Core Viewpoint - Shanghai Fudan (01385) shares have increased nearly 7%, currently trading at 40.32 HKD with a transaction volume of 220 million HKD, following the inclusion of 23 Chinese entities, including Fudan Microelectronics, on the U.S. Entity List [1] Group 1: Company Performance - Fudan Microelectronics has strengthened its strategic reserves of wafers and key raw materials, with inventory growing from approximately 600 million CNY at the end of 2020 to about 3.1 billion CNY by mid-2025 [1] - The company has effectively improved its supply chain stability and risk resistance capabilities, ensuring steady operations [1] Group 2: Market Analysis - Morgan Stanley's research indicates that Shanghai Fudan is well-prepared for supply chain disruptions, having started wafer production at local fabs in 2023 and gradually shifting FPGA production to mainland China [1] - The impact on demand is expected to be limited, as overseas sales accounted for only 6% of the company's total revenue last year [1] - Short-term selling pressure may occur, with a target price set at 32.8 HKD and a "buy" rating [1]

Core Viewpoint - Morgan Stanley's research report indicates that Shanghai Fudan is well-prepared for supply chain disruptions caused by being placed on the U.S. trade blacklist, having started local wafer production in 2023 and gradually shifting FPGA production to mainland China [1] Group 1: Company Preparedness - The company has begun wafer production at local fabs since 2023 [1] - FPGA production is being gradually transferred to mainland China [1] Group 2: Demand Impact - The impact on demand is considered limited, as overseas sales accounted for only 6% of total revenue last year [1] Group 3: Market Reaction - There may be short-term selling pressure due to U.S. asset management firms being prohibited from trading Shanghai Fudan's shares [1] - Morgan Stanley has set a target price of HKD 32.8 and maintains an "Overweight" rating on the stock [1]

Core Viewpoint - Fudan Microelectronics emphasizes its commitment to independent innovation and stable operations in response to being added to the U.S. BIS Entity List, highlighting its strategic reserves and diversified product offerings [2][3]. Group 1: Strategic Reserves - The company has strengthened its strategic reserves for core product lines, with inventory increasing from approximately 600 million yuan at the end of 2020 to about 3.1 billion yuan by mid-2025, enhancing supply chain stability and risk resistance [3]. Group 2: Industry Collaboration - Fudan Microelectronics maintains an open cooperation mindset, enhancing supply chain diversification since 2022 and deepening collaboration with domestic and international partners, which has improved supply chain resilience and production capacity [4]. Group 3: Frontier Innovation - The company has established a research and development platform for FPAI heterogeneous fusion architecture chips, covering a full range of computing power chips from 4 TOPS to 128 TOPS, with the first 32 TOPS product progressing well, supporting stable operations and long-term value growth [5].

Core Viewpoint - The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has added 23 Chinese entities to its Entity List, including Shanghai Fudan Microelectronics Group Co., Ltd., citing national security concerns related to advanced computing and semiconductor manufacturing support [1][3]. Group 1: Impact of Entity List Inclusion - Thirteen of the listed entities are related to semiconductors and integrated circuits, with others spanning biotechnology, aerospace, and industrial software [1]. - Fudan Microelectronics is notably the first Chinese IC design company to face such sanctions due to its commercial FPGA/MCU business, with nine other Chinese IC design companies also marked with a specific footnote indicating severe restrictions [3][5]. - The sanctions imply a full process blockade, affecting all manufacturing nodes and limiting access to U.S. equipment and design tools, which could extend R&D cycles and disrupt global supply chains [5]. Group 2: Company Response and Strategy - In response to the sanctions, Fudan Microelectronics issued a public letter emphasizing its commitment to legal and compliant operations, and its strategic reserve of key materials has increased from approximately 600 million yuan at the end of 2020 to about 3.1 billion yuan by mid-2025 [8]. - The company has diversified its supply chain and strengthened collaborations with partners to enhance resilience and production capacity [8]. - Fudan Microelectronics is advancing its R&D in heterogeneous computing architecture chips, with a product range from 4 TOPS to 128 TOPS, and has reported positive progress on its first 32 TOPS product [8]. Group 3: Financial Performance - For the first half of 2025, Fudan Microelectronics reported revenues of 1.839 billion yuan, a year-on-year increase of 2.49%, while net profit fell by 44.38% to 194 million yuan due to increased inventory provisions and reduced government subsidies [11]. - The company's R&D expenditure totaled 533 million yuan, a decrease of 10.80%, representing 28.99% of its revenue, down 4.32 percentage points from the previous year [11]. - As of September 15, 2025, Fudan Microelectronics' A-shares rose by 2.75%, with a market capitalization of 50 billion yuan [12].

