汇丰银行-亚洲-半导体行业-智能手机越来越智能化 10页

'16October2017AsiaTechnologySectorEQUITIESSEMICONDUCTORSmartphonesgettingsmarterTAIWANGrowingAIadoptionamonghigh-endsmartphonesBruceLu*Analyst,TechnologySmartphoneAIdevelopmentstillatearlystagesHSBCSecurities(Taiwan)CorporationLimitedbruce.kl.lu@hsbc.com.tw+886266312861OutlookforkeyplayersThurstonLee*AssociateGrowingAIadoptionamonghigh-endsmartphones:InconjunctionwithourHSBCSecurities(Taiwan)CorporationLimitedthurston.jc.lee@hsbc.com.twrecentMediatekreport(Mediatek:SizingtheASICopportunity,13Oct2017),where+886266312862wediscussedthetrendofsystemhousesdevelopinghigh-endapplicationprocessorsinternally,andourAIthematicreports(ArtificialIntelligence:Chipswitheverything,16*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsOct2017andArtificialintelligenceandtheproductivityparadox,15Aug2017),wehighlightanothertrendofhigh-endsmartphonesincorporatingAI/machinelearningfunctionalitiesandneuralprocessingunits(NPUs).Webelievethistrend,asobservablethroughrecentlaunchesofApple’sA11andHuawei’sKirin970,willallowbothsoftwareandhardwaredeveloperstofurtherextendsmartphones’capabilitiesinareassuchas3Dsensing/AR/VR/real-timedataprocessing,furtherimprovetheuserexperienceandpotentiallyexcitethestagnantglobalsmartphonedemandagain.AIdevelopmentstillatearlystages:Althoughwehavejuststartedtowitnessnewdevelopmentsinnewfunctionalities,suchasApple’snewFaceID,weexpectmoreapplicationstoemergeandutilizethepotentialityofAI/machinelearning.WebelieveHuawei’sapproachofcombiningon-deviceandcloudmachinecalculationstocreateamobileAIshouldbeagoodexample.Lookingforward,weexpectsupportfromdevelopersinalgorithmandsoftware/applicationdevelopmenttofurtheracceleratethedeploymentofAIfunctionalities.Aspartofthedevelopment,weexpectfutureapplicationprocessorstoexhibitlargerdiesizesasaresultofNPUadditions,andtherelationshipbetweenchipsetprovidersandsmartphonevendorstobecomeeventightergivenhigherintegrationbetweensoftwareandhardware.Outlookforkeyplayers:WebelieveatoppriorityforvendorswillbetofurtherinvestinextendingtheirhardwareframeworktobetterfacilitateanenvironmentthatisfriendlyforAI.Huawei(NotListed)hasannouncedplanstoworkwithdeveloperswithdifferentapplicationknow-howinadvancingalgorithms.Qualcomm(QCOMUS,CMPUSD52.8,NotRated)hastakenupadifferentapproachwithitsAIsoftwareplatform,theSnapdragonNeuralProcessingEngine,whichaimsatincorporatingAIthroughasoftwareplatform.ForMediatek,wealsoexpectresourcestobeinvestedinbuildingtheframeworkforAI/machinelearning.Localmediasource,EconomicDaily(20September2017)reportedthatMediatekwilllaunchitsAIincorporatedchipsetP70in2018.WethinkthiscouldpotentiallybeanopportunityforMediatektofurthersolidifyitsrelationshipwithcustomersastheywillrelymoreheavilyonchipsetvendors.Althoughwedonotexpecttoseeamaterialimpactinthenearterm,webelievethetrendwillverylikelybeagamechangerandwillcontinuetomonitorthistrendclosely.MiFIDII–ResearchIsyouraccessagreed?CONTACTustodayDisclosures&DisclaimerIssuerofreport:HSBCSecurities(Taiwan)CorporationLimitedThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.ViewHSBCGlobalResearchat:https://www.research.hsbc.com EQUITIES●SEMICONDUCTOR16October2017ValuationcomparisonExhibit1:ValuationcomparisonUp/downStockTickerRatingPriceTPsideMktCap________EPS_____________P/E(x)________P/BV(x)____ROE(%)__Close(%)(USDbn)FY16FY17eFY18eFY16FY17eFY18eFY16FY17eFY18eFY16FY17eTSMC2330TTHold238222-7204.812.8913.5115.0818.417.615.94.44.03.624.122.7Samsung005930KSBuy2,700,0003,600,00033310.4162,351310,701380,83516.68.77.11.81.61.410.418.8QualcommQCOMUSN.R.53N.R.N.R.78.03.842.262.7413.823.419.32.52.63.017.810.9Mediatek2454TTBuy322380181814.9810.6717.3821.530.218.52.13.23.09.810.5AppleAAPLUSN.R.157N.R.N.R.810.98.359.0110.9718.817.414.36.55.94.934.733.7Source:BloombergI/B/E/SestimatesforNon-Ratedcompanies,HSBCestimatesforRatedcompanies.Note:Pricecloseasof16October2017;pricesandTPinlocalcurrencies.SmartphonesbecomingsmarterGrowingAIadoptionamonghigh-endsmartphonesInourrecentMediatekreport(Mediatek:SizingtheASICopportunity,13Oct2017)weexploredthegrowingtrendofsystemhousesdevelopinghigh-endapplicationprocessorsinternally,forinstance,Apple’sA-serieschip,Samsung’sExynos,andHuawei’sKirin.Aswehaveconcluded,webelievethatwhileinthepastmanyhadquestionedwhethertherewasaneedforsystemhousestodeveloptheirownapplicationprocessorinternallygiventheneedtofurtherinvestinvariousIP/talent,thebenefitsofdevelopingapplicationprocessorsinternally,suchasbetterdesignflexibility,haveledotherleadingsystemhousesdownasimilarpath.Asanextensiontothisgrowinginternaldevelopment,wearebeginningtoseehigh-endsmartphonesincorporatingAI/machinelearningfunctionalitiesandNPUsasthenextstep.Webelievethistrend,asobservablethroughrecentlaunchesofApple’sA11andHuawei’sKirin970,willallowbothsoftwareandhardwaredeveloperstofurtherextendsmartphone’scapabilitiesinareasincluding3Dsensing/imageprocessing/voicerecognition/security/AR/VR/real-timedataprocessing,furtherimprovinguserexperienceandpotentiallyignitingthestagnantglobalsmartphonedemandagain.AIdevelopmentstillatearlystagesAlthoughAI/machinelearninghavehistoricallybeenassociatedmorewithotherapplicationssuchasroboticsandcloudcomputing,newtechnologieshaveemergedandalloweddeveloperstofurtherexplorethepotentialofAIineverydayusage.Currently,weareseeingcontinuouseffortsbycompaniessuchasApple(AAPLUS,CMPUSD156.9,NotRated),Samsung(005930KS,CMPKRW2,700,000,Buy,TPKRW3,600,000),Huawei(NotListed),Google(GOOGL.US;CMPUSD1007.87;NotRated)andothersinfurtherextendingthecapabilitiesofAI.InlateOctober2015,Googlelaunchedacomputerprogramcalled“AlphaGo”,whichbecamethefirstcomputerGoprogramthatcouldbeatahumanprofessionalplayerthroughmachinetrainingandwithouthandicaps.AssuggestedbyGoogle,thesystememploysanewneuralnetworkarchitecturethatwasdesignedtotakeanalternativeevaluationapproachthatdiffersfromIBMDeepBlue’sbruteforce.Usingthenewlyestablishedneuralnetworkarchitecture,theMonteCarloTreeSearch,developerswereabletoexecutenumerousrandomsimulationiterationsoverthedifferentnodesofthesystemandletthesystemessentiallyexploreand“teach”itselftheoptimalwayindealingwiththedata.What’ssignificantaboutthisdevelopment,assomemayhaveignored,isdevelopers’shiftintacklingthedesignofcomputingarchitecture.2 EQUITIES●SEMICONDUCTOR16October2017Aswecanobservewithpastandcurrentcomputingsystemdesigns,designsgenerallytakeontheapproachwhereacentralbrain,theCPU,holdssignificantcontroloverdataprocessingandisinchargeofdelegatingtaskstootherfunction-specifichardware,suchasthegraphicscard.Withneuralnetworks,thecomputingstructureisreorganizedintoanetworkofnodeswherecomputationisbrokendownintosmallerpiecesandprocessedatdifferentnodesforbetterefficiencies.Neuralcomputingsystemswereinspiredbythebiologicalneuralnetworksthatconstituteahumanbrain.Thesekindsofsystemlearnandprogressivelyimproveiterationperformanceofgiventasks.Forexample,inimagerecognition,thesystemwillfirstlearntoidentifyimagesthatcontainaspecificanimalthathasbeenmanuallylabelledandthenlearnsotherobjectsthroughdifferentiterations.Exhibit2:ExampleoftraditionalExhibit3:ExampleofaneuralnetworkcomputingconnectionInputlayerOutputlayerInputlayerHiddenlayerOutputlayerSource:HSBCSource:HSBCAscanbeseenintheexhibitsabove,traditionalcomputingconnectionsshowamorelinearapproachwhileaneuralnetworkapproachesiterationsinamatrixconfiguration.Inthelastfewyears,wehaveseenahugemovetowardstheideasofdeeplearning,machinelearningandAIworkloads.Whileinitiallytheseideasweremuchmoreresearchedontheserverside,vendorsarestartingtotestwhethertheconceptsandfunctionalitiesofAI/machinelearningareapplicableonmobilephones.Giventheperformancedifferencesbetweenmobilephonesandservers,developersarestilltryingtofigureoutwhatwouldbethebestwaytointegrateAIonmobilephones.Oneapproachtothisisedgecomputing.Althoughwehavejuststartedtowitnessnewdevelopmentsinnewfunctionalities,suchastheApple’snewFaceIDwhichperformsbiometricauthenticationthroughuniquecharacteristicsofanindividual’sface,weexpectmoreapplicationstoemergeandutilizethepotentialityofAI/machinelearning.WebelieveHuawei’sapproachofcombiningon-deviceandcloudmachinecalculationstocreateamobileAIshouldbeagoodexample.CurrentdevelopmentsApple:ApplerecentlydebuteditsnewiPhoneXmodelthatincludesnewfeaturessuchasfacialrecognitionandAR.Althoughthesenewfeatureswerequiteimpressive,theywouldnothavebeenavailableifnotforthephone’snewA11bionicchip,whichhousesApple’snewneuralengine.AssuggestedbyApple,itsneuralengineisactuallyapairofprocessingcoresdedicatedtohandlingspecificmachinelearningalgorithmsthatareusedtopowervariousadvancedfeaturesontheiPhone.AccordingtoApple’spresentationmaterials,theneuralengineisabletoperformupto600bnoperationspersecondtohelpspeedupdatacomputations.AlthoughtheiPhoneXisyettohitthemarketandthereislimitedavailableinformationonitsneuralengine,onepointApplemadeduringtheeventwasthatitsFaceIDdoesnotjustuseaconventioncamera,butrathercreatesamapof30,000lightdotstomapauser’sfacetoidentifycharacteristicsforauthentication–thisisasignificantamountofdatabeingprocessedquickly.3 