customers like Samsung and Texas Instruments. We estimate new-built factories near customers will give GlobalWafers a 5% edge in freight costs.

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.

GlobalWafers 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 a 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 during 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 estimate new built factories near customers will give GlobalWafers a 5% edge in freight costs.

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.

GlobalWafers 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 a 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 during 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 estimate new built factories near customers will give GlobalWafers a 5% edge in freight costs.

On April 2, US President Donald Trump announced reciprocal tariffs, imposing 46% tariffs on Vietnam, 34% on China, 26% on India and 24% on Malaysia. Smartphone component suppliers in our coverage tanked double digits on April 3 Asia trading. Semiconductor foundries fell 3%-6% in the US aftermarket.

GlobalWafers 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 a 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 during 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 estimate new built factories near customers will give GlobalWafers a 5% edge in freight costs.

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.

GlobalWafers 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 a 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 during 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 estimate new built factories near customers will give GlobalWafers a 5% edge in freight costs.

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.

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.

GlobalWafers 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 a 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 during 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 on GlobalWafers at TWD 710 despite trimming near-term forecasts. Our long-term view is unchanged, where GlobalWafers is likely to enjoy at least a few years of monopoly in US advanced wafer supply while competitors balk at new US sites. GlobalWafers is undervalued, in our view, as incrementally weaker automotive and industrial outlooks are pressuring the stock.

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.