Core Viewpoint - Fudan Microelectronics has strengthened its strategic reserves of wafers and key raw materials for its core product lines, significantly increasing its inventory from approximately 600 million yuan at the end of 2020 to about 3.1 billion yuan by mid-2025, enhancing supply chain stability and risk resistance [1] Group 1 - The inventory scale has grown from approximately 600 million yuan to about 3.1 billion yuan [1] - The total of raw materials and work-in-progress amounts to approximately 2.1 billion yuan [1] - This strategic move aims to ensure stable operations and provide a safeguard against risks [1]

Core Viewpoint - The company emphasizes its commitment to independent innovation and stable operations, aiming to create long-term value for investors and partners in a complex global technology landscape [2]. Strategic Reserves - The company has significantly increased its strategic reserves, with inventory growing from approximately 600 million at the end of 2020 to about 3.1 billion by mid-2025, enhancing supply chain stability and risk resilience [3]. Industry Collaboration - The company maintains an open cooperation mindset, strengthening its supply chain diversification since 2022 and enhancing collaboration with domestic and international partners, which has improved supply chain resilience and production capacity [4]. Frontier Innovation - The company has established a research and development platform for FPAI heterogeneous fusion architecture chips, covering a full spectrum of computing power chips from 4 TOPS to 128 TOPS, with the first 32 TOPS product showing good promotion progress [5]. - The company is committed to continuous core technology upgrades and enhancing independent control levels while fostering collaborative innovation within the industry [5].

Group 1: U.S. Entity List and China's Response - The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has added 23 Chinese entities to its entity list, citing actions that "contradict U.S. national security or foreign policy interests" [2][3] - In response to ongoing U.S. pressure, China has initiated anti-dumping investigations against imports of relevant analog chips from the U.S., effective from September 13, 2025 [7][8] - The investigation period for dumping is set from January 1, 2024, to December 31, 2024, while the period for industry damage investigation spans from January 1, 2022, to December 31, 2024 [9] Group 2: Details of the Entities Listed - The 23 Chinese companies include 13 entities related to the semiconductor sector, such as Fudan Microelectronics and Sino IC Technology [4][6] - Other sectors represented in the list include biotechnology, aerospace remote sensing, quantum technology, industrial software, and supply chain services [5][6] Group 3: Impact on Semiconductor Industry - The Chinese semiconductor industry association reported that the price of the investigated U.S. products has significantly decreased, with a dumping margin exceeding 300% during the investigation period [9] - The total import quantity of the relevant products from the U.S. has shown a continuous upward trend, with imports reaching 1.159 billion units in 2022, 1.299 billion in 2023, and projected at 1.590 billion in 2024 [9] Group 4: Apple's iPhone 17 Series and Supply Chain - Apple has launched the iPhone 17 series, which is expected to drive a significant "super replacement wave" in the market due to major upgrades in AI features, imaging systems, and design [10][11] - The iPhone 17 series aims for a production target of 100 million units, benefiting numerous core listed companies in the A-share market [10][11] Group 5: Key Suppliers in Apple's Supply Chain - Major suppliers in the A-share market include BOE Technology Group, BYD, Luxshare Precision, and others, which are deeply involved in R&D and possess strong cost control capabilities [11][12] - Luxshare Precision has reportedly surpassed Foxconn, capturing 45% of the assembly share for the iPhone 17 series, indicating strong market expectations for Apple's new devices [13]

