And I'm sure I'm not much of a holiday for you.
I just reacting to his news ISE, what are just your first take on these new
curbs? How disruptive could this be for the
semiconductor industry? Yeah, as you mentioned, I think this
will likely be more disruptive compared to any curbs that a U.S.
government has done on China's semiconductor sector in the past three
or four years. The reason is that if we read through
the whole documents, you can find that is much more comprehensive this time.
Even some of the loopholes, some of the gray areas that's left from the previous
sections, this time the U.S. government seems to fill in those gaps.
I tried to restrict the China there semiconductor ambition from all fronts,
from the access to the leading edge, sulfur and carbon through a ISE kind of
chips. And even down to the talents may also
restrict some U.S. person, U.S.
citizens to facilitate, to help directly or indirectly the China Semiconductor
leading edge technology developed. So I guess the implications this time
around is much more profound than any sanction they had dated past couple of
years in terms of surpassing we're seeing all of these chip manufacturers
coming out and saying that demand is just awful at the moment, that they're
really feeling it. I mean, look at MMD for one thing, a
massive mess. They had young.
Exactly. Samsung.
And you are looking then in effect in an industry under siege.
And that was before this happened. This is only going to get worse, isn't
it? He can't just put the doorstep of the
blame on that being a fallen P.C. sales.
Exactly. I think the for what you see.
Or Samsung or AMD, the other earnings were their guidance is mostly center on
the weakness was mostly centered on the consumer electronics like you mentioned,
P.C., that's consumer electronics pirates previously as being bad for the
past couple of quarters. But this round of the Crips from the US
base will focus on the artificial intelligence, hyper reverse computing.
Those are more infrastructures data center related and that has been
resilient. The demand in the past couple quarters
when customers tried it was bad. So if that is also brought down by the
new restriction, then as you just mentioned, things were likely to go
further south from here. How do you think the U.S.
is going to enforce these new curbs? Well, I think they at least they lay out
more details this time compared to the past.
They lay out even very down to details about the CPSU, you, GQ, a chip.
Their performance in terms of clock speed or even the sills size of some
memory. They also also mention specifically
about the leading technology development, which process technology
nodes below that it will be restricted for logic, for DRM, for NAND flash.
So I guess in the past the restriction was more vague, but this time is more
detailed, more targeted in terms of implementation.
I guess that's why there definitely will be some challenges, but at least the
scope this time is more target is I guess the.
Well, I think that to reinforce this or two to implement this, I guess it will
be more relatively easy and also be removing
some of the gray areas that someone is. Supply chain can work around in the past
business cycles. I mean, the chip industry is seen as in
essence a reflection of what's going on with the broader global economy.
But this kind of muddies the waters that I mean, what is your takeaway then?
How much gloom and doom can we pour on the pessimism that we already have
regarding growth, globally speaking? Well, a right hand you will view this as
the extreme negative measure that things will get further south.
Inventory, correct. You'll like it to be deeper, faster.
But on the other hand, is actually not a bad thing because it rained the whole
supply chain to face this issue, to face that inventory problem.
And they may become more panic to control the inventory, to cut their
orders. And that's usually the necessary process
for the industry to reach the bottom, to clean out the inventory.
And then we can renew or we can begin a new cycle right after that.
Yeah. So I think there's no mystery about it.
Just the next one to two quarter will be more challenging.
But the inventory correction is faster than it, which means that we can reach
the bottom and recovery next phase faster.
Sebastian, maybe next year. How are you?
Are you rerating the sector in any way? In light of this news,
what is your revenue outlook or everything for next year now for some of
these companies that you cover? Yeah, I think we really need to
see is definitely a new factor that we have to re-evaluate.
I think the whole as mentioned, the hyper computing data Sanders related
artificially Taylor Riggs intelligence, real materials will also be affected.
So that's why I think the overall outlook will be in the next quarter to
quarter, as will likely to be to be to be down further.
Yeah. It's interesting when we start to see
these tensions flare up again, you start to hear China saying, look, I want to
step in, I'm going to support these homegrown sectors now and basically try
to do this on their own. Is the localization efforts of China now
at risk as well? In light of these restrictions, I think,
yes, that's what we think, too, because in the past through year or while we
spend, we saw a slew of engineers move back from the US to to China.
And also a lot of the people come from far away.
Silicon, they said, are established to start a company.
So the startup ecosystem in China, they're very good.
Domestic semiconductor ambition has been built up aggressively.
But this time around. As mentioned, I think the better the
U.S. restrict the access to some of the
fundamental technologies from the US and also to restrict those U.S.
citizens, U.S. persons to help facilitate China.
I'm building this leading edge technology development.
And if you look at a lot of the well, a lot of the top semiconductor company in
China, either their chairman or CEO, a lot of them are holding a U.S.
passport. So that will become one of the chuck
challenged. Yeah,
I suppose it. Very quickly here at Zoo, it is that the
whole semiconductor industry is one big beast, which parts of it are holding up
and which are the ones which are going down the toilet?
Well, I think there's still some some bright spots, sir, some some bright
spots in this whole things, because one one angle to look at it is a memory
sector, because this is the sector that's you believe in the first thing
first out, because this sector has been firstly got a face to inventory
corrections is more than a year ago. And now they're close to the not in the
bottom, but that they're closer to the bottom.
And this time around, you look at some of the US, the curve restriction.
They also restrict the China to develop on the memory
memory development, on onto technology, know the access to it, Kumba.
So there is an argument on the on the supply side would be positive for the
overall since semiconductor memory, semiconductor supply, demand dynamics.
So anything while everything looks pretty gloomy, the memory sector is one
of those subsector with a semi that we think may
show some bright spot.