Core Viewpoint - TSMC plans to issue $10 billion in new shares to strengthen its foreign exchange hedging operations in response to currency fluctuations, marking its largest initiative of this kind to date [1] Group 1: Company Actions - TSMC Global Ltd. will issue shares to mitigate foreign exchange volatility, representing the third such transaction since 2024 and the largest to date [1] - The issuance aims to provide TSMC Global with greater financial flexibility in managing exchange rate risks [1] Group 2: Market Context - The recent appreciation of the New Taiwan Dollar has raised concerns in Taiwan about the economy's over-reliance on exports [1] - In May, the New Taiwan Dollar experienced its largest single-day increase since the 1980s, prompting official calls to curb speculative activities [1] Group 3: Industry Impact - TSMC, as a major chip manufacturer for companies like Apple and Nvidia, faces challenges from the currency appreciation, which can reduce profits from overseas sales when converted back to local currency [4] - TSMC's CEO indicated that the company's operating profit margin has declined by several percentage points due to the local currency's appreciation [4]

Core Insights - The global semiconductor foundry 2.0 market is projected to grow by 12.5% year-on-year to reach $72.29 billion in Q1 2025, driven by surging demand for AI and high-performance computing chips [1] - The definition of foundry 2.0, introduced by TSMC, encompasses not only traditional wafer manufacturing but also packaging, testing, and photomask production, expanding the market size to nearly $250 billion in 2023 from $115 billion under the old definition [1] Company Performance - TSMC holds a dominant market share of 35.3%, with a year-on-year growth of approximately 30%, attributed to its strong position in advanced processes and substantial AI chip orders [2] - Intel ranks second with a 6.5% market share, while ASE and Samsung follow with 6.2% and 5.9% shares, respectively [2] - The traditional foundry market revenue increased by 26%, while the non-memory IDM market saw a 3% decline due to weak demand in automotive and industrial applications [2] Industry Trends - AI is identified as the core driver of growth in the semiconductor industry, reshaping the priorities within the foundry supply chain and reinforcing TSMC's and advanced packaging suppliers' critical roles [3] - The foundry industry is transitioning from a traditional linear manufacturing model to a highly integrated value chain system, with expectations of new waves of semiconductor technology innovation driven by AI applications and Chiplet integration [3] - The broader foundry 2.0 market is anticipated to reach $298 billion by 2025, marking an 11% growth from 2024, with a compound annual growth rate (CAGR) of 10% projected from 2024 to 2029 [3]

Core Insights - The 2025 Top 100 Chinese Listed Companies in Soft Power has been announced, with TSMC ranking first with a soft power value of 571.6 billion RMB, and the total soft power value of the list exceeding 2.5 trillion RMB, reflecting a year-on-year growth of 26.85% [1][2][4] Group 1: Soft Power Rankings - TSMC leads the list with a soft power value of 571.6 billion RMB, followed by Kweichow Moutai at 256.3 billion RMB and Tencent Holdings at 202.4 billion RMB [4][7] - The top ten companies account for 60.03% of the total soft power value, with a combined value of 1.52 trillion RMB, an increase of 42.91% from the previous year [4][5] Group 2: Financial Performance - In 2024, the total revenue of listed companies reached 71.98 trillion RMB, with a net profit of 5.22 trillion RMB, and 4,036 companies reported profits [5][6] - The overall R&D investment by listed companies amounted to 1.88 trillion RMB, representing 51.96% of the national R&D expenditure, with a research intensity of 2.61%, up by 0.1 percentage points year-on-year [6][5] Group 3: R&D and Innovation - The R&D investment of listed companies increased by nearly 60 billion RMB compared to the previous year, with 926 companies having a research intensity exceeding 10%, primarily in technology sectors such as computer, pharmaceutical, and electronics [6][5] - Private companies demonstrated strong innovation vitality, with an overall R&D intensity of 4.19%, significantly higher than the market average [6]

Group 1 - Semiconductor stocks in the US experienced a collective surge on Tuesday, with AMD rising over 5% [1] - Micron Technology and TSMC both increased by 4% [1] - Broadcom's stock price reached a historic high with an increase of over 3% [1] - NVIDIA saw a rise of 2% [1]