EQUITIES●SEMICONDUCTOR16October2017Huawei:DifferentfromwhatwehaveseenwithApple’spresentation,whichemphasizedmoreontheFaceIDfunctionality,HuaweiwentintomoredetailsaboutitsnewneuralprocessingcapabilityatitsKirin970launch.Asidefromalsoassistingwithimageprocessingfunctions,HuaweistandsoutinthatitaimsatcreatingamobileAIplatformthroughthecombinationofon-deviceprocessingandcloudprocessingthatwouldfurtherextendthecapabilitiesofmobilehardwarethroughimprovedperformance.Ashighlightedinitspresentationmaterials,Huaweiisintheprocessofexpandingitsmachinelearningprocessingalgorithmsandcloudprocessingservices.Ideally,applicationdeveloperswouldbeabletocreate/accessalgorithmsandperformhighlyefficientdataprocessesonthemobilephone,andthiscouldenableHuawei’suserstostoretheirpersonalinformation,suchasfacialcharacteristics,locallyandusethemas“tuningknobs”fordifferentalgorithms.Exhibit4:InstantaneousprocessingiskeyExhibit5:Combiningcloudandon-devicetomobileAIprocessingtocreatemobileAISource:HuaweiSource:HuaweiExhibit6:StrongeramalgamationbetweensoftwareandhardwarebringsbetterperformanceSource:HuaweiQualcomm:Qualcomm,ontheotherhand,hastakenadifferentapproachfrombothAppleandHuawei.Qualcomm’scurrentplanismuchsimplerthantherestofthepackasitaimstoadoptthesiliconchipsetthat’salreadyinplacethroughsoftwaresupport.Ayearago,QualcommlauncheditsSnapdragonNeuralProcessingEngine,whichisasoftwaredevelopmentkit(SDK)thatallowsdeveloperstooptimizetheirapplications/AIprocesseswhenusingQualcomm’sSnapdragon600/800seriesprocessors.WhatSDKessentiallydoesisallowdeveloperstoassignparticularfunctionalityoftheirapptodifferentpartsofthechipset.DevelopersthatuseQualcomm’sSDKwillbeabletoallocatedifferenttaskstotheCPU,GPUorDSPtoachievethedesiredperformance.4 EQUITIES●SEMICONDUCTOR16October2017Lookingforward,weexpectsupportfromdevelopersinalgorithmandsoftware/applicationdevelopmenttofurtheracceleratethedeploymentofAIfunctionalities.WhiledifferentplayersaretakingdifferentapproachestotheAI/machinelearningproblem,weremainpositiveonthistrend.Aspartofthedevelopment,weexpectfutureapplicationprocessorstoexhibitlargerdiesizesasaresultofNPUadditions,andtherelationshipbetweenchipsetprovidersandsmartphonevendorstobecomeeventightergivenahigherintegrationbetweensoftwareandhardware.OutlookforkeyplayersAlthoughitishardtosaywhichareasvendorswilltargetafter3Dsensing,wethinkallwilllikelyinvestresourcesinextendingthehardwareframeworktobetterfacilitateanenvironmentthatisfriendlyforAI/machinelearning.Huaweihasalsoannouncedplanstoworkwithdeveloperswithdifferentapplicationknow-howinadvancingalgorithms.Qualcomm,ontheotherhand,hastakenupadifferentapproachwithitsAIsoftwareplatform,theSnapdragonNeuralProcessingEngine,whichaimsatincorporatingAIthroughasoftwareplatform.ForMediatek,webelieveAI/machinelearninghasbeentheoneofthemostimportantR&Dfocuses.Localmediasource,EconomicDailyhasalreadyreportedthatMediatekwilllaunchitsAIincorporatedchipsetP70in2018.SimilartoApple/Huawei’sapproach,Mediatekwillalsoincorporateadedicatedprocessingunitinitshigh-endchipsandwillworkwithdevelopersinadvancingalgorithmsforvariousapplications.WethinkthiscouldpotentiallybeanopportunityforMediatektofurthersolidifyitsrelationshipwithcustomersastheywillrelymoreheavilyonchipsetvendors.AnotherimportantadvantagethatMediatekhasisitshighexposuretovariousconsumerproducts,whichcouldenableittoeasilyintegratesimilarAIfunctionsacrossallofitsconsumerproductportfolios,e.g.,voicerecognitiononhomeentertainmentproducts.Althoughwedonotexpectanymaterialimpactinthenearterm,webelievethetrendwillverylikelybethegamechangerandwillcontinuetomonitorthistrendclosely.ValuationandrisksMediatek(2454.TW;TPTWD380;Buy):Givenourconstructiveviewonthecompany’simprovingsmartphonebusinessandexpandingnon-smartphoneaddressablemarket,wereiterateourBuyratingonthestock.OurTPofTWD380isderivedbyapplyinganunchangedtargetPEmultipleof22x,whichisatthehigherendofthecompany’stradingrangeduringthelastmarginupcycle,toour2018eEPSofTWD17.38.Ourtargetpriceimplies18%upsideandwereiterateourBuyratinggivenourexpectationofrecoveringsmartphonedemandfromemergingmarketsheadinginto2018e.Keydownsideriskstoourviewinclude:(1)weaker-than-expectedendmarket;(2)worse-than-expectedexecution;(3)potentialdelaysinnewsmartphoneproductlaunch;and(4)stronger-than-expectedcompetitionandpricingpressure.WhilethecompetitivelandscapecertainlyremainsakeyriskforMediatek,thebiggestdownsideriskinourviewwouldbethecompany’sabilitytosuccessfullyexecuteandcapturegrowthopportunities.5 EQUITIES●SEMICONDUCTOR16October2017DisclosureappendixAnalystCertificationThefollowinganalyst(s),economist(s),orstrategist(s)whois(are)primarilyresponsibleforthisreport,includinganyanalyst(s)whosename(s)appear(s)asauthorofanindividualsectionorsectionsofthereportandanyanalyst(s)namedasthecoveringanalyst(s)ofasubsidiarycompanyinasum-of-the-partsvaluationcertifies(y)thattheopinion(s)onthesubjectsecurity(ies)orissuer(s),anyviewsorforecastsexpressedinthesection(s)ofwhichsuchindividual(s)is(are)namedasauthor(s),andanyotherviewsorforecastsexpressedherein,includinganyviewsexpressedonthebackpageoftheresearchreport,accuratelyreflecttheirpersonalview(s)andthatnopartoftheircompensationwas,isorwillbedirectlyorindirectlyrelatedtothespecificrecommendation(s)orviewscontainedinthisresearchreport:BruceLuandThurstonLeeImportantdisclosuresEquities:StockratingsandbasisforfinancialanalysisHSBCbelievesaninvestor"sdecisiontobuyorsellastockshoulddependonindividualcircumstancessuchastheinvestor"sexistingholdings,risktoleranceandotherconsiderationsandthatinvestorsutilisevariousdisciplinesandinvestmenthorizonswhenmakinginvestmentdecisions.Ratingsshouldnotbeusedorreliedoninisolationasinvestmentadvice.Differentsecuritiesfirmsuseavarietyofratingstermsaswellasdifferentratingsystemstodescribetheirrecommendationsandthereforeinvestorsshouldcarefullyreadthedefinitionsoftheratingsusedineachresearchreport.Further,investorsshouldcarefullyreadtheentireresearchreportandnotinferitscontentsfromtheratingbecauseresearchreportscontainmorecompleteinformationconcerningtheanalysts"viewsandthebasisfortherating.From23rdMarch2015HSBChasassignedratingsonthefollowingbasis:Thetargetpriceisbasedontheanalyst’sassessmentofthestock’sactualcurrentvalue,althoughweexpectittotakesixto12monthsforthemarketpricetoreflectthis.Whenthetargetpriceismorethan20%abovethecurrentshareprice,thestockwillbeclassifiedasaBuy;whenitisbetween5%and20%abovethecurrentshareprice,thestockmaybeclassifiedasaBuyoraHold;whenitisbetween5%belowand5%abovethecurrentshareprice,thestockwillbeclassifiedasaHold;whenitisbetween5%and20%belowthecurrentshareprice,thestockmaybeclassifiedasaHoldoraReduce;andwhenitismorethan20%belowthecurrentshareprice,thestockwillbeclassifiedasaReduce.Ourratingsarere-calibratedagainstthesebandsatthetimeofany"materialchange"(initiationorresumptionofcoverage,changeintargetpriceorestimates).Upside/Downsideisthepercentagedifferencebetweenthetargetpriceandtheshareprice.Priortothisdate,HSBC’sratingstructurewasappliedonthefollowingbasis:Foreachstockwesetarequiredrateofreturncalculatedfromthecostofequityforthatstock’sdomesticor,asappropriate,regionalmarketestablishedbyourstrategyteam.Thetargetpriceforastockrepresentedthevaluetheanalystexpectedthestocktoreachoverourperformancehorizon.Theperformancehorizonwas12months.ForastocktobeclassifiedasOverweight,thepotentialreturn,whichequalsthepercentagedifferencebetweenthecurrentsharepriceandthetargetprice,includingtheforecastdividendyieldwhenindicated,hadtoexceedtherequiredreturnbyatleast5percentagepointsoverthesucceeding12months(or10percentagepointsforastockclassifiedasVolatile*).ForastocktobeclassifiedasUnderweight,thestockwasexpectedtounderperformitsrequiredreturnbyatleast5percentagepointsoverthesucceeding12months(or10percentagepointsforastockclassifiedasVolatile*).StocksbetweenthesebandswereclassifiedasNeutral.