Trimming Win Semi FVE to TWD 350 on Short-Term Weakness in Smartphones; Long-Term Thesis Intact

We trim our fair value estimate on Win Semiconductors to TWD 350 following disappointing guidance on the second quarter, and a more cautious view on the full-year outlook. Our fair value estimate corresponds to 37 times 2022 P/E and 25 times 2023 P/E. We also cut revenue and gross margin assumptions for 2022-26 to account for a cautious 5G infrastructure rollout, and less bullish estimates for mobile and Wi-Fi products. Despite these cuts, we still believe Win Semi is a prime beneficiary in long-term trends like 5G adoption, low-orbit satellite, autonomous driving, "Internet of Things" and 3D sensing applications. We think Win Semi is an attractive high-risk-high-reward play for investors willing to look beyond the currently tepid smartphone outlook.