Take profit...

Notion just got pumped 44%...

Huge pump after QR revealed. Get in the ship before it sails.

That's a 45% increase in HDD revenue...

Notion HDD revenue rebounded from 16million last quarter to 23million this quarter...

The semiconductor industry is definitely going to revive in this second half of this year. There is no turning back, we all are using more digital devices.

All the local OSAT players are getting more orders from China. Customers are looking for a more resilient supply chain instead of focusing all their resources in China. This will benefit our local OSAT players, as well as equipment and precision metal players.

If the hyperscaler is asking for more HDD, WDC and STX also mentioned there is a supply issue due to unhealthy supply chain. Keep in mind that Toyota once shut down their factory due to insufficient disk space. This shows how important is a 'cheap but large capacity storage devices'.

Some suppliers went bust during this HDD recession. WDC and STX mentioned that this recession hurt their supply chain gao gao. Hence, I am very confident that WDC and STX will not terminate their contracts with Dufu. A good relationship with its customer is also a moat.

https://www.storagenewsletter.com/2024/02/16/markets-of-hdd-recording-heads-and-rigid-disk-platters-plunged-y-y-32-and-33-respectively/

https://www.reuters.com/technology/sony-partner-with-seagate-hard-disk-drives-used-ai-nikkei-2024-02-16/

I would say the fabless players will look for more than one supplier...
NO ONE WILL WISH TO RELY 100% on TSMC.
They will place order with other OSAT players like ASE/AMKOR.
No doubt that TSMC will further expand their advance packaging capacities, but do they wish to take orders from chips that are 10nm and below? Keep in mind that the margin is so low, and saturated with China players in this region...

Nearline HDD is mainly used in the conventional data center. AI data center has a lot of issues to solve, power is one of them. FYI, GPU is very power intensive. Hence, you will see headlines like Microsoft is proposing to use nuclear energy for their AI data center and etc... In general HDD uses more power than NAND flash (SSD), so I don't think it will be the main storage that will be used in the AI data center. It will be benefitted by the trend, because generative AI will create a lot of new contents. The new contents have to be stored, and nearline HDD is the most economical way to store these data. This is guided by Seagate in their earnings call, I don't have the details and firm answer for this.

TSMC is just a benchmark. It shows that the semicon industry is reviving again.
The capex guided by TSMC is mainly to expand their manufacturing capacities for AI chips (Nvidia, AMD and etc). Therefore, we can expect that the money will be channelled to a lot of front-end to back-end (CoWos capacity) equipment manufacturers. The equipment manufacturers will look for precision metal players to manufacture the modules (precision parts). Other than TSMC, big players like ASE and Amkor are also expanding to provide advanced packaging (2.5D) services.
This year will be a HUAT year for all the semicon players (not so huat for automotive)...
Logic, Memory, Analog, Sensors... The market will be hotter once Intel introduces their AI PC...

Control cost is by having a lot of suppliers. The more they are, the cheaper it will be the equipment. FYI, companies like ASML has no competitors in their league. The price of a EUV can go up to 500 million USD just for one equipment. This industry is not a "commodity" or any "low barrier to entry industry". The amount of patents and intellectual properties are insane and I don't think in any near future, TSMC will be able to build their own equipment, especially the EUV machine.

Do you really understand how difficult it is to build an equipment like the ASML EUV?
Why US ban China from buying high end EUV from ASML?
Why AMAT, KLA, LAM and etc are still there but not slaughtered by TSMC expansion?

Wait... You mean TSMC wants to build the equipment by themselves?
Do they have the capability?
Why Apple chose to use ICs from other companies instead of building all by themselves?

I have no idea why the stock plunged from RM1.94 to the current price.
But I guess the real reason behind the plunge is due to the sluggishness of the Q4'23 earnings report. Institutions maybe already access the QR report and decided to dump the shares.

Slowly but surely the money will be poured to the equipment manufacturers then further down to the precision metal manufacturers.

