Foreign Exchange Risk Management - The company acknowledges the Taiwan dollar's exchange rate as one of six factors impacting profitability, but emphasizes its inability to control it [1] - The company aims to leverage other controllable factors to maintain profitability despite unfavorable exchange rate fluctuations [1][2] - The company has contingency plans in place to address potential rapid appreciation of the Taiwan dollar [1] Hedging Strategies - The company employs multiple strategies to manage US dollar exposure, including spot market sales, forward contracts, and transferring US dollar cash to an offshore holding company [3] - The offshore holding company's financial statements are denominated in US dollars, reducing hedging costs [3] - The company prioritizes a combination of tools, considering market appetite and hedging costs for each [4] - The company has been using capital injection to the offshore company for years as part of its hedging strategy [4]

Core Viewpoint - The Nasdaq Composite Index has reached a historic milestone by surpassing 21,000 points, driven by strong earnings reports from major tech companies and optimistic market sentiment regarding future growth [2][4]. Financial Performance - Over 85% of the 62 S&P 500 companies that have reported earnings so far have exceeded expectations, indicating robust performance in the current earnings season [3][15]. - The "Big Seven" tech companies are expected to see a 14% year-over-year increase in earnings, while the remaining 493 S&P 500 companies are projected to have an average growth of only 3.4% [16]. - Goldman Sachs predicts that the S&P 500 index could rise to 6,900 points in the next 12 months, supported by strong earnings and investor optimism about growth in 2026 [3][17]. Market Trends - Major tech stocks, including Google, Apple, and Meta, have shown significant gains, contributing to the overall strength of the market [7]. - The financial technology company Block's stock surged over 7% after being announced as a new addition to the S&P 500 index [8]. Economic Indicators - The U.S. Treasury Secretary indicated that if inflation data is low, the Federal Reserve should consider lowering interest rates, which could positively impact the mortgage market [9]. - A weaker dollar has been identified as a favorable factor for the earnings growth of U.S. companies, with a 10% decline in the dollar potentially leading to a 2-3% increase in S&P 500 earnings per share [20]. Investor Sentiment - Despite concerns regarding trade policies, investors appear to be focusing on the long-term growth prospects for 2026 rather than short-term economic challenges [19][23]. - There is a general expectation among investors that the final tariff rates proposed by the Trump administration may be lower than currently suggested, which could further support market confidence [24].

加入"中国IC独角兽联盟"，请点击进入 7月20日，台积电嘉义科学园区的建筑工地发生一起板车倾覆事故。涉事车辆当时载重约 50 吨，目前暂 无人员伤亡消息。 由于短期连续爆出四起重大事故，台湾地区当局"职安署"已全面叫停台积电在嘉义科学园区的机电工程 作业。 转自：国芯网 7月21日消息，据台媒报道， 由于台积电短期内连续爆出四起重大安全事故，台湾省当局已全面叫停台 积电在嘉义科学园区的工程作业！ 7月16日，台积电嘉义厂区工地发生一起意外，厂房高空安装重达数百公斤的机电用冰水管过程中，冰 水管意外掉落，直接砸中下方女工人，造成其头部重创，救护人员到场后紧急将其送往医院治疗，但18 日上午被宣告死亡。报道说，这是该厂区两个月以来第四起工业安全意外。 事故发生于16日16时左右，台积电嘉义科学园区先进封装厂AP7厂房内，当时工人正在进行机电用冰水 管安装作业，一个重达200至500公斤的冰水管，疑未完全固定，从5至6米高处意外坠落砸中地面的一名 女性工人。女子随后被紧急送往医院救治，因脑部出血持续接受治疗，于18日死亡。 台媒报道称，台积电嘉义厂区两个月内发生4起工业安全事故，已造成2死2伤。 报道回顾这两个月 ...

Investment Rating - The report maintains an "Outperform" rating for the electronic industry, indicating expected performance above the market index by more than 10% [1][37]. Core Insights - TSMC has raised its revenue growth forecast for 2025 from approximately 25% to around 30%, driven by strong AI demand and a moderate recovery in non-AI demand [2][4]. - The semiconductor sector is experiencing high demand, particularly in AI and domestic growth opportunities, with recommendations for companies like SMIC, Huahong Semiconductor, and others [2]. - The PCB industry is facing a shortage of high-end materials, which is expected to sustain high growth in quarterly performance due to increased demand from AI servers and network devices [3]. - The approval of H20 chip exports to China is anticipated to benefit the computing power supply chain significantly, with a focus on AI infrastructure as a key investment theme [4]. Summary by Sections Market Performance - The Shanghai Composite Index rose by 0.69%, while the electronic sector increased by 2.15%, with components up by 9.36% and semiconductors by 0.42% over the past week [11]. Company Performance - TSMC reported Q2 2025 revenue of $30.07 billion, exceeding guidance, with a year-over-year increase of 44.4% and a quarter-over-quarter increase of 17.8% [2]. - The report highlights a strong performance from companies like Industrial Fulian, Longsys Technology, and others, with a focus on AI computing and innovation [1][2]. Investment Recommendations - The report recommends a range of companies across different segments, including Industrial Fulian, Xiaomi Group, and others in the semiconductor and PCB sectors, indicating a positive outlook for 2025 [1][9][10].