*Astockwasclassifiedasvolatileifitshistoricalvolatilityhadexceeded40%,ifthestockhadbeenlistedforlessthan12months(unlessitwasinanindustryorsectorwherevolatilityislow)oriftheanalystexpectedsignificantvolatility.However,stockswhichwedidnotconsidervolatilemayinfactalsohavebehavedinsuchaway.Historicalvolatilitywasdefinedasthepastmonth"saverageofthedaily365-daymovingaveragevolatilities.Inordertoavoidmisleadinglyfrequentchangesinrating,however,volatilityhadtomove2.5percentagepointspastthe40%benchmarkineitherdirectionforastock"sstatustochange.6 EQUITIES●SEMICONDUCTOR16October2017Ratingdistributionforlong-terminvestmentopportunitiesAsof16October2017,thedistributionofallindependentratingspublishedbyHSBCisasfollows:Buy45%(27%oftheseprovidedwithInvestmentBankingServices)Hold41%(24%oftheseprovidedwithInvestmentBankingServices)Sell14%(16%oftheseprovidedwithInvestmentBankingServices)Forthepurposesofthedistributionabovethefollowingmappingstructureisusedduringthetransitionfromtheprevioustocurrentratingmodels:underourpreviousmodel,Overweight=Buy,Neutral=HoldandUnderweight=Sell;underourcurrentmodelBuy=Buy,Hold=HoldandReduce=Sell.Forratingdefinitionsunderbothmodels,pleasesee“Stockratingsandbasisforfinancialanalysis”above.Forthedistributionofnon-independentratingspublishedbyHSBC,pleaseseethedisclosurepageavailableathttp://www.hsbcnet.com/gbm/financial-regulation/investment-recommendations-disclosures.Sharepriceandratingchangesforlong-terminvestmentopportunitiesMediaTek(2454.TW)sharepriceperformanceTWDVsRating&targetpricehistoryHSBCratinghistoryFromToDateAnalystNeutralHold06Apr2015YolandaWangHoldBuy27May2015YolandaWangBuyHold31Jul2015YolandaWang490HoldBuy30Jun2017BruceLu440TargetpriceValueDateAnalyst390Price1470.0009Mar2015YolandaWangPrice2437.0020Apr2015YolandaWang340Price3460.0027May2015YolandaWang290Price4381.0028Jul2015YolandaWangPrice5318.0031Jul2015YolandaWang240Price6289.0007Sep2015YolandaWangPrice7296.0021Oct2015YolandaWang190Price8288.0030Oct2015YolandaWangPrice9198.0001Feb2016YolandaWangOct-12Oct-13Oct-14Oct-15Oct-16Oct-17Price10214.0003Aug2016JoyceChenSource:HSBCPrice11265.0026Aug2016BruceLuPrice12244.0028Oct2016BruceLuPrice13230.0006Jan2017BruceLuPrice14213.0026Jan2017BruceLuPrice15237.0029Mar2017BruceLuPrice16206.0028Apr2017BruceLuPrice17355.0030Jun2017BruceLuPrice18340.0024Jul2017BruceLuPrice19380.0005Oct2017BruceLuSource:HSBCToviewalistofalltheindependentfundamentalratingsdisseminatedbyHSBCduringthepreceding12-monthperiod,pleaseusethefollowinglinkstoaccessthedisclosurepage:ClientsofGlobalResearchandGlobalBankingandMarkets:www.research.hsbc.com/A/DisclosuresClientsofHSBCPrivateBanking:www.research.privatebank.hsbc.com/DisclosuresHSBC&AnalystdisclosuresDisclosurechecklistCompanyTickerRecentpricePricedateDisclosureMEDIATEK2454.TW322.0013Oct20176Source:HSBC1HSBChasmanagedorco-managedapublicofferingofsecuritiesforthiscompanywithinthepast12months.2HSBCexpectstoreceiveorintendstoseekcompensationforinvestmentbankingservicesfromthiscompanyinthenext3months.3Atthetimeofpublicationofthisreport,HSBCSecurities(USA)Inc.isaMarketMakerinsecuritiesissuedbythiscompany.7 EQUITIES●SEMICONDUCTOR16October20174Asof30September2017HSBCbeneficiallyowned1%ormoreofaclassofcommonequitysecuritiesofthiscompany.5Asof31August2017,thiscompanywasaclientofHSBCorhadduringthepreceding12monthperiodbeenaclientofand/orpaidcompensationtoHSBCinrespectofinvestmentbankingservices.6Asof31August2017,thiscompanywasaclientofHSBCorhadduringthepreceding12monthperiodbeenaclientofand/orpaidcompensationtoHSBCinrespectofnon-investmentbankingsecurities-relatedservices.7Asof31August2017,thiscompanywasaclientofHSBCorhadduringthepreceding12monthperiodbeenaclientofand/orpaidcompensationtoHSBCinrespectofnon-securitiesservices.8Acoveringanalyst/shasreceivedcompensationfromthiscompanyinthepast12months.9Acoveringanalyst/soramemberofhis/herhouseholdhasafinancialinterestinthesecuritiesofthiscompany,asdetailedbelow.10Acoveringanalyst/soramemberofhis/herhouseholdisanofficer,directororsupervisoryboardmemberofthiscompany,asdetailedbelow.11Atthetimeofpublicationofthisreport,HSBCisanon-USMarketMakerinsecuritiesissuedbythiscompanyand/orinsecuritiesinrespectofthiscompany12Asof10Oct2017,HSBCbeneficiallyheldanetlongpositionofmorethan0.5%ofthiscompany’stotalissuedsharecapital,calculatedaccordingtotheSSRmethodology.13Asof10Oct2017,HSBCbeneficiallyheldanetshortpositionofmorethan0.5%ofthiscompany’stotalissuedsharecapital,