Silicon Wafer Producers Face Slower Recovery Than Expected, Lowering Fair Value Estimates

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.