Group 1: Market Performance - As of July 18, 2025, the Shanghai Composite Index rose by 0.50% to close at 3534.48 points, while the Shenzhen Component Index increased by 0.37% to 10913.84 points, and the ChiNext Index gained 0.34% to 2277.15 points [1] - The Semiconductor Materials ETF (562590) increased by 0.91%, and the Sci-Tech Semiconductor ETF (588170) rose by 0.79% [1] - In the overnight U.S. market, the Dow Jones Industrial Average fell by 0.32%, the S&P 500 decreased by 0.01%, and the Nasdaq Composite rose by 0.05% [1] Group 2: Company News - TSMC reported impressive financial results for Q2, achieving revenue of $30.07 billion, a year-on-year increase of 44.4% from $20.82 billion, and a quarter-on-quarter growth of 17.8% from $25.53 billion [2] - TSMC's gross margin was 58.6%, operating profit margin was 49.6%, and net profit margin was 42.7% [2] - TSMC plans to build 11 wafer fabs and 4 advanced packaging plants in Taiwan to meet strong structural growth demand, with a focus on 2nm technology in Hsinchu and Kaohsiung [2] Group 3: Industry Insights - Donghai Securities emphasizes that the Chinese semiconductor industry is characterized by a dual resonance of cyclicality and growth, with significant pressure at the current cycle's bottom and strong domestic demand for localization [3] - The semiconductor industry is cyclical, influenced by price, inventory, capacity supply, and end-user demand, with the last four cycles lasting 7, 3, 3, and 4 years respectively [3] - The current cycle peaked at the end of 2021, with bottom oscillation expected in 2023-2024 [3] Group 4: ETF Information - The Semiconductor Materials ETF (562590) and its connected funds focus heavily on semiconductor equipment (55.5%) and semiconductor materials (21.3%), together accounting for over 76% of the index [4] - The Sci-Tech Semiconductor ETF (588170) tracks the Sci-Tech Innovation Board Semiconductor Materials and Equipment Theme Index, including companies in semiconductor equipment and materials [3]

Core Viewpoint - TSMC's 2nm process is set to begin mass production in the second half of this year, with strong demand from major clients like Apple, AMD, and Intel, leading to significant capacity expansion plans [1][2][3] Group 1: Production Capacity Expansion - TSMC plans to increase its 2nm monthly production capacity from 40,000 wafers at the end of this year to 100,000 wafers by next year, representing a 150% increase [1] - By 2027, TSMC anticipates further increasing the capacity to between 160,000 and 180,000 wafers, with the potential to reach 200,000 wafers if demand exceeds expectations [1][2] - The majority of the new capacity will be established at TSMC's Kaohsiung F22 facility [1] Group 2: Market Position and Client Demand - The 2nm process is expected to become TSMC's largest advanced process node by 2027, surpassing the current 7nm and 5nm processes, which have monthly capacities of approximately 160,000 wafers [2][3] - TSMC's advanced process expansion is a key driver for its performance, as more advanced nodes command higher prices, benefiting both volume and pricing [2][3] - Major clients expected to adopt TSMC's 2nm technology include Apple, AMD, Intel, Qualcomm, MediaTek, and NVIDIA [2][3] Group 3: Technological Advancements - TSMC's 2nm process technology is designed to provide significant performance and power efficiency advantages, with speed increases of 10% to 15% at the same power level, or a 25% to 30% reduction in power consumption at the same speed [3] - The company plans to introduce the N2P process technology, an extension of the N2 family, which will offer even better performance and power efficiency, expected to begin mass production in the second half of 2026 [4]

Group 1 - TSMC plans to increase its monthly production capacity of 2nm chips from 40,000 wafers at the end of this year to 100,000 wafers by next year, representing a 150% increase [1] - The demand from major clients such as Apple, AMD, and Intel for 2nm technology is exceptionally strong, leading to a supply shortage [1] - By 2027, TSMC aims to further expand its 2nm capacity to 200,000 wafers per month, potentially making it the largest node in terms of capacity among TSMC's advanced processes below 7nm [1]

