Group 1 - Goldman Sachs raised the 12-month target level for the Taiwan Weighted Index from 32,400 points to 34,600 points [1] - The increase in the target level is driven by TSMC's earnings report and guidance, which have positively impacted profit forecasts [1]

Core Viewpoint - The choice of TSMC as a foundry partner by Nvidia and AMD has proven to be a significant investment, especially in the context of the current AI industry where chip supply is a major bottleneck [1][2][3]. Group 1: Importance of TSMC - TSMC is recognized as the largest foundry in the AI supply chain, playing a crucial role alongside manufacturers like Nvidia and AMD [4]. - The strong relationships TSMC maintains with its partners are a key reason why companies prefer TSMC over alternatives, even when faced with attractive options from competitors like Intel [4]. Group 2: Nvidia's Commitment - Nvidia's CEO Jensen Huang expressed confidence in becoming TSMC's largest customer, a promise he made despite initial setbacks in technology [2]. - Nvidia's success, with a market valuation of $5 trillion, is attributed to its close relationship with TSMC, which has granted Nvidia exclusive access to certain technologies and a steady supply of chips [2]. Group 3: AMD's Strategic Decision - AMD's CEO Lisa Su highlighted the decision to trust TSMC as a major strategic move, which has led to significant gains in market share in both client and server segments [3]. - AMD's shift from GlobalFoundries to TSMC as its primary manufacturing partner has been pivotal in its success, contrasting with Intel's struggles in its internal foundry operations [3].

Industry Insights - Samsung Electronics has raised NAND flash supply prices by over 100% in Q1 2026, significantly exceeding market expectations, highlighting a severe supply-demand imbalance in the semiconductor market [2] - The company has completed negotiations with major clients for new pricing, effective from January, following a nearly 70% increase in DRAM prices [2] - Samsung is preparing for a new round of negotiations for NAND prices in Q2, with expectations of continued price increases [2] Company Performance - Zhongwei Company (688012.SH) expects a net profit of 2.08 billion to 2.18 billion RMB for 2025, representing a year-on-year growth of approximately 28.74% to 34.93% [2] - The company's plasma etching equipment, a core semiconductor manufacturing tool, is gaining recognition both domestically and internationally, with significant increases in shipments for advanced logic and memory devices [2] - Shengmei Shanghai (688082.SH) forecasts revenue of 6.68 billion to 6.88 billion RMB for 2025, an increase of 18.91% to 22.47% year-on-year, driven by strong global semiconductor demand and successful customer expansion [3] - The company anticipates 2026 revenue to be between 8.2 billion and 8.8 billion RMB, reflecting ongoing business growth trends and order situations [3] Market Trends - The semiconductor equipment market is expected to continue growing, driven by sustained demand for AI computing power, an upward cycle in storage chips, and advancements in packaging technology [3] - TSMC projects capital expenditures of 52 to 56 billion USD for 2026, a significant increase from 40.9 billion USD in 2025, further highlighting market opportunities in semiconductor equipment [3] Related ETFs - The Sci-Tech Semiconductor ETF (588170) tracks the Sci-Tech Board semiconductor materials and equipment index, focusing on semiconductor equipment (60%) and materials (25%) [4] - The ETF benefits from the domestic substitution trend in the semiconductor industry, which has a low domestic replacement rate and high potential for growth, driven by the AI revolution and technological advancements [4] - The Huaxia Semiconductor Equipment ETF (562590) also emphasizes semiconductor equipment (63%) and materials (24%), targeting the upstream semiconductor sector [4]