TSMC just guided their Capex will be 28-32 billion USD in this year compared to ~30 billion USD last year. Most of their capex will be used to expand their AI related segment. The current bottleneck of Nvidia AI accelerator is the advanced packaging that is used to package the HBM DRAM by using CoWos technique (2.5D packaging). Lots of OSAT, even foundaries like TSMC, Samsung and Intel are expanding their advanced packaging factories.
https://investor.tsmc.com/english/quarterly-results/2023/q4

You believe in what the predictors are saying, but too blind to see what's the "CURRENT TREND". What I witness is that nearline HDD is going to recover throughout this whole calendar year. This is align with what Western Digital and Seagate are guiding.
For your information, Western Digital manufactures NAND flash memory as well.

https://blocksandfiles.com/2024/01/04/nearline-drives-last-hdd-holdout/

Ok, let's put our money on bet.
I suggest you to try to short STX which is listed on Nasdaq. Their main revenue (>80%) is coming from HDD. Instead, I will long Dufu & STX, see who's return is higher in the next 5 years. If what you said is valid, you should be very profitable by shorting STX.

The cost per GB of a large capacity HDD is cheaper by 7x or even more than a large capacity SSD.
So when you think SSD will replace HDD in data center?
Do you know >80% of data in the hyperscale conventional data center are stored in HDD?

Frontkn is definitely going back to RM4...

Frontkn Taiwan division will be very very very busy this year.
TSMC is expanding + utilization soars due to AI chips demand:
H100
MI300

Taiwan exports rose 18.1% year-on-year in January to US$37.19 billion powered by exports of electronic components related to AI, including chips, officials reportedly said, noting it was the 3rd straight month of year-on-year growth and the best increase in 21-months, media report. Electronic component exports rose 7.5% to $13.67 billion, ending 14 straight monthly declines.

TSMC's revenue in January rose 7.9% year-on-year to NT$215.79 billion, also up 22.4% versus December, TSMC reported.

The more I shout, the more it drops.
Maybe it's doing CNY sales.
Maybe I'm so wrong.
Maybe the upcoming QR is awful.
Maybe...
Let's focus on the fundamental rather than the stock price movement...

https://www.forbes.com/sites/tomcoughlin/2024/01/30/c4q-2023-hard-disk-drive-industry-update/?sh=ec6967458aeb

https://twitter.com/thomascoughlin/status/1752361405955911717

WDC earnings transcript:
Turning to HDD. The sequential revenue increase was driven by improving nearline demand and pricing. Moreover, we are encouraged by demand in China with revenue doubling on a sequential and year-over-year basis, both of which were ahead of our expectations. We anticipate year-over-year growth in HDD throughout this calendar year.
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At the end of the fiscal second quarter, cash and cash equivalents were 2.5 billion and total liquidity was 4.7 billion, including the undrawn revolver capacity of 2.25 billion. For the fiscal third quarter, our non-GAAP guidance is as follows: We expect revenue to be in the range of 3.2 billion to 3.4 billion. We expect sequential revenue growth to be mainly driven by an increase in HDD. We anticipate flash revenue to be up slightly as we remain focused on optimizing bit shipments and ASP.

Seagate transcript:
We enter calendar 2024 with increased confidence in our non-GAAP gross margin trajectory, including our ability to reclaim 30% minimum benchmark level at quarterly revenues that are at least 20% below our prior cyclical peak. From a demand standpoint, gradual recovery within the U.S. cloud market has started to take shape, reflecting solid progress in consuming excess inventory, along with more stable end-market behavior. Enterprise OEM demand trends have also stabilized within the U.S. markets. Customer feedback still points to macro-related concerns, although IT hardware budgets are projected to modestly improve in calendar 2024, and traditional server growth is expected to resume trends that support incremental HDD demand growth in the calendar year.

We were also encouraged to see incremental demand among certain non-U.S. cloud and enterprise customers in the December quarter. Across the broader China markets, we project a relatively slower pace of recovery given the ongoing economic challenges within the region. However, some local governments announced further steps to support the region's economy, which our customers believe will bolster local demand across mass capacity markets in China in the second half of the calendar year.

https://blocksandfiles.com/2024/01/26/western-digitals-second-successive-growth-quarter-seagate-hamr-no-threat/

https://blocksandfiles.com/2024/01/25/seagates-revenue-recovery-underway/

All signs are showing better demand and prospect for large capacity HDD...

https://blocksandfiles.com/2023/12/15/toshiba-exec-hdds-have-a-bright-future/

Toshiba executive said large capacity HDD has bright future...