AI Industry Overview - Artificial intelligence (AI) investing is a leading trend in the market, with companies investing billions to build computing capacity for an AI-first economy [1] - The AI hardware sector is dominated by Nvidia, which holds a 90% market share in graphics processing units (GPUs) used for AI applications [4] Nvidia - Nvidia is reapplying for an export license to ship GPUs to China, which is expected to boost its growth rate, projecting a 50% year-over-year revenue increase for Q2, although it could have been 77% without the export restrictions [5][6] - The company is positioned for sustained growth in the AI sector, indicating a strong future for its stock [6] Taiwan Semiconductor Manufacturing (TSMC) - TSMC is a critical supplier for Nvidia, providing chips for its GPUs, and is recognized for its cutting-edge technology and high chip yields, which enhance profitability [8] - TSMC anticipates a 45% compounded annual growth rate (CAGR) in AI-related revenue over the next five years, highlighting significant future growth potential [9] Cloud Computing Sector - The cloud computing industry is benefiting from AI deployment, with companies preferring to rent computing power from providers like Amazon and Alphabet rather than building their own data centers [10] - The global cloud computing market is projected to grow from approximately $750 billion in 2024 to $2.4 trillion by 2030, driven by both AI and non-AI workloads [11] Amazon Web Services (AWS) - AWS is a major profit driver for Amazon, contributing 63% of operating profits despite only accounting for 19% of total revenue, indicating its importance to the company's financial health [12] - AWS is expected to continue driving Amazon's stock higher due to its market-leading growth [12] Google Cloud - Google Cloud is growing faster than AWS, with a 28% growth rate compared to AWS's 17%, and is working towards improving its operating margin from 18% [13] - As the cloud computing market expands, both Amazon and Alphabet are well-positioned to capitalize on the rise of AI, making their stocks attractive investments [13]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies. Core Insights - The AI industry is experiencing significant growth, with Anthropic launching a financial analysis solution that integrates advanced AI models, indicating a trend towards vertical applications of large models in specific sectors [11] - TSMC has raised its revenue forecast for FY25Q2, reflecting a robust demand driven by AI, with a year-on-year revenue increase of 44.4% and a stable gross margin of 58.5% [12][21] - Apple is set to enter the foldable smartphone market with its first model expected to launch in late 2026, which is anticipated to enhance industry standards and expand the market [23][27] Summary by Sections AI Industry Developments - Anthropic's Claude AI tool is designed for the financial services sector, showcasing the practical value of AI in industry-specific applications [11] - The integration of Claude with major data providers allows for real-time financial information access, marking a significant step in the digital transformation of the finance industry [11] TSMC Performance - TSMC reported a quarterly revenue of $30.1 billion, with a quarter-on-quarter growth of 17.8% and a year-on-year growth of 44.4%, driven by strong demand for advanced process nodes [12][21] - The company expects a 30% revenue growth for the full year 2025, largely attributed to the increasing demand for AI models and high-performance computing [15][21] - TSMC's advanced process technologies, particularly 3nm and 5nm, are becoming the main revenue drivers, with a focus on expanding capacity to meet AI hardware demands [21][22] Apple’s Market Strategy - Apple has decided to use Samsung's display technology for its first foldable iPhone, which is expected to enhance collaboration with suppliers and set new industry standards [23] - The anticipated launch of the foldable iPhone is expected to significantly increase the market size for foldable devices, attracting mainstream consumers and prompting competitors to innovate [27]

Core Viewpoint - The report from Guojin Securities emphasizes the strong sustainability of performance growth in companies, particularly in AI-PCB, computing hardware, semiconductor self-control, the Apple supply chain, and AI-driven beneficiary industries [1] Industry Insights - AI-PCB is experiencing a demand resonance, with multiple companies in the sector reporting strong orders and full production capacity, leading to high growth expectations for the second half of the year [1][3] - The demand for AI copper-clad laminates is robust, driven by the ramp-up of Nvidia's GB200 and ASICs, with a shift towards M8 materials in AI servers and switches, and potential future adoption of M9 materials [3] - The semiconductor industry indicators show a steady upward trend across various segments, including consumer electronics, PCB, semiconductor chips, and passive components [1] Company Performance - TSMC reported Q2 2025 revenue of $30.07 billion, a year-on-year increase of 44.4% and a quarter-on-quarter increase of 17.8%, with a gross margin of 58.6% [2] - TSMC's net profit for the same quarter was $12.8 billion, reflecting a year-on-year growth of 60.7% and a quarter-on-quarter growth of 10.2% [2] - TSMC has raised its revenue guidance for Q3 2025 to between $31.8 billion and $33 billion, indicating an 8% quarter-on-quarter growth and a 38% year-on-year growth [2] - Nvidia is set to resume sales of H20 chips to China, with significant orders already received, while Oracle plans to invest $3 billion in Germany and the Netherlands over the next five years to enhance AI and cloud computing infrastructure [2]