Group 1 - The U.S. Department of Commerce's Bureau of Industry and Security (BIS) added 23 Chinese entities to the Entity List, including 13 semiconductor and integrated circuit companies, due to actions deemed contrary to U.S. national security or foreign policy interests [2][4] - Entities on the Entity List require a license for exports of items subject to the Export Administration Regulations (EAR), with a presumption of denial for such licenses [2] - Shanghai Fudan Microelectronics was specifically noted for its involvement in high-performance computing (HPC) and artificial intelligence (AI) chip applications, leading to additional export controls on foreign-produced items containing U.S. technology [2] Group 2 - The Ministry of Commerce of China announced an anti-dumping investigation into imported analog chips from the U.S., citing the abuse of national security concepts and violations of World Trade Organization (WTO) rules by the U.S. government [4][6] - The investigation was initiated based on a domestic industry's application, indicating a 37% increase in imports from the U.S. and a 52% decrease in import prices from 2022 to 2024, which harmed domestic product sales [6][7] - The investigation period for dumping is set from January 1, 2024, to December 31, 2024, while the period for assessing industry damage is from January 1, 2022, to December 31, 2024 [7] Group 3 - The scope of the investigation includes certain analog integrated circuit chips, specifically general interface chips and gate driver chips produced using 40nm and above process technology [8][9] - General interface chips are designed for diverse interface types to connect various devices, while gate driver chips control power semiconductor devices [9][10] - The products under investigation are classified under the Chinese import and export tariff code 85423990, excluding other products not within this investigation [10]

Core Insights - A new round of competition has erupted between China and the U.S. in the semiconductor sector, particularly following the U.S. Department of Commerce's decision to place 23 Chinese companies on an export control entity list [1][2][5]. Group 1: Impact on Semiconductor Companies - Among the 23 companies listed, 13 are related to semiconductors and integrated circuits, including notable firms like Fudan Microelectronics and Shanghai Hualing Integrated Circuit [4]. - The U.S. export controls will prevent these semiconductor companies from obtaining supplies from the global supply chain, effectively cutting them off [5]. - The announcement of anti-dumping investigations by China's Ministry of Commerce indicates a potential retaliatory measure against U.S. restrictions, which could lead to increased market opportunities for domestic semiconductor firms [8][10]. Group 2: Market Opportunities for Domestic Firms - The anti-dumping investigation may benefit several domestic companies such as Sanan Optoelectronics, Nanjing Microelectronics, and others, as it raises the cost and barriers for importing U.S. analog chips [11]. - China is the largest consumer market for electronic products and imports over 300 billion yuan worth of analog chips annually, with a significant portion coming from the U.S. [10]. - The shift towards domestic production and the potential for increased market share for local firms could lead to a more competitive landscape in the semiconductor industry [12]. Group 3: Future Trends and Negotiations - The ongoing competition signals a broader trend of decoupling in core technology sectors, with China beginning to assert its capabilities in response to U.S. actions [12]. - Upcoming negotiations between Chinese and U.S. officials will address unilateral tariff measures and export controls, indicating a potential for dialogue despite the competitive tensions [13]. - The expectation is that both countries may eventually reach a trade agreement, suggesting a complex interplay between competition and cooperation in the semiconductor sector [14].

Core Viewpoint - The recent addition of 23 Chinese entities, including several closely related to Fudan Microelectronics, to the U.S. Entity List by the U.S. Department of Commerce is expected to have significant impacts on the semiconductor industry, particularly in terms of EDA tool restrictions and wafer fabrication challenges [2][3]. Group 1: Impact of Entity List Inclusion - The inclusion of Fudan Microelectronics in the Entity List will primarily hinder its research and development due to restricted access to EDA tools [3]. - Wafer fabrication processes will also be affected, as the restrictions apply to all foreign-produced items containing U.S. technology, regardless of the manufacturing process node [3][4]. - The specific designation of Footnote 4 (FN4) for Fudan Microelectronics indicates a comprehensive ban on all nodes utilizing U.S. technology, including mature processes [4][8]. Group 2: Comparison with Other Companies - Unlike Fudan Microelectronics, companies like Cambricon have managed to thrive despite being on the Entity List, indicating that the impact of such sanctions may be diminishing over time [3]. - The distinction between Fudan Microelectronics and Cambricon lies in the FN4 designation, which imposes stricter limitations on Fudan's operations compared to Cambricon's ability to utilize certain non-U.S. production lines [4][5]. - As of September 2025, nine Chinese IC design companies have been marked with FN4, highlighting the growing list of entities facing stringent restrictions [4][6]. Group 3: Strategic Responses - Fudan Microelectronics may adopt strategies similar to those of Higon, which has successfully navigated FN4 restrictions by relocating its entire design-manufacturing-testing chain to domestically controlled processes [8]. - The company can leverage policy support, stockpiling, and process downgrading as part of its strategy to mitigate the impact of the Entity List [8]. - The short-term outlook may appear negative, but effective management and execution could lead to long-term benefits and operational freedom post-supply chain challenges [8].