Core Insights - Counterpoint Research indicates that Apple, Qualcomm, and MediaTek are expected to launch 2nm system-on-chip (SoC) in the second half of 2026, with TSMC likely as the manufacturer [1] - The adoption of 3nm and 2nm nodes is accelerating due to the integration of more AI features in devices, driven primarily by Apple, which will have over 80% of its product line using 3nm technology this year [1] - The overall cost of SoCs is rising due to increased semiconductor content and wafer price hikes, with one-third of smartphone SoCs projected to adopt 3nm and 2nm technologies by 2026 [1] Company and Industry Analysis - TSMC is expected to begin packaging tests for the 2nm node in the second half of 2025 and achieve mass production by 2026, with Apple, Qualcomm, and MediaTek anticipated to release their flagship SoCs by the end of 2026 [1] - TSMC currently holds approximately two-thirds of the semiconductor foundry market share as of Q4 2024 [1] - TSMC is projected to account for 87% of the total shipment volume of smartphone SoCs at 5nm and below (3nm and 2nm nodes), with this share expected to grow to 89% by the end of 2028 [2] - Major clients like Apple, Qualcomm, and MediaTek rely heavily on TSMC, which may hinder Samsung's foundry competitiveness in advanced nodes due to past yield issues affecting the 3nm process [2]

Group 1 - AMD is recognized as a critical asset in the AI sector, highlighting its importance in the Western technology landscape [1] - Invictus Origin, founded by Oliver Rodzianko, aims to become a globally recognized actively managed fund with innovative portfolio strategies [1] - The flagship Nasdaq High-Alpha Black Swan Portfolio is designed to outperform the Nasdaq-100 while maintaining approximately 20% in strategic cash reserves for downside protection [1] Group 2 - Oliver Rodzianko has extensive experience as a macro-focused investment analyst, specializing in technology, semiconductors, artificial intelligence, and energy [1] - The investment process of Invictus Origin integrates U.S. market specialization with international market awareness, aiming for durable outperformance [1] - The firm emphasizes disciplined capital stewardship and is developing a family office structure for lower-volatility capital preservation [1]

Core Viewpoint - The importance of photolithography in semiconductor manufacturing is being questioned, with industry leaders suggesting alternative technologies may reduce reliance on High-NA EUV lithography [1][8]. Group 1: High-NA EUV Lithography - High-NA EUV lithography machines are facing low demand, with many major chip manufacturers hesitant to fully adopt the technology due to high costs and alternative methods being developed [1][3]. - Intel has begun production using ASML's High-NA EUV machines, aiming to leverage this technology for its next-generation manufacturing processes, including Intel 18A (1.8nm) and Intel 14A (1.4nm) [4][6]. - TSMC has stated that it will not adopt High-NA EUV for its A16 (1.6nm) and A14 (1.4nm) processes, indicating that standard EUV machines will suffice until at least 2026 [5][6]. Group 2: Industry Trends and Shifts - Samsung and SK Hynix are delaying the implementation of High-NA EUV in DRAM production due to high costs and upcoming architectural changes in DRAM technology [6][7]. - The focus is shifting towards etching technology, which is becoming increasingly critical in semiconductor manufacturing, especially as advanced processes evolve below 3nm [7][9]. - The industry is exploring new transistor designs that may lessen the dependency on advanced lithography techniques, emphasizing the importance of etching processes instead [7][9]. Group 3: ASML's Market Position - ASML's EUV lithography technology dominates the market, controlling 75% to 80% of the EUV lithography market, contributing significantly to its revenue [10][13]. - In 2024, ASML reported a total of 418 lithography machine sales, including 44 EUV machines, with significant revenue contributions from the Chinese market [10][13]. - ASML is also developing the next generation Hyper NA EUV lithography system, which promises improved performance and efficiency [11][12]. Group 4: Emerging Technologies - New lithography technologies, such as EUV-FEL and atomic lithography, are being researched as potential alternatives to ASML's current EUV systems, which could disrupt the market [14][15][16]. - These emerging technologies aim to provide higher resolution and lower costs, posing a potential threat to ASML's market dominance [15][16].