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1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report analyzes the overseas market from July 14 - July 18, 2025, including market performance, policy news, and economic fundamentals. The market's expectation of interest rate cuts has decreased due to factors like better - than - expected economic data. Trump's policies have impacts on trade, stablecoin, and government spending. The overseas economy shows mixed trends in different aspects such as overall sentiment, employment, demand, and production [1][2][3]. 3. Summary According to the Directory 3.1 Overseas Market One - Week Review - **Equity Market**: US stocks' three major indices showed different trends, with the Nasdaq performing well. Factors influencing US stocks include decreased interest - rate cut expectations, the signing of the stablecoin bill, and the approval of H20 chip sales to China. As of July 18, the S&P 500 and Nasdaq rose 0.59% and 1.51% respectively, while the Dow fell 0.07%. Some international indices also had gains [10]. - **Foreign Exchange**: The US dollar continued to rebound. Retail sales being better than expected, initial jobless claims lower than expected, and the June CPI showing tariff impacts led to a decrease in interest - rate cut expectations. As of July 18, the US dollar index rose 0.60%, and the euro, yen, and RMB depreciated against the US dollar [10]. - **Interest Rates**: US Treasury bonds fluctuated within a narrow range. After the release of CPI, retail sales, and jobless claims data, Treasury yields rose, but fell on Friday due to Fed Governor Waller's dovish remarks. As of July 18, the 2Y Treasury yield fell 2bp, and the 10Y rose 1bp [11]. - **Commodities**: Crude oil, gold, and silver prices declined. Market risk - aversion sentiment decreased, and Trump's sanctions on Russia did not include new energy - export restrictions. As of July 18, COMEX gold and silver fell 0.31% and 1.75% respectively, and WTI crude oil fell 2.11% [11]. 3.2 Overseas Policy and News 3.2.1 Overseas Central Bank Dynamics - Fed officials had different stances. Waller continued to be dovish, while Collins and Bostic were hawkish. The market's expectation of interest rate cuts cooled. As of July 19, the probability of a rate cut by September was 52.9% (down from 60.3% a week ago), and the expected number of rate cuts in 2025 was 1.82 (down from 2.01 a week ago) [2][29]. - The Fed's Beige Book showed that manufacturing activity declined slightly, corporate recruitment was cautious, and the economic outlook was neutral to slightly pessimistic [29]. 3.2.2 Trump Policy Tracking - **Trade**: The US government approved the sale of NVIDIA H20 chips to China, and Trump was optimistic about reaching an agreement on illegal drugs with Beijing. Trump announced an agreement with Indonesia, aiming to reduce the trade deficit. He also mentioned the possibility of imposing tariffs "slightly above 10%" on smaller trading partners [35]. - **Stablecoin**: Trump signed the "Genius Act" to establish a regulatory framework for US stablecoins, marking the implementation of stablecoin regulatory legislation [38]. - **Government Lay - offs and Expenditure Cuts**: The US Supreme Court allowed large - scale lay - offs in the Department of Education. The government also cancelled federal aid for the California high - speed rail project and a Massachusetts highway project [38]. 3.3 Overseas Economic Fundamental High - Frequency Tracking 3.3.1 Overall Sentiment - Bloomberg's median forecast showed that the probability of a US recession was 35% and that of the eurozone was 30%, both unchanged from a week ago. Polymarket's bet on a 2025 US recession decreased to 18% from 20% a week ago [43]. - The US and German weekly economic activity indices decreased. The New York Fed's Nowcast model raised Q2 and Q3 GDP growth expectations, while the Atlanta Fed's GDPNow model lowered the Q2 expectation [44][48]. 3.3.2 Employment The number of initial jobless claims decreased for the fifth consecutive week. As of July 12, it was 22.1 million, lower than the expected 23.3 million [53]. 3.3.3 Demand - Retail sales were stable. The red - book commercial retail sales annual rate was 5.2% as of July 12. Airport security check - in numbers were higher than the previous year, and railway transportation volume rebounded [57]. - The real - estate market activity declined. The 30 - year mortgage fixed - rate rose, and mortgage application activities decreased [57]. 3.3.4 Production The US production side remained stable. As of July 12, the crude - steel capacity utilization rate was 78.7%, and the crude - steel output was 178.3 million short tons, both higher than the previous year. The refinery capacity utilization rate was 93.9% [63]. 3.3.5 Shipping International freight indicators showed mixed trends. The Baltic Dry Index, Panamax Freight Index, and Capesize Freight Index rose, while the Drewry World Container Freight Index (WCI) and some China - related container freight indices fell [66]. 3.3.6 Price US retail gasoline prices fell. The 1 - year and 2 - year inflation swaps rose, indicating an increase in inflation expectations [70]. 3.3.7 Financial Conditions The US financial pressure slightly increased. The OFR US Financial Stress Index rose, the CCC high - yield bond credit spread was basically flat, and the SOFR - ON RRP spread widened [72]. 3.4 Next Week's Overseas Important Event Reminders Next week (July 21 - July 25, 2025), key events include the ECB's interest - rate meeting (market expects a pause in rate cuts), the preliminary PMI values of the eurozone and US manufacturing and service sectors, US durable goods orders, and US second - hand and new home sales [77].

