Group 1 - Goldman Sachs upgraded Hua Hong Semiconductor (01347) from "Neutral" to "Buy," raising the target price by 28% to HKD 68.1 [1] - The positive outlook is driven by new growth opportunities from AI applications, including data center power management chips and mature process chips for edge AI devices [1] - High capacity utilization in recent quarters has supported price improvements, alongside expanding domestic customer demand and the "Made in China for China" trend, which is expected to drive long-term demand [1] Group 2 - Continuous capacity expansion and technology node upgrades are anticipated, with a projection to introduce 28nm technology by 2027 [1] - The current price corresponds to a forecasted P/E ratio of 43 times for 2026, which is within the historical valuation range, but the company is expected to achieve a compound annual growth rate of 63% in net profit from 2025 to 2029, indicating potential for upward valuation [1] - Goldman Sachs favors companies in the Chinese semiconductor sector that have exposure to AI and advanced technologies, as well as a relatively mild competitive landscape [1]

Core Viewpoint - The semiconductor industry is experiencing a recovery in 2025, driven by explosive growth in AI technology and domestic consumption subsidies stimulating demand for new devices [1] Group 1: Industry Overview - In Q2 2025, the top ten global foundries generated a total revenue of 41.718 billion, reflecting a quarter-on-quarter growth of 14.6% [3] - TSMC's revenue reached 30.239 billion, with a market share increase of 2.6 percentage points to 70.2%, while other major players saw a decline in market share [1][3] - The competition focus in the foundry market is shifting from "advanced processes" to "advanced packaging," with TSMC holding a significant advantage in both areas [1] Group 2: Company Performance - SMIC, Hua Hong, and JCET showed revenue growth rates of 23.14%, 19.09%, and 18.21% respectively in H1 2025, indicating a recovery in their financial performance [4] - SMIC's gross margin improved by 8 percentage points year-on-year, while Hua Hong and JCET also saw slight increases in their gross margins [4] - SMIC's capital expenditure reached 3.3 billion in H1 2025, maintaining a pace of adding 50,000 12-inch wafers annually [5] Group 3: Product Development - Hua Hong's revenue from power semiconductors grew by 59.3% year-on-year, with its share of total revenue increasing by 7.4 percentage points to 28.5% [5] - JCET is diversifying its product offerings, with significant advancements in OLED, CIS, and logic chip markets, including mass production of 40nm OLED display driver chips [5][6] - The revenue structure of JCET shows a growing contribution from 40nm products, which is expected to enhance profitability [6]

Group 1 - The semiconductor industry is showing signs of recovery in the first half of 2025, driven by explosive growth in AI technology and domestic consumption subsidies stimulating demand for new devices [1] - In Q2 2025, the top ten global foundries reported a combined revenue of 41.718 billion, a quarter-on-quarter increase of 14.6% [3] - TSMC's revenue reached 30.239 billion in Q2 2025, with a market share increase of 2.6 percentage points to 70.2%, while other major players experienced a decline in market share [1][3] Group 2 - Chinese foundries are focusing on scaling mature processes, with significant recovery in capacity utilization rates for SMIC, Huahong, and GlobalFoundries in the first half of 2025 [4] - Huahong's capacity utilization rates exceeded 100% in all quarters of 2024, reaching 102.7% and 108.3% in Q1 and Q2 of 2025, respectively [4] - Huahong's revenue for the first half of 2025 was 8.018 billion, a year-on-year growth of 19.09%, ranking second among major domestic foundries [5] Group 3 - Huahong's capital expenditure in the first half of 2025 was 918.6 million, with 854.6 million allocated for the construction of Fab 9 [5] - Huahong announced plans to acquire a 97.4988% stake in Huali Micro through a share issuance and cash payment, aiming to enhance its operational capabilities [6] - The acquisition is expected to complement the strengths of both companies, potentially boosting Huahong's performance further [6]

Core Viewpoint - The Hong Kong stock market experienced a collective decline on September 18, with mixed performances in tech stocks and active movements in the semiconductor sector. The Hang Seng Tech Index ETF (513180) followed the index's downward trend, despite some stocks like Hua Hong Semiconductor and ASMPT showing gains, while others like XPeng Motors and Alibaba Health faced losses [1]. Group 1: Market Performance - The three major indices in the Hong Kong stock market collectively fell in the afternoon session on September 18 [1]. - The Hang Seng Tech Index ETF (513180) mirrored the index's decline, with notable performances from stocks such as Hua Hong Semiconductor and ASMPT, which saw significant gains [1]. Group 2: Company Highlights - Hua Hong Semiconductor saw a notable increase of over 9% in its stock price, driven by a positive rating upgrade from Goldman Sachs [1]. - Goldman Sachs expressed a more optimistic view on Hua Hong Semiconductor, citing growth opportunities from AI applications, improved pricing supported by high utilization rates, and a trend towards domestic production in China [1]. Group 3: Future Outlook - The Hang Seng Tech Index surpassed the 6300-point mark, fueled by a bullish sentiment around AI and expectations of a potential interest rate cut by the Federal Reserve [1]. - There is an anticipated continuous inflow of southbound funds, which, combined with the resonance of domestic and foreign capital and the return of AI narratives, could lead to a revaluation of the Hang Seng Tech Index [1].

Core Viewpoint - Goldman Sachs upgraded Hua Hong Semiconductor's rating from "Neutral" to "Buy," raising the target price by 28% to HKD 68.1, citing new growth opportunities driven by AI applications and strong demand from domestic customers [1] Group 1: Growth Opportunities - AI applications are expected to bring new growth opportunities, particularly in data center power management chips and mature process chips for edge AI devices [1] - The company has experienced high capacity utilization in recent quarters, supporting price improvements [1] Group 2: Demand and Trends - There is an expansion in domestic customer demand, driven by the trend of "China manufacturing for China" which is expected to support long-term demand [1] - The semiconductor sector in China is favored for companies with exposure to AI and advanced technologies, as well as a relatively mild competitive landscape [1] Group 3: Capacity and Technology Upgrades - Continuous capacity expansion and technological upgrades are anticipated, with a projection to introduce 28nm technology by 2027 [1]

Group 1 - The Federal Reserve announced a 25 basis point cut in the federal funds rate target range to 4.00% to 4.25% on September 17 [1] - The A-share and Hong Kong stock markets reacted positively, with all three major indices turning red, and the Sci-Tech Innovation 50 Index rising over 4% [1] - Over 2100 stocks in the Shanghai, Shenzhen, and Beijing markets saw gains [1] Group 2 - The semiconductor industry chain experienced significant gains, with companies like SMIC and Haiguang Information both rising over 6% and reaching historical highs [2] - Other semiconductor stocks such as Ruixin Micro and Huicheng Shares saw increases of over 10% [2][5] - The Sci-Tech Innovation 50 Index rose over 3%, with constituent stocks like Zhongwei Company and Haiguang Information increasing by over 8% and 7% respectively [3] Group 3 - The Hang Seng Index surpassed the 27,000-point mark, reaching its highest level since July 2021 [4]

Core Viewpoint - The semiconductor stocks in the A-share market experienced significant gains, with several companies reaching their daily limit up or showing substantial increases in share prices, indicating a strong market sentiment towards the semiconductor sector [1][2]. Company Performance - Huicheng Co., Ltd. (汇成股份) saw a 19.99% increase, with a total market capitalization of 13.7 billion [2]. - Liyang Chip (利扬芯片) rose by 16.53%, with a market cap of 7.958 billion [2]. - Zhongwei Company (中微公司) increased by 14.15%, with a market cap of 162.4 billion [2]. - New Xiangwei (新相微) gained 11.69%, with a market cap of 1.23 billion [2]. - Canxin Co., Ltd. (灿芯股份) rose by 10.06%, with a market cap of 954.1 million [2]. - Ruixin Microelectronics (瑞芯微) reached a 10% increase, with a market cap of 9.64 billion [2]. - Other notable performers include Shengke Communication (盛科通信) up by 9.90%, Beifang Huachuang (北方华创) up by 9.35%, and Haiguang Information (海光信息) up by 8.32% [2]. Industry Developments - On September 16, CCTV's "News Broadcast" highlighted the achievements of China Unicom's Sanjiangyuan Green Power Intelligent Computing Center project, which involves several domestic AI chip brands such as Alibaba's Pingtouge, Muxi Co., Ltd., and others that have signed or are expected to sign contracts [1].