Investment Rating - The industry rating is maintained as "Outperform" [6] Core Viewpoints - The semiconductor industry is expected to continue its optimistic growth trajectory, driven by AI and domestic substitution efforts [4][15] - The storage sector is highlighted as a key area of focus, with expectations of price increases for DDR4 contracts by 30-40% in Q3 [3][16] - The demand for storage capacity is rapidly increasing due to AI servers, PCs, and mobile devices, leading to a rise in high-value product penetration [3][14] Summary by Sections 1. Market Overview - In May, global chip delivery times remained stable, with a slight increase in spot market delivery times and rising storage prices [2][13] - Major chip suppliers showed stable delivery times, with some experiencing slight increases in both delivery times and prices [2][13] 2. Storage Sector - The storage sector is expected to see continued price increases, with significant demand for DDR4 and DDR5, leading to a saturated production capacity [3][18] - The anticipated price increases for DRAM and NAND Flash in Q3 and Q4 are driven by supply-side reforms and strong demand from AI applications [3][14][17] 3. Industry Growth Projections - The global semiconductor market is projected to grow, with a forecasted sales figure of approximately $626.87 billion in 2024, reflecting a 19% year-on-year increase [30][31] - The Chinese semiconductor market is expected to exceed $170 billion in sales in 2024, with a significant contribution from the Yangtze River Delta region [30][31] 4. Key Companies to Watch - Recommended companies in the semiconductor storage sector include Jiangbolong, Shannon Semiconductor, and Zhaoyi Innovation, among others [5] - In the IDM foundry and packaging sector, companies like Huahong Semiconductor and SMIC are highlighted for their growth potential [5] 5. Equipment and Materials - The equipment and materials sector is seeing stable growth, with leading manufacturers showing strong performance in Q1 2025 [4][15] - The ongoing domestic substitution efforts are reshaping the supply chain landscape, enhancing the competitiveness of local firms [4][15]

Core Investment Thesis - Investing in artificial intelligence (AI) can be straightforward by focusing on established companies with proven track records [1][2] Group 1: Key Companies - Nvidia, Taiwan Semiconductor Manufacturing (TSMC), and Broadcom are highlighted as excellent investment opportunities due to their strong performance and growth potential [2][7] - Nvidia leads in AI infrastructure with its advanced graphics processing units (GPUs), continuously innovating to maintain its competitive edge [4] - TSMC plays a crucial role in Nvidia's success by manufacturing the advanced chips needed for AI applications, making it a key player in the AI supply chain [5] - Broadcom contributes to AI infrastructure through its connectivity switches and custom AI accelerators (XPUs), enhancing the performance of AI systems [6] Group 2: Growth Projections - Nvidia is projected to benefit significantly from the anticipated increase in data center capital expenditures, expected to rise from $400 billion in 2024 to $1 trillion by 2028 [8] - TSMC anticipates a compound annual growth rate (CAGR) of 45% for AI-related revenue over the next two years, contributing to an overall growth rate nearing 20% CAGR [9] - Broadcom expects substantial growth in AI-related revenue, projecting an increase from $12.2 billion in fiscal year 2024 to between $60 billion and $90 billion by fiscal year 2027 [10] Group 3: Investment Recommendation - The increasing trend in AI-related spending positions Nvidia, TSMC, and Broadcom as primary beneficiaries, making them attractive investment options for the future [12]

Group 1 - Morgan Stanley's latest report indicates that Asian tech stocks are expected to rise by 15%-20% this year, primarily driven by strong momentum in the artificial intelligence (AI) sector [1] - The report emphasizes that AI will continue to dominate the current growth cycle, with data center capital expenditure expansion in 2025 and growth certainty in 2026 reinforcing this trend [1] - The demand for automation and generative technologies in the region is a strong support for the rapid rise of AI concept stocks, which are becoming the core engine of the Asian stock market [1] Group 2 - The Bloomberg Asia Pacific Semiconductor Index has risen over 12% this year, significantly outperforming regional stock indices [1] - Major tech companies like Microsoft and Google maintain strong demand for AI memory chips, which is expected to further enhance industry prosperity [1] - Morgan Stanley recommends leading chip companies such as TSMC, SK Hynix, Advantest, and Delta Electronics, predicting that these stocks will continue to gain momentum over the next 12 months due to strong demand and upward revisions in profit expectations [1] Group 3 - The A-share market opened higher, with all three major indices rising over 1%, and the Shanghai Composite Index returning to 3400 points after a week [2] - The decrease in geopolitical risk premium is expected to benefit all emerging market currencies, particularly those in Asia that rely heavily on energy imports, as falling oil prices improve trade conditions [2] - The announcement of a ceasefire led to significant fluctuations in the oil market, with WTI crude oil futures dropping over 5% following the statement [2]