Group 1: Alphabet - Alphabet is the parent company of Google, YouTube, Waymo, and Android, with the majority of its revenue coming from advertisements [3] - Google Search accounted for 56% of Alphabet's revenue in Q1, and the Google Services division generated an operating margin of 42% [4] - Concerns arise as Google Search's market share has fallen below 90% for the first time since 2015, leading to bearish sentiment among analysts [6] - Alphabet's stock trades at 19 times forward earnings, significantly cheaper than the S&P 500's 23.7 times forward earnings [8] - Despite concerns, Google Search's revenue increased by 10% year over year in Q1, indicating resilience [9] - Upcoming Q2 results on July 23 are expected to show continued healthy revenue for Google Search, potentially boosting the stock [10] Group 2: Taiwan Semiconductor - Taiwan Semiconductor (TSMC) is the leading chip foundry, producing chips for major companies like Apple and Nvidia [11] - TSMC does not market chips directly to consumers, which alleviates client concerns about technology theft [11] - The company is launching a 2-nanometer chip node later this year and a 1.6 nm offering in 2026, maintaining its technological edge [12] - TSMC projects a 45% compound annual growth rate (CAGR) in AI-related revenue and nearly 20% CAGR in total revenue over the next five years [13] - The stock trades at 24.9 times forward earnings, which is slightly more expensive than the broader market but justified by its growth potential [14][16] - TSMC's projected 20% growth rate significantly outpaces the market's long-term growth rate of around 10%, indicating it may be undervalued [16]

Core Viewpoint - Investors are currently underestimating the growth potential of AI chipmaker Nvidia, despite recent concerns regarding future growth prospects and market uncertainties [2][12]. Group 1: TSMC's Performance - TSMC, the world's largest chip foundry, reported second-quarter revenue of $30.1 billion, reflecting a 39% year-over-year increase and an 11% quarter-over-quarter increase [6]. - The company's adjusted earnings per share (EPS) surged 61% to a record high of $2.47, driven by strong demand for high-performance computing (HPC) related to AI [6][7]. - TSMC raised its 2025 revenue forecast, now expecting a 30% increase in U.S. dollars, attributing this growth to robust AI and HPC-related demand [8]. Group 2: Nvidia's Financials - Nvidia's fiscal 2026 first-quarter revenue reached $44 billion, a 69% year-over-year increase, with data center revenue, including AI chips, soaring 69% to a record $39 billion [10]. - Gaming and PC revenue also increased by 42% to $3.8 billion, with data center sales accounting for 89% of total revenue [10]. - Nvidia is guiding for second-quarter revenue of approximately $45 billion, indicating a year-over-year growth of 50% [11]. Group 3: Market Outlook - Nvidia incurred a $4.5 billion charge due to export controls on H20 chips destined for China, but has applied for a license to resume sales, potentially worth up to $15 billion in the second half of the year [12]. - The evidence suggests that the AI revolution is ongoing, and with the resumption of chip sales to China, Nvidia has significant growth potential ahead [13].