calculatedaccordingtotheSSRmethodology.HSBCanditsaffiliateswillfromtimetotimeselltoandbuyfromcustomersthesecurities/instruments,bothequityanddebt(includingderivatives)ofcompaniescoveredinHSBCResearchonaprincipaloragencybasis.Analysts,economists,andstrategistsarepaidinpartbyreferencetotheprofitabilityofHSBCwhichincludesinvestmentbanking,sales&trading,andprincipaltradingrevenues.Whether,orinwhattimeframe,anupdateofthisanalysiswillbepublishedisnotdeterminedinadvance.EconomicsanctionsimposedbytheEUandOFACprohibittransactingordealinginnewdebtorequityofRussianSSIentities.ThisreportdoesnotconstituteadviceinrelationtoanysecuritiesissuedbyRussianSSIentitiesonorafterJuly162014andassuch,thisreportshouldnotbeconstruedasaninducementtotransactinanysanctionedsecurities.Fordisclosuresinrespectofanycompanymentionedinthisreport,pleaseseethemostrecentlypublishedreportonthatcompanyavailableatwww.hsbcnet.com/research.HSBCPrivateBankingclientsshouldcontacttheirRelationshipManagerforqueriesregardingotherresearchreports.Inordertofindoutmoreabouttheproprietarymodelsusedtoproducethisreport,pleasecontacttheauthoringanalyst.Additionaldisclosures1.Thisreportisdatedasat16October2017.2.Allmarketdataincludedinthisreportaredatedasatclose16October2017,unlessadifferentdateand/oraspecifictimeofdayisindicatedinthereport.3.HSBChasproceduresinplacetoidentifyandmanageanypotentialconflictsofinterestthatariseinconnectionwithitsResearchbusiness.HSBC"sanalystsanditsotherstaffwhoareinvolvedinthepreparationanddisseminationofResearchoperateandhaveamanagementreportinglineindependentofHSBC"sInvestmentBankingbusiness.InformationBarrierproceduresareinplacebetweentheInvestmentBanking,PrincipalTrading,andResearchbusinessestoensurethatanyconfidentialand/orpricesensitiveinformationishandledinanappropriatemanner.4.Youarenotpermittedtouse,forreference,anydatainthisdocumentforthepurposeof(i)determiningtheinterestpayable,orothersumsdue,underloanagreementsorunderotherfinancialcontractsorinstruments,(ii)determiningthepriceatwhichafinancialinstrumentmaybeboughtorsoldortradedorredeemed,orthevalueofafinancialinstrument,and/or(iii)measuringtheperformanceofafinancialinstrument.Production&distributiondisclosures1.Thisreportwasproducedandsignedoffbytheauthoron16Oct201711:14GMT.2.Inordertoseewhenthisreportwasfirstdisseminatedpleaseseethedisclosurepageavailableathttps://www.research.hsbc.com/R/34/QjxvrbR8 EQUITIES●SEMICONDUCTOR16October2017DisclaimerLegalentitiesasat13July2017Issuerofreport‘UAE’HSBCBankMiddleEastLimited,Dubai;‘HK’TheHongkongandShanghaiBankingCorporationLimited,HongHSBCSecurities(Taiwan)CorporationLimitedKong;‘TW’HSBCSecurities(Taiwan)CorporationLimited;"CA"HSBCSecurities(Canada)Inc.;HSBCBank,Paris13thFloor,333KeelungRoad,Sec.1,Branch;HSBCFrance;‘DE’HSBCTrinkaus&BurkhardtAG,Düsseldorf;000HSBCBank(RR),Moscow;‘IN’HSBCTaipei,TaiwanSecuritiesandCapitalMarkets(India)PrivateLimited,Mumbai;‘JP’HSBCSecurities(Japan)Limited,Tokyo;‘EG’HSBCTelephone:+886227228458SecuritiesEgyptSAE,Cairo;‘CN’HSBCInvestmentBankAsiaLimited,BeijingRepresentativeOffice;TheHongkongandFax:+886227222056ShanghaiBankingCorporationLimited,SingaporeBranch;TheHongkongandShanghaiBankingCorporationLimited,Website:www.research.hsbc.comSeoulSecuritiesBranch;TheHongkongandShanghaiBankingCorporationLimited,SeoulBranch;HSBCSecurities(SouthAfrica)(Pty)Ltd,Johannesburg;HSBCBankplc,London,Madrid,Milan,Stockholm,TelAviv;‘US’HSBCSecurities(USA)Inc,NewYork;HSBCYatirimMenkulDegerlerAS,Istanbul;HSBCMéxico,SA,InstitucióndeBancaMúltiple,GrupoFinancieroHSBC;HSBCBankAustraliaLimited;HSBCBankArgentinaSA;HSBCSaudiArabiaLimited;TheHongkongandShanghaiBankingCorporationLimited,NewZealandBranchincorporatedinHongKongSAR;TheHongkongandShanghaiBankingCorporationLimited,BangkokBranch;PTBankHSBCIndonesiaThisdocumenthasbeenissuedbyHSBCSecurities(Taiwan)CorporationLimitedintheconductofitsTaiwanregulatedbusinessfortheinformationofitsinstitutionalandprofessionalcustomers.ItisnotintendedforandshouldnotbedistributedtoretailcustomersinTaiwan.Thisrecommendationmaterialisforreferenceonly.Investorsshouldcarefullyconsidertheirowninvestmentrisk.Investmentresultsaretheresponsibilityoftheindividualinvestor.HSBCSecurities(Taiwan)CorporationLimitedisregulatedbytheSecuritiesandFuturesBureau.AllenquiresbyrecipientsinTaiwanmustbedirectedtoyourHSBCcontactinTaiwan.IfthisreportisreceivedbyacustomerofanaffiliateofHSBC,it"sprovisiontotherecipientissubjecttothetermsofbusinessinplacebetweentherecipientandsuchaffiliate.Thisdocumentisnotandshouldnotbeconstruedasanoffertosellorthesolicitationofanoffertopurchaseorsubscribeforanyinvestment.HSBChasbasedthisdocumentoninformationobtainedfromsourcesitbelievestobereliablebutwhichithasnotindependentlyverified;HSBCmakesnoguarantee,representationorwarrantyandacceptsnoresponsibilityorliabilityastoitsaccuracyorcompleteness.ExpressionsofopinionarethoseoftheResearchDivisionofHSBConlyandaresubjecttochangewithoutnotice.Fromtimetotimeresearchanalystsconductsitevisitsofcoveredissuers.HSBCpoliciesprohibitresearchanalystsfromacceptingpaymentorreimbursementfortravelexpensesfromtheissuerforsuchvisits.HSBCanditsaffiliatesand/ortheirofficers,directorsandemployeesmayhavepositionsinanysecuritiesmentionedinthisdocument(orinanyrelatedinvestment)andmayfromtimetotimeaddtoordisposeofanysuchsecurities(orinvestment).HSBCanditsaffiliatesmayactasmarketmakerorhaveassumedanunderwritingcommitmentinthesecuritiesofcompaniesdiscussedinthisdocument(orinrelatedinvestments),maysellthemtoorbuythemfromcustomersonaprincipalbasisandmayalsoperformorseektoperforminvestmentbankingorunderwritingservicesfororrelatingtothosecompanies.HSBCResearchmaynotbedistributedtothepublicmediaorquotedorusedbythepublicmediawithouttheexpresswrittenconsentofHSBCSecurities(Taiwan)CorporationLimited.ReportswrittenbyTaiwan-basedanalystsonnon-TaiwanlistedcompaniesarenotconsideredrecommendationstobuyorsellsecuritiesunderTaiwanStockExchangeOperationalRegulationsgoverningsecuritiesfirmsrecommendingtradesinsecuritiestocustomersandassuchHSBCSecurities(Taiwan)CorporationLimitedmaynotexecutetransactionsforclientsinthesesecurities/instruments.IntheUKthisreportmayonlybedistributedtopersonsofakinddescribedinArticle19(5)oftheFinancialServicesandMarketsAct2000(FinancialPromotion)Order2005.TheprotectionsaffordedbytheUKregulatoryregimeareavailableonlytothosedealingwitharepresentativeofHSBCBankplcintheUK.HSBCSecurities(USA)Inc.acceptsresponsibilityforthisresearchreportpreparedbyitsforeignaffiliate.AllU.S.personsreceivingthisreportandwishingtoeffecttransactionsinanysecuritydiscussedhereinshoulddosowithHSBCSecurities(USA)Inc.intheUnitedStatesandnotwiththeforeignaffiliate,theissuerofthisreport.Note,however,thatHSBCSecurities(USA)Inc.isnotdistributingthisreportandhasnotcontributedtoorparticipatedinitspreparation.InKorea,thispublicationisdistributedbyeitherTheHongkongandShanghaiBankingCorporationLimited,SeoulSecuritiesBranch("HBAPSLS")orTheHongkongandShanghaiBankingCorporationLimited,SeoulBranch("HBAPSEL")forthegeneralinformationofprofessionalinvestorsspecifiedinArticle9oftheFinancialInvestmentServicesandCapitalMarketsAct(“FSCMA”).ThispublicationisnotaprospectusasdefinedintheFSCMA.Itmaynotbefurtherdistributedinwholeorinpartforanypurpose.BothHBAPSLSandHBAPSELareregulatedbytheFinancialServicesCommissionandtheFinancialSupervisoryServiceofKorea.InSingapore,thispublicationisdistributedbyTheHongkongandShanghaiBankingCorporationLimited,SingaporeBranchforthegeneralinformationofinstitutionalinvestorsorotherpersonsspecifiedinSections274and304oftheSecuritiesandFuturesAct(Chapter289)(“SFA”)andaccreditedinvestorsandotherpersonsinaccordancewiththeconditionsspecifiedinSections275and305oftheSFA.ThispublicationisnotaprospectusasdefinedintheSFA.Itmaynotbefurtherdistributedinwholeorinpartforanypurpose.TheHongkongandShanghaiBankingCorporationLimitedSingaporeBranchisregulatedbytheMonetaryAuthorityofSingapore.RecipientsinSingaporeshouldcontacta"HongkongandShanghaiBankingCorporationLimited,SingaporeBranch"representativeinrespectofanymattersarisingfrom,orinconnectionwiththisreport.InAustralia,thispublicationhasbeendistributedbyTheHongkongandShanghaiBankingCorporationLimited(ABN65117925970,AFSL301737)forthegeneralinformationofits“wholesale”customers(asdefinedintheCorporationsAct2001).Wheredistributedtoretailcustomers,thisresearchisdistributedbyHSBCBankAustraliaLimited(ABN48006434162,AFSLNo.232595).TheserespectiveentitiesmakenorepresentationsthattheproductsorservicesmentionedinthisdocumentareavailabletopersonsinAustraliaorarenecessarilysuitableforanyparticularpersonorappropriateinaccordancewithlocallaw.Noconsiderationhasbeengiventotheparticularinvestmentobjectives,financialsituationorparticularneedsofanyrecipient.ThispublicationisdistributedinNewZealandbyTheHongkongandShanghaiBankingCorporationLimited,NewZealandBranchincorporatedinHongKongSAR.InJapan,thispublicationhasbeendistributedbyHSBCSecurities(Japan)Limited.Itmaynotbefurtherdistributedinwholeorinpartforanypurpose.InCanada,thisdocumenthasbeendistributedbyHSBCSecurities(Canada)Inc.