人民财讯9月18日电，港股芯片股多数走强，截至发稿，华虹半导体涨超9%，晶门半导体涨超6%，中 芯国际涨超5%。 ...

Summary of Hua Hong (1347.HK) Conference Call Company Overview - **Company**: Hua Hong (1347.HK) - **Market Cap**: HK$91.6 billion / $11.8 billion - **Enterprise Value**: HK$109.4 billion / $14.1 billion - **Current Price**: HK$53.35 - **12-Month Price Target**: HK$68.10 - **Upside Potential**: 27.6% [1][2] Key Industry Insights - **AI-Powered Growth**: The company is expected to benefit from increasing demand for power management ICs (PMIC) driven by AI applications, particularly in data centers and edge AI devices [2][21]. - **ASP Improvement**: There has been a recent improvement in average selling prices (ASP) due to solid demand and high utilization rates, indicating a positive supply/demand balance [3][19]. Financial Performance and Projections - **Revenue Growth**: Projected revenues for 2025 are $2.44 billion, with a growth trajectory leading to $3.99 billion by 2027 [6][15]. - **Net Income Growth**: Expected net income CAGR of 63% from 2025 to 2029 [2]. - **Earnings Estimates**: EPS is projected to increase from $0.03 in 2024 to $0.20 in 2027 [15][23]. - **Margins**: Gross margin is expected to improve from 10.9% in 2024 to 22.0% by 2029 [12][23]. Capacity Expansion and Technology Migration - **New Capacity**: The company is ramping up its Fab 9 and acquiring Fab 5, with plans to start construction of a new fab for 28nm technology by 2027 [22]. - **Technology Node Migration**: Transitioning to 28nm technology is anticipated to enhance ASP and gross margins [22]. Valuation and Investment Thesis - **Valuation Method**: The valuation has shifted to a discounted P/E approach, reflecting long-term growth potential beyond the current capacity ramp-up [25]. - **Target Price Justification**: The new target price of HK$68.1 is based on a 2028E target P/E of 41.3x, indicating a favorable valuation compared to peers [26][30]. Competitive Landscape - **Market Position**: Hua Hong is positioned favorably within the China semiconductor industry, particularly in AI and advanced technologies, with less competition in these segments [2][21]. Risks and Considerations - **Short-Term ASP Fluctuations**: While ASP improvements are expected, they may not be significant in the short term [3]. - **Operational Challenges**: The company faces challenges related to capacity expansion and technology migration, which could impact margins [22]. Conclusion - **Investment Recommendation**: The company has been upgraded from Neutral to Buy, with a strong outlook driven by AI opportunities, ASP improvements, and capacity expansions [2][25].

Investment Rating - The report maintains an "Outperform" rating for the industry [2] Core Insights - The power semiconductor industry is experiencing a recovery in performance, with automotive and data center sectors showing clear growth trends [4] - The overall profit levels in the industry have reached a new high in the past eight quarters, driven by demand recovery and stabilization of prices [14] Summary by Sections Power Semiconductor Performance Review - The industry has seen revenue growth in Q2 2025, with traditional applications like industrial control and consumer electronics remaining stable. The automotive sector continues to be the main growth area, while server power demand is increasing the fastest [7] - The market share of domestic manufacturers is steadily increasing, particularly in the mid-to-low voltage power devices [14] New Energy Vehicles (NEVs) - In July 2025, the sales of NEVs reached 1.26 million units, a year-on-year increase of 27.4%, with a penetration rate of 48.7% [30] - The share of main drive power modules for NEVs with power above 200kW has increased from 9% in 2022 to 25% in the first seven months of 2025 [33] Market Trends and Projections - The penetration rate of SiC MOSFETs in NEVs reached 18% in the first seven months of 2025, with 800V models showing a penetration rate of 76% [5] - The report suggests that the industry is entering a phase of improvement, with overall profits at a new high and market share continuing to grow [6] Investment Recommendations - The report recommends focusing on companies such as Yangjie Technology, New Clean Energy, Huazhong Microelectronics, and others for their expansion in new devices, processes, and markets [6] - The transition from 6-inch to 8-inch substrates in the SiC sector is expected to benefit leading substrate companies [6]