Core Viewpoint - TSMC, the world's largest semiconductor foundry, experienced its largest stock price increase since April, with a peak rise of 6.9% in the Taipei market, reaching an all-time high [1] Group 1: Stock Performance - TSMC's stock price surged by 6.9%, marking a significant milestone in its market performance [1] - The stock reached a historical high, indicating strong investor confidence [1] Group 2: Analyst Ratings - Goldman Sachs raised TSMC's target price by 35% to NT$2,330, reflecting expectations of continued robust growth for the company over the next year [1]

Core Insights - The global AI infrastructure market is facing a severe supply shortage, particularly for GPUs, with an expected order volume of 2 million units this year against only 700,000 available units [1] - The demand for self-developed ASICs by cloud service companies is projected to grow at a rate of 44.6%, surpassing the 16.1% growth rate for GPUs, indicating a structural shift towards ASIC adoption due to GPU supply constraints [1] - The supply chain risks for GPUs are expected to peak this year, with production processes and high bandwidth memory (HBM) being interlinked, meaning any bottleneck could disrupt overall supply [1] Group 1 - TSMC is expanding its advanced packaging production lines, crucial for AI accelerators, but the gap between rapidly growing order volumes and actual shipments will persist due to the time required for capacity expansion [2] - ASIC chips, initially led by Google's TPU, are gaining attention as they are designed for specific AI workloads, offering advantages in energy efficiency, performance, and total cost of ownership (TCO) in the long run [2] - The AI accelerator market for ASIC users is expected to maintain a compound annual growth rate (CAGR) of approximately 28% until 2030, with the generative AI ASIC market projected to grow from about $24.9 billion in 2024 to approximately $186.7 billion by 2032, reflecting an annual growth rate of around 28.6% [2] Group 2 - This year is viewed as a critical turning point for the ASIC market, with industry executives noting that the current GPU supply shortage is a short-term issue but will have long-term implications on decision-making [3] - Major tech companies are increasingly viewing GPUs as strategic assets rather than stable commodities, leading to a shift towards reducing GPU dependency and increasing the share of ASICs in new data center investment plans [3]

Core Viewpoint - TSMC controls advanced CoWoS packaging capacity, which is crucial for determining which AI chip manufacturers can scale production, making it a key player in the explosive growth of the AI market [1][2]. Group 1: TSMC's Role in AI Development - TSMC's CoWoS capacity is becoming increasingly critical for the survival and growth of other chip manufacturers and designers, as advanced packaging technology has become a new industry bottleneck [1]. - The rapid development of AI since 2023 has created trillions of dollars in market value, but supply chain bottlenecks, particularly in advanced manufacturing, are limiting growth [1][3]. - TSMC is a key factor in determining the speed and scale of AI development, with its capacity expansion plans aiming to double advanced wafer capacity by 2028 [4]. Group 2: Impact on Competitors - Google has reduced its 2026 TPU production target from 4 million to 3 million units due to limited access to TSMC's CoWoS technology, while NVIDIA has secured over half of TSMC's CoWoS capacity until 2027 [3]. - The shortage of CoWoS capacity may intensify competition, prompting other manufacturers like Intel to fill the gap and compete with TSMC in the foundry services sector [4][5]. - Companies like Google and Apple are exploring alternative solutions, such as Intel's EMIB packaging technology and engaging with Samsung's factories to meet their needs [4].

高盛将台积电12个月目标价从1,720元台币上调至2,330元台币，并将2026/2027年利润上调9-15%，理由 是强大的技术领先地位以及受益于人工智能机遇的有利地位。 ...

Market Overview - Major US stock indices showed mixed performance, with the S&P 500 rising by 0.19% and the Dow Jones increasing by 0.66%, while the Nasdaq fell by 0.03% [1] - Tesla shares dropped by 2.6%, influenced by software stocks offsetting gains in chip stocks, while Salesforce fell over 4% and Nvidia rose over 1% [1] - The White House's decision to delay tariffs on certain household goods led to an 8% increase in shares of RH [1] Semiconductor Sector - SanDisk surged nearly 16%, Micron Technology rose over 10%, ASML increased by over 8%, and TSMC hit a historical high with a rise of over 5% [2] - The semiconductor sector is expected to benefit from increased capital expenditure in 2026, with analysts projecting a tightening market for memory chips, leading to significant price increases [11] Chinese Tech Stocks - The China concept index rose over 4%, with Baidu increasing by 15% and Alibaba by over 6% [3] - Baidu announced plans to spin off Kunlun Chip for independent listing on the Hong Kong Stock Exchange, resulting in a 9% rise in its stock [10] Economic Policies and Initiatives - The State Council approved the draft of the Water Supply Regulations and the revised Drug Administration Law Implementation Regulations [4] - Shanghai's measures to accelerate the construction of low-altitude economic advanced manufacturing clusters include support for eVTOL and industrial-grade drones, with funding up to 50 million yuan [5] - The State Council issued a solid waste comprehensive governance action plan aiming for a 45 billion-ton annual comprehensive utilization of major solid waste by 2030 [5] IPO and Corporate Actions - Blue Arrow Aerospace's IPO application was accepted, aiming to raise 7.5 billion yuan for reusable rocket technology upgrades and capacity enhancement [12] - Multiple companies announced acquisitions, including Zhongwei Company planning to acquire a 64.69% stake in Hangzhou Zhonggui, and Meike Home proposing to buy 100% of Wande Technology [15][16] Lithium and Battery Materials - Tianqi Lithium forecasted a net profit of 1.1 to 1.6 billion yuan for 2025, driven by strong demand in the new energy vehicle and energy storage markets [29] - The lithium hexafluorophosphate market is expected to remain tight, with significant price increases anticipated due to strong demand and cautious supply expansion [13] Consumer Market Trends - Hainan's duty-free market saw a significant increase during the New Year holiday, with sales reaching 712 million yuan, a year-on-year growth of 128.9% [10][14]

