Global Technology| July 22, 2015 AAssiiaa SSeemmiiccoonndduuccttoorrss Industry View: In-Line Aspeed (5274.TW, OW to EW): The company generates 90% of its revenue from sever BMC (board management controller). It has 25% global market share in the BMC chip, key end-customers are data center vendors such as Microsoft, Facebook, Amazon, and China B.A.T. The company has won several Grantley projects this year, such as from Supermicro. However, Aspeed’s 1H15 revenue has been tracking below our estimates given a delayed server replacement cycle. There wasn’t any market share or ASP issue, so the revenue shortfall was purely demand-driven. With more evidence that the server demand will not recover sharply in 2H15, we cut our 2015e and 2016e EPS forecasts by 4%-5%. The stock now doesn’t look attractive at 26x P/E vs. 21% EPS growth in 2015e and we lower our rating to EW, from OW. Inotera (3474.TW, UW): Server DRAM accounts for 50% of Inotera’s sales in 2015e. The demand shortfall of server DRAM would enlarge the gap of DRAM oversupply in 2H15 and 2016e. We have been factoring very conservative DRAM price assumption for Inotera based on our bearish view on the DRAM cycle. We therefore maintain our earnings forecasts but reiterate UW rating on the stock, given its heavy exposure to sever DRAM. 19