Chen Weitai
[Taiwan version of chip bill first debut]
After Warren Buffett, the stock god, used actions to support our national protection mountain-TSMC (2330), the long-awaited Taiwan government finally took action. Just today (2022/11/17) the Executive Yuan will pass the draft amendments to Article 10-2 and Article 72 of the “Industrial Innovation Regulations” drafted by the Ministry of Economic Affairs. For companies with technological innovation and key positions in the international supply chain, investment prospects Innovative research and development and advanced process equipment are eligible for new tax incentives, which are called the “Taiwan version of the Chip Act” by the market.
And what is the content of this Taiwanese version of the chip bill? At present, there is only a preliminary structure, that is, for companies with technological innovation and a key position in the international supply chain, provide (1) 25% of forward-looking innovative R&D expenditures to offset the current year’s payable profit-making enterprise income tax, (2) and be able to purchase 5% of the expenditure on brand-new machinery or equipment in advanced manufacturing processes can be used to offset the income tax payable for the current year, and there is no upper limit on the expenditure on the equipment or equipment. 50% of business income tax.
[Determining conditions are still to be discussed]
The object of this preferential tax policy is not limited to the industry category. Anyone who meets the requirements of research and development expenses, research and development density of a certain scale, and effective tax rate of a certain rate can apply for the application, and the threshold and conditions of research and development funds and research and development density will be It is determined by the sub-methods. At present, there are three plans for the threshold of R&D funding to be discussed: 5 billion yuan, 7 billion yuan, and 10 billion yuan; and the threshold of R&D density (the ratio of R&D expenditure to net revenue) is currently 3.2% on average in the manufacturing industry. If It is a company with a key position in the world. According to common sense, it should be higher, at least higher than 5%, and it is likely to fall at 6-7%.
Why is our Taiwan government introducing the Taiwan version of the chip bill at this stage? I think the main reason is that the United States, Europe, Japan, and South Korea have actively offered preferential incentives in the past year, hoping that Taiwan’s semiconductor and other high-tech industries will set up factories, in order to avoid the magnetic attraction effect that will sink Taiwan’s industry into a void Therefore, it launched the so-called largest corporate R&D investment offset program in history.
[The top ten IC design companies have a high probability]
So under the impetus of this Taiwanese version of the chip bill, which stocks will benefit? To be honest, before the R&D density and R&D funding threshold are finalized, it is really difficult to determine, so let’s help you start with the top 10 IC design companies!
Table 1. Top 10 IC designs by accumulative revenue in the first ten months
[4 low price-to-earnings ratios, high foreign shareholding]
Attached Table 1 is the top ten IC design companies in terms of cumulative revenue in the first ten months. MediaTek (2454) ranked first. The total revenue in the first ten months exceeded 473.9 billion. The leader in IC design is well-deserved, with revenue The numbers are far ahead of the second-ranked Realtek (2379) and the third-ranked Novatek (3034). The cumulative revenue of these two stocks has exceeded 90 billion.
If you want to take a closer look, I suggest looking at the proportion of foreign capital holdings, because companies with high foreign capital holdings are bound to be unique in competitiveness, and they must have the opportunity to outperform other peers in R&D expenses and R&D density. , but KY company must be excluded, because it is very likely that part of KY’s foreign capital holdings is the company’s holdings, not purely foreign capital. Therefore, the top three foreign shareholders are: MediaTek (2454), Realtek (2379) and Novatek (3034).
Finally, if we pick out the IC design stocks with the lowest P/E ratios in Table 1 at this stage, the top three are: Radiant (3592), Novatek (3034), and Realtek (2379). Therefore, I would like to combine the above-mentioned screenings. I think the four individual stocks of MediaTek (2454), Realtek (2379), Novatek (3034) and Rayding (3592) are investors. Chip Act, these companies are likely to be selected stocks! I wish everyone a successful investment!
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About the Author:
Engaged in the financial securities industry for nearly 20 years, a qualified securities analyst, currently the chief investment officer of Zhongying Fortune, CMoney Quanyao financial consultant, financial chief writer, and a lecturer for the Securities Foundation, Zhongzheng Community University and Star Cloud Academy, Yahoo financial column, business Contributing author of Zhou Fortune Network.
The investment mentality first focuses on the long-short cycle of the overall economy, and combines fundamental stock selection and technical operations; it believes that “choosing the opportunity to enter the market” is the way to make profits in stock market investment. There are currently 2 books: “Trust me, you can’t make enough money”, “Taiwan stock market history”.