Market Overview - US stock futures showed a slight increase as investors reacted to the US military operation in Venezuela, which resulted in the capture of President Nicolás Maduro, and optimism surrounding AI demand supported stock prices [1][2] - S&P 500 futures rose by 0.2%, Nasdaq 100 futures increased by 0.5%, and Dow Jones Industrial Average futures ticked up by 0.1% [1] Oil and Energy Sector - Venezuela's oil production is currently below 1 million barrels per day, accounting for less than 1% of global output, which limits the potential impact on energy markets [4] - Futures for US benchmark West Texas Intermediate crude and international benchmark Brent both decreased by 0.4% [4] Technology Sector - TSMC shares surged after Goldman Sachs raised its price target for the company, anticipating another year of solid growth [5] - Foxconn reported record fourth-quarter revenue, driven by strong demand for AI products, indicating a robust start for the AI sector [5] Cryptocurrency Market - Bitcoin rose by 1% in early premarket trading, climbing from approximately $91,000 to over $92,000, influenced by the political uncertainty following Maduro's arrest [11] - Strategy stock increased by 3% due to Bitcoin's rise and the announcement of a dividend rate increase on one of its perpetual preferred stocks [9] Precious Metals - Gold and silver prices increased as investors sought safe-haven assets amid the geopolitical risks associated with the US involvement in Venezuela [13]

Group 1 - The upcoming week will focus on China's CPI and PPI data, as well as the CES technology exhibition [2] - The U.S. stock market showed mixed results last Friday, with ASML and Micron Technology experiencing significant gains, and the Chinese concept index rising by 4.38% [2] - Venezuela's oil exports are reportedly paralyzed amid a national emergency declared by President Maduro [2][2] Group 2 - Trump announced plans to allow major U.S. oil companies to enter Venezuela following the capture of President Maduro [2] - The OPEC+ group agreed to pause production increases in the first quarter, without discussing the situation in Venezuela [2] - TSMC is set to trial production of its advanced 1.4nm process next year, signaling the approach of the 1nm era [2] Group 3 - BYD has surpassed Tesla to become the top seller of electric vehicles globally [2] - Standrobotics plans to list in Hong Kong, with Xiaomi having previously invested in its early stages [2] - Wanbang Digital Energy intends to list on the Hong Kong main board, positioning itself as the largest supplier of smart charging equipment globally [2]

Group 1: Stock Performances - FTAI Aviation Ltd. gained 21.42% this week following the announcement of FTAI Power [1] - Symbotic Inc. soared 11.73% this week [1] - Sandisk Corporation increased by 6.17% this week [1] - Micron Technology, Inc. rose 8.77% this week, with semiconductor stocks showing positive sentiment [2] - ASML Holding N.V. experienced a rise of 9.72% this week [2] - Intel Corporation increased by 8.90% this week [2] - ASE Technology Holding Co., Ltd. rose 6.71% this week [2] - Bloom Energy Corporation gained 10.9% this week, attributed to optimism regarding AI technology and energy production [3] - Reddit, Inc. soared 9.57% this week, influenced by discussions on California's proposed billionaire wealth tax [3] - Taiwan Semiconductor Manufacturing Company Ltd. increased by 6.86% this week after receiving an annual export license from the US Department of Commerce [4]