Core Viewpoint - TSMC has faced significant safety issues at its Chiayi plant, leading to a halt in operations due to multiple industrial accidents resulting in fatalities and injuries [1][2]. Summary by Sections Industrial Accidents - TSMC's Chiayi plant has reported four major industrial accidents within two months, resulting in two deaths and two injuries [2]. - The first incident occurred on May 20, where a worker fell from a four-story scaffold and was seriously injured [2]. - A second incident involved a worker being run over by a forklift while resting, resulting in a severe leg injury [2]. - The third accident on May 26 involved a falling transformer that killed a worker despite emergency medical efforts [2]. - The most recent incident on July 16 involved a heavy ice water pipe falling from a height of 5 to 6 meters, fatally injuring a female worker [1][2]. Regulatory Response - Due to the series of accidents, Taiwan's Occupational Safety and Health Administration has ordered a complete suspension of TSMC's mechanical engineering operations at the Chiayi science park [2].

Group 1 - Dow futures rose by 0.24%, S&P 500 futures increased by 0.26%, and Nasdaq futures gained 0.28% [1] - NVIDIA CEO Jensen Huang sold 75,000 shares worth approximately $12.94 million, part of a plan to sell up to 6 million shares by the end of the year [2] - Tesla announced that Model 3 sales reached 3 million units, maintaining its position as the global leader in pure electric sedan sales for seven consecutive years [3] Group 2 - TSMC plans to expand its 2nm monthly production capacity from 40,000 wafers at the end of 2024 to 100,000 wafers by 2025, a 150% increase [4] - Cryptocurrency exchange Bullish filed for an IPO to raise up to $100 million, with a cumulative trading volume exceeding $1.25 trillion by March 31, 2025 [5] Group 3 - Block, a fintech company led by Jack Dorsey, will replace Hess in the S&P 500 index, resulting in a 9.78% increase in its stock price [6] - JPMorgan estimates that OpenAI could face a total addressable market exceeding $700 billion by 2030, with a valuation of $300 billion as of March [7] - Microsoft warned of a cyberattack on its SharePoint servers, leading to a 0.1% decline in its stock price [8] Group 4 - BHP's stock rose by 2.55% after Citi reported that its production results for Q4 of FY2025 exceeded expectations, with net debt projected at $13 billion, lower than previous estimates [9]

Group 1 - The top 5% of semiconductor companies generated an economic profit of $1,590 billion, surpassing the entire semiconductor market's profit of $1,470 billion [2] - The middle 90% of companies saw their average profit decline from approximately $130 million to $38 million, and further down to $17 million over two years, representing an 88% decrease [2] - The shift in profitability occurred within 2-3 years, particularly influenced by the rise of AI semiconductor demand [2] Group 2 - McKinsey predicts that semiconductor companies within the AI industry chain will experience an annual growth rate of 18-29% by 2030, while traditional semiconductor companies will only see a growth rate of 2-3% [3] - The "winner-takes-all" dynamic is driven by leading companies establishing standards for new semiconductor products, which hinders market entry for later competitors [3] - Examples include SK Hynix's development of the first generation of HBM and NVIDIA's promotion of SOCAMM, showcasing the trend of companies creating independent memory standards [3] Group 3 - The South Korean semiconductor industry is lagging in the AI semiconductor core markets like GPU and ASIC, despite holding over 50% of the global memory semiconductor market [4] - Local companies, apart from SK Hynix's HBM, struggle to integrate into NVIDIA's AI value chain, with emerging AI semiconductor startups facing funding and manpower challenges [4] - There is a call for South Korea to develop second and third generation HBM to build an AI semiconductor ecosystem, with a focus on low-power and high-speed technologies [4] Group 4 - To survive in the competitive AI semiconductor landscape, local companies need comprehensive support in funding and ecosystem development, similar to Taiwan's strategic nurturing of its semiconductor industry [5] - A shift from tax incentives to more proactive financial support, such as subsidies or equity investments, is recommended to enhance local capabilities [5] - The limited domestic production capacity for AI semiconductor components necessitates attracting foreign companies to establish R&D centers in South Korea [5]