(memberIIROC),and/oritsaffiliates.TheinformationcontainedhereinisundernocircumstancestobeconstruedasinvestmentadviceinanyprovinceorterritoryofCanadaandisnottailoredtotheneedsoftherecipient.NosecuritiescommissionorsimilarregulatoryauthorityinCanadahasreviewedorinanywaypassedjudgmentuponthesematerials,theinformationcontainedhereinorthemeritsofthesecuritiesdescribedherein,andanyrepresentationtothecontraryisanoffense.IfyouareanHSBCPrivateBanking(“PB”)customerwithapprovalforreceiptofrelevantresearchpublicationsbyanapplicableHSBClegalentity,youareeligibletoreceivethispublication.Tobeeligibletoreceivesuchpublications,youmusthaveagreedtotheapplicableHSBCentity’stermsandconditions(“KRCTerms”)foraccesstotheKRC,andthetermsandconditionsofanyotherinternetbankingserviceofferedbythatHSBCentitythroughwhichyouwillaccessresearchpublicationsusingtheKRC.DistributionofthispublicationisthesoleresponsibilityoftheHSBCentitywithwhomyouhaveagreedtheKRCTerms.Ifyoudonotmeettheaforementionedeligibilityrequirementspleasedisregardthispublicationand,ifyouareacustomerofPB,pleasenotifyyourRelationshipManager.ReceiptofresearchpublicationsisstrictlysubjecttotheKRCTerms,whichcanbefoundathttps://research.privatebank.hsbc.com/–wedrawyourattentionalsototheprovisionscontainedintheImportantNotessectiontherein.©Copyright2017,HSBCSecurities(Taiwan)CorporationLimited,ALLRIGHTSRESERVED.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,onanyformorbyanymeans,electronic,mechanical,photocopying,recording,orotherwise,withoutthepriorwrittenpermissionofHSBCSecurities(Taiwan)CorporationLimited.MCI(P)069/06/2017,MCI(P)126/02/2017[926979]9 GlobalTelecoms,Media&TechnologyResearchTeamGlobalAsiaSpecialistSalesAnalyst,GlobalSectorHead,TelecomsAnalystJamesBritton+442079915503StephenHoward+442079916820YogeshAggarwal+912222681246james1.britton@hsbc.comstephen.howard@hsbcib.comyogeshaggarwal@hsbc.co.inKubilayYalcin+492119104880Analyst,GlobalSectorHead,TechnologyAnalystkubilay.yalcin@hsbc.deStevenCPelayo+85228224391VivekGedda+912261640693stevenpelayo@hsbc.com.hkvivekgedda@hsbc.co.inMylesMcMahon+85228224676mylesmacmahon@hsbc.com.hkAnalyst,GlobalSectorHead,Internet&AnalystE-commerceVikasAhuja+912233960690ChiTsang+85228222590vikasahuja@hsbc.co.inchitsang@hsbc.com.hkAnalystNealeAnderson+85229966716Europeneale.anderson@hsbc.com.hkAnalystNicolasCote-Colisson+442079916826Analystnicolas.cote-colisson@hsbcib.comBruceLu+886266312861bruce.kl.lu@hsbc.com.twAnalystAntoninBaudry+33156524325Analystantonin.baudry@hsbc.comSamsonHung+886266312863samson.hm.hung@hsbc.com.twAnalystChristopherJohnen+492119102852Analystchristopher.johnen@hsbc.deRickySeo+82237068777rickyjuilseo@kr.hsbc.comAnalystLuigiMinerva+442079916928Analystluigi.minerva@hsbcib.comRajivSharma+912222681239rajivsharma@hsbc.co.inAnalystOlivierMoral+33156524322Analystolivier.moral@hsbc.comDarpanThakkar+912261640695darpan.thakkar@hsbc.co.inAnalystAdamFox-Rumley+442079916819Analystadam.fox-rumley@hsbcib.comPiyushChoudhary+6566580607piyush.choudhary@hsbc.com.sgAmericasAnalystAnalystJenaHan+82237068772ChristopherARecouso+12125252279jenahan@kr.hsbc.comchristopher.a.recouso@us.hsbc.comAnalystAnalystWillCho+82237068765RonnyBerger,CFA+442079912750will.cho@kr.hsbc.comronny.berger@hsbc.comAssociateAnalystWayneWang+85229149935SunilRajgopal+12125250267wayne.n.wang@hsbc.com.hksunilrajgopal@us.hsbc.comAssociateGlobalEmergingMarkets(GEMs)KennethShim+82237068779kennyshim@kr.hsbc.comAnalystHervéDrouet+442079916827Associateherve.drouet@hsbcib.comAngusLin+85229966584angus.s.h.lin@hsbc.com.hkEmergingEurope,MiddleEast&AfricaAssociate(EMEA)AnthonyLiao+886266312865Analystanthony.wc.liao@hsbc.com.twZiyadJoosub+27116764223ziyad.joosub@za.hsbc.comAnalystEricChang+97144236554erichy.chang@hsbc.com'