Although their spacer ring division will not be growing as they used to be... Their next growth leg will be coming from metal stamping and fabrication division... They invested a lot in China... Dufusion bought a land at Bukit Minyak for future expansion... They are moving the profits from HDD to other divisions...

Both WD and Seagate are guiding better Q2 results, primary driven by HDD demand...
I am quite certain that Dufu will deliver a better than expected result in Q4'23, and a better prospects guidance...

Seagate HAMR Moziac disk will not treaten Western Digital nor Toshiba nearline HDD... UltraSMR will continue to win market share... This is because CSPs are not asking for certain technology, but looking forward to products that can deliver the best TCO.
There will be 1 million HAMR HDD to be shipped in this first half... 30TB HAMR has 10 disks... 10 disks with 9 ring spacers...

Being a contra investor requires a lot of patience and conviction to see the thesis to be played out.
The market is being quite ignorant to the fact that nearline HDD demand is on uptrend again... They underestimate the demand for large capacity HDD due to AI introduction...

I made a mistake in the previous thread where I said Q4'23 is definitely a QoQ and YoY growth.
The answer is I don't know and was being ego to say something like this.

https://www.forbes.com/sites/tomcoughlin/2024/01/30/c4q-2023-hard-disk-drive-industry-update/?sh=620ecca758ae

The recession for HDD was bottomed in Q3'23 and the recovery started in Q4'23.
The amount of HDD shipments does not matter to Dufu since it is a niche player which benefits the most when the exabyte shipped increases.

Q4'23 for Dufu is definitely a QoQ and YoY growth.
The downside is capped... Let's see how the market will react to this.
The short term fluctuation is a cost that investors will need to pay if he wants to enjoy the upside.

https://www.tomshardware.com/pc-components/hdds/seagate-ramping-32tb-hamr-hdd-in-q1-40tb-hdds-in-2025

Seagate is ramping up for their 30TB HAMR HDD.

Both Seagate and Western digital guided sequential recovery for their HDD businesses.
Coupled with TSMC strong guidance this year, Dufu is a gem waiting to be discovered.

Capacity shipped by WD and Seagate are on uptrend again...

Seagate:
65.1EB Q4'23 compared to 56EB Q3'23 for nearline HDD
11.9TB Q4'23 compared to 10.3TB Q3'23 average capacity for mass capacity drive

WD:
Exabyte shipments: increased 14% QoQ

The downside is minimal.

Cheap stock with great stories.

any price below 0.6 is a steal

Let's admit it, it is an act of a fool to predict stock price fluctuation. But one thing that we can predict is the long term performance of the company that we bought. DUFU is definitely one of those companies that is worth to hold for a long term.

No

Gross profit is back to 20%+ ish, fcf is at 22 million and the net profit is flat.
Financially it looks terrible and the current valuation (PE ratio) does not make sense to anyone.
There are a few things to note from this earning report:
1. The result same as what the management guided us in the last quarter earning report.
2. The bleak result is aligned with Seagate and WD weak HDD revenue in Q3.

Although the prospect written by DUFU looks meh to me, but I think they tend to sound pessimistic so that no high hope will be given. In my opinion, they prefer not to over-promised.
WDC and Seagate just had their earning calls not long ago. Both of them guided that the nearline HDD inventory adjustment of their cloud customers are coming to the end.

Please allow me to quote a statement made by the CEO of WDC:
Aaron Rakers -- Wells Fargo Securities -- Analyst
OK. And then as a quick follow-up, I'm just curious on the hard disk drive business. I know the cloud revenue in total was down consistently again quarter over quarter. Just how would you characterize what you're seeing from a nearline perspective from the cloud? Have you started to see demand pull again? Just any kind of context of how you're thinking about the shaping of kind of a recovery here as we move forward.

David Goeckeler -- Chief Executive Officer
Yeah. We think this past quarter was the bottom, Aaron. And we see improving demand as we move throughout the fiscal year on a quarter-over-quarter basis. We've had certain customers that have been on the sidelines for a while, and they're starting to come back and give us visibility into ordering.

So, we expect the market to recover from here going forward.

Although there will be a lagging period, but the recovery of nearline HDD for WDC has been started in Q4 this year.
Let's see how the market will react to Q3 earnings report of DUFU.

Both Seagate and WD guided their upcoming report would be ugly. I think the investors should look for the sign of bottom in the upcoming earnings call.