Job Market and Economic Outlook - The U.S. job market is expected to start 2026 sluggishly due to trade uncertainty, stricter immigration policies, and cautious corporate investment in AI, but a rebound is predicted later in the year by JP Morgan Chase & Co. [1] - U.S. policy changes and a tightening global memory chip market are putting South Korea's largest semiconductor makers under renewed scrutiny [1] Semiconductor Industry - China's push to localize its semiconductor supply chain is reshaping the global chip equipment market, adding pressure on foreign suppliers while increasing demand for domestic tools [3] - Taiwan Semiconductor Manufacturing Co. is under scrutiny following a powerful earthquake near Taiwan, raising concerns about potential production disruptions [7] - Taiwan Semiconductor plans to raise prices for its advanced chips despite heightened geopolitical tensions [7] - Taiwan Semiconductor secured a one-year U.S. export license to import U.S. chipmaking equipment into its China operations [8] Corporate Developments - Intel Corporation completed the issuance and sale of over 214 million shares of common stock to Nvidia in a $5 billion private placement [4] - Nvidia is reportedly in advanced discussions for another M&A deal aimed at acquiring talent due to pressure from Google's internal chip development [4] - TikTok parent ByteDance plans to allocate about 100 billion yuan ($14 billion) to Nvidia chips in 2026 [5] - Meta Platforms Inc. is accelerating its push to build practical, revenue-generating AI tools [6] - SoftBank Group agreed to acquire DigitalBridge Group in a cash deal valued at about $4 billion, marking a significant step in scaling global infrastructure for AI [17] Automotive Sector - XPeng reported strong December performance, delivering 37,508 vehicles in December 2025, a 2% year-over-year increase [12] - Nio reported a record 48,135 vehicle deliveries in December 2025, an increase of 54.6% year-over-year [13] - Tesla could struggle to follow up on a record third quarter, with predictions of weaker fourth-quarter deliveries [14] Artificial Intelligence Developments - South Korean telecom operator SK Telecom launched A.X K1, the country's first hyperscale AI model with 519 billion parameters [18] - OpenAI is shifting its first AI hardware project to Foxconn Technology Group as it accelerates plans for a consumer device [18] - Meta Platforms accelerated its AI push with the acquisition of Manus AI, a startup focused on autonomous agents [19] - VivoPower announced plans to acquire a hydro-powered data center site in Norway as part of its AI-focused digital strategy [20]

Summary of Key Points from the Conference Call Industry Overview - **Focus on AI**: The semiconductor industry in 2026 is heavily centered around AI, with strong demand for AI accelerators (XPU) leading to supply constraints in various components like CoWoS, memory, and logic wafers [1][20] - **Concerns about AI Bubble**: There are growing concerns among investors regarding the sustainability of AI investments, with discussions on whether the current AI boom is a bubble [1][20] Company-Specific Insights TSMC - **Top Pick**: TSMC is identified as the top investment pick due to its strong position in GPU and ASIC markets, which mitigates risks associated with potential AI bubbles [6][54] - **Revenue Growth**: Projected revenue growth of 23% in 2026 and 20% in 2027, with a 20% EPS CAGR [56][57] - **Capex Plans**: TSMC's 2026 capital expenditure is projected at USD 47 billion, a 15% increase YoY, with a decreasing capex/revenue ratio due to faster revenue growth [3][56] - **AI Revenue Contribution**: Expected to rise from 14.4% of total revenue in 2024 to 27.3% in 2026 [59] MediaTek - **Temporary Headwinds**: MediaTek faces temporary challenges in the mobile segment due to high memory prices affecting its TV SoC and other products [7][73] - **AI ASIC Upside**: Anticipated upside from AI ASIC projects, with projections indicating that TPU will contribute significantly to MediaTek's earnings in 2026 and 2027 [7][73] Samsung Electronics - **Valuation Increase**: Target price raised from KRW 130,000 to KRW 140,000, driven by higher valuation multiples [13] - **Market Position**: Samsung is expected to gain market share in HBM, with demand projected to double in 2026 [50] SK Hynix - **Target Price Increase**: Target price raised from KRW 650,000 to KRW 750,000, reflecting improved valuation multiples [13] Micron - **Target Price Increase**: Target price raised from USD 270 to USD 330, driven by higher valuation multiples [14] KIOXIA - **Underperform Rating**: KIOXIA rated as Underperform with a target price of JPY 7,000 [15] UMC and Vanguard - **Underperform Ratings**: UMC rated Underperform with a target price of NT$ 32.00, while Vanguard rated Market-Perform with a target price of NT$ 90.00 [17][19] Geopolitical Considerations - **China's Memory IPOs**: The potential IPOs of YMTC and CXMT are significant as they mark China's entry into the memory market, although they are not expected to alleviate supply shortages in 2026 [5][49] - **Technological Lag**: China is projected to lag behind TSMC by approximately 5 years in semiconductor technology, with SMIC's recent advancements not matching TSMC's capabilities [5][53] Market Dynamics - **CoWoS and HBM Growth**: CoWoS and HBM shipments are expected to rise significantly, with CoWoS capacity projected to increase from 724K wafers in 2025 to 1,250K in 2026 [22][46] - **Memory Price Trends**: Memory prices are expected to normalize by late 2026, but strong demand driven by AI will keep prices at healthy levels [8][42] Conclusion - The semiconductor industry is poised for significant growth driven by AI, with TSMC, MediaTek, Samsung, and SK Hynix positioned favorably. However, geopolitical risks and potential supply constraints from new entrants in the memory market warrant careful monitoring.