Core Insights - The global semiconductor industry generated a total economic profit of $1,470 billion last year, with the top 5% of companies, including NVIDIA, TSMC, SK Hynix, and Broadcom, capturing $159 billion of this profit, while the middle 90% only earned $5 billion, and the bottom 5% incurred losses of $37 billion [1][2] Group 1 - The shift in market structure occurred rapidly within two to three years, with the average annual profit for the middle 90% of companies dropping from over $30 billion during the pandemic to just $3.8 billion in 2023, and further declining to $1.7 billion last year, representing an 88% decrease [1][2] - AI-related semiconductor companies are projected to grow at an annual rate of 18% to 29% until 2030, while traditional semiconductor firms are expected to see growth rates of only 2% to 3% [2][3] - The "winner-takes-all" phenomenon is attributed to leading companies establishing new semiconductor product standards, which limits the entry of later competitors [2][3] Group 2 - Despite holding over 50% of the global memory chip market, the South Korean semiconductor industry is being marginalized in the AI core chip sectors like GPUs and ASICs, with few local companies able to enter NVIDIA's AI value chain [3][4] - South Korea's semiconductor firms need to build an AI semiconductor ecosystem starting from the storage sector, focusing on new technologies such as CXL, PIM, and LPCAMM to remain competitive [3][4] - To survive in the "winner-takes-all" structure of the AI semiconductor field, South Korean companies require multi-layered financial support and ecosystem development, similar to Taiwan's strategic cultivation of its semiconductor industry over the past 40 years [4]

Core Viewpoint - TSMC is considering the use of drones in its Arizona chip manufacturing facility to enhance operational efficiency and safety, amidst challenges faced during construction and local labor relations [1][2]. Group 1: Drone Utilization - TSMC is forming a drone team for its Arizona factory, currently in the bidding phase for drone suppliers, with a final list expected by the end of the year [1][2]. - Drones are intended for facility inspections, traffic monitoring, and disaster response, potentially reducing labor needs and risks for workers in hazardous environments [2]. Group 2: Expansion Plans - TSMC is accelerating the expansion of its Arizona facility, planning for one-third of its advanced chip production to occur there, driven by demand for AI and high-performance computing chips [4]. - The company has committed to a $100 billion investment plan in the U.S., with a reaffirmation of an additional $100 billion investment over the next five years to enhance manufacturing capabilities [4][5]. Group 3: Challenges in Japan - TSMC is slowing down the construction of its second wafer fab in Kumamoto, Japan, due to worsening traffic conditions and a lack of demand for mature process chips from automotive manufacturers [3][5]. - The start date for the Kumamoto fab has been postponed from early this year to later in the year, with further delays possible [6][7]. Group 4: Market Dynamics - The demand for AI chips from U.S. tech giants like NVIDIA and AMD is driving TSMC's investments in the U.S., while its facilities in Taiwan remain the core manufacturing sites [5]. - TSMC's cautious approach to capital expenditure is influenced by concerns over market capacity and the potential for high tariffs on imported chips, making U.S. production capacity a priority [7].

Investment Rating - The report maintains a "Recommended" investment rating for the semiconductor and semiconductor equipment industry [5] Core Insights - The approval of NVIDIA's H20 and AMD's MI308 chips for export to China is expected to significantly boost demand for AI chips in China, leading to positive performance expectations across the related industry chain [1][3] - TSMC has raised its revenue growth guidance for 2025 to a range of 30%, indicating strong demand in the semiconductor sector [3][31] - The overseas AI chip index rose by 4.3% this week, driven by the export approvals, while the domestic AI chip index increased by 1.7% [1][10] - The smartphone market saw a 1% year-on-year decline in Q2 2025, marking the first drop after six consecutive quarters of growth, with Samsung maintaining the largest market share at 19% [2][24] Market Indices Summary - The overseas AI chip index increased by 4.3% this week, with notable stock price increases for AMD (over 7%), NVIDIA, and TSMC (over 4%) [1][10] - The domestic A-share chip index rose by 1.7%, with significant gains from Cambrian (over 5%) and others [10] - The NVIDIA mapping index surged by 6.7%, reflecting increased demand expectations for AI chips [10][13] - The server ODM index grew by 2.2%, driven by the anticipated demand for servers due to the chip exports [10][15] - The domestic storage chip index fell by 0.4%, with mixed performance among various companies [10][19] - The power semiconductor index remained stable with a 1.0% increase [10][16] Industry Data Summary - In Q2 2025, global smartphone shipments decreased by 1%, with Samsung leading the market at 19% share, followed by Apple at 16% and Xiaomi at 15% [2][24] - The share of smartphones equipped with AMOLED displays rose to 63%, while LCD displays dropped to 37% [2][27] Major Events Summary - NVIDIA and AMD received U.S. government approval to sell H20 and MI308 chips in China, respectively [3][30] - Apple is set to launch a foldable iPhone using Samsung's OLED panels, with a projected price exceeding 15,000 RMB [3][30] - Several companies, including SiTew and TSMC, reported significant revenue growth forecasts for 2025 [3][31][32]