Vanguard International Semiconductor Corp.

Overview Key strengths Key risks Sufficient financial buffer with net cash position should support Vanguard's operations and expansion. Smaller operating scale and less-diversified product and client portfolios compared than leading global foundry peers. Good technology capability providing 8-inch foundry services with strong position in some products. Competition for mature technology nodes could intensify under normal business cycles. Prudent financial risk management and flexible capex schedule support credit profile. Volatility in business performance and financial leverage to arise from possible technology transitions to more advanced nodes over the long term. In our view, Vanguard International Semiconductor Corp.'s performance could materially improve from the second half of 2024, once the ongoing and prolonged inventory correction in industrial and auto segments concludes. This,

...Vanguard's operations to improve gradually over the next two years. In our view, Vanguard International Semiconductor Corp.'s performance could materially improve from the second half of 2024, once the ongoing and prolonged inventory correction in industrial and auto segments concludes. This, along with recovering global demand for semiconductors and soaring demand for artificial intelligence should underpin a rise in Vanguard's utilization rate to 60%- 65% in 2024 and around 80% in 2025. This compares with slightly below 60% in 2023. Nevertheless, our forecast of Vanguard's high-single digit revenue growth in 2024 is lower than S&P Global's assessment of 14% growth for the whole semiconductor sector, which partly reflects competition among mature node foundries. A quick shift in the company's product mix away from competitive display driver chips could slightly lower business volatility. Vanguard has been expanding its production capacity for power management chips, supported by long-term...

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