Core Viewpoint - The PCB sector is experiencing significant performance growth driven by AI demand, with several key investment themes identified for 2023 [1][2]. Investment Themes - **PCB Upgrade Trend**: The commercialization of CoWoP technology is accelerating, leading to a new round of upgrades in AI PCB products. mSAP capacity, equipment, and technical capabilities will become higher competitive thresholds for PCB manufacturers, presenting investment opportunities across the mSAP supply chain [1][2]. - **CCL Upgrade from M8 to M9**: The transition from M8 to M9 CCL is a definitive trend, with an increasing number of GPUs, ASIC servers, and 1.6T switches adopting M9 CCL. The usage of Q fabric, HVLP 3-4, and hydrocarbon resins will continue to rise rapidly [1][2]. - **Upstream Material Price Increases**: The price of upstream materials is still in an upward cycle, which is expected to further improve profitability [1][3]. - **Rising Demand for Substrates**: Demand for BT substrates is increasing, with continuous price hikes, while ABF substrate demand is beginning to overflow to domestic manufacturers [1][4]. Market Performance - The PCB sector's performance has exceeded market expectations, particularly in the upstream materials and equipment segments, driven by global AI PCB capacity expansion. Companies like Jin'an Guoji and Huazheng New Materials in the CCL segment, and Dazhu CNC and Chipbase in the equipment segment, have shown significant excess returns [2]. Price Trends - The CCL industry average price has increased by 20%-30% in 2025, with expectations for further price hikes in 2026 potentially exceeding those of 2025 due to supply-demand dynamics and raw material price trends [3]. Demand Dynamics - The global AI data center's storage demand is robust, with TSMC's capital expenditure for 2026 projected at $52-56 billion, significantly above market expectations. This indicates a strong upward trend in storage chip demand, leading to continuous price increases for BT substrates and the overflow of ABF substrate demand to domestic suppliers [4].

Core Insights - The Schwab Emerging Markets Equity ETF (SCHE) offers lower costs and higher yields compared to the iShares MSCI Emerging Markets ETF (EEM), which has a longer history and greater tech exposure [1][4][10] Cost and Size Comparison - SCHE has an expense ratio of 0.07%, significantly lower than EEM's 0.72%, which could lead to compounded savings over time [3][4] - As of January 22, 2026, SCHE's one-year return is 28.4%, while EEM's is 37.9% [3] - SCHE has a dividend yield of 2.9%, higher than EEM's 2.2% [3][9] - SCHE has assets under management (AUM) of $12.0 billion, compared to EEM's $25.1 billion [3] Performance and Risk Comparison - Over the past five years, SCHE's maximum drawdown is -35.70%, while EEM's is -39.82% [5] - The growth of $1,000 invested over five years is $1,036 for SCHE and $1,044 for EEM [5] Holdings and Diversification - EEM tracks large- and mid-cap companies with a 30% tilt towards technology, while SCHE has a 22% tech exposure and holds over 2,100 stocks, making it more diversified by company count [6][7] - EEM's top holdings include Taiwan Semiconductor Manufacturing, Tencent Holdings, and Samsung Electronics, which make up 21.5% of its assets [6] - SCHE's top holdings also feature Taiwan Semiconductor, Tencent, and Alibaba Group, comprising nearly 22% of its assets [7] Investment Implications - Both SCHE and EEM provide passive investment opportunities in emerging markets, holding over 1,000 stocks each [8] - The significant difference in expense ratios suggests that SCHE may be a more cost-effective option for investors seeking exposure to emerging markets [10]

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is significantly investing to meet the growing demand for AI chips, with a planned capital expenditure of up to $56 billion, indicating strong confidence in sustained AI demand despite some caution from its CEO [2][4][5]. Company Overview - TSMC holds a dominant market share in the logic chip market, essential for AI computing, and is increasing production capacity to meet demand [2]. - The company's stock has increased over 300% since the start of the AI race in 2023, yet it is still considered undervalued compared to major tech companies [7][8]. Financial Performance - TSMC's revenue rose by 26% year over year during its last quarter, and it trades at 25 times forward earnings, which is competitive compared to the broader market [8][10]. - The company projects nearly 30% revenue growth by 2026 and expects a compound annual growth rate (CAGR) of 25% through 2029 [11]. Market Dynamics - Continued spending by AI hyperscalers on data centers is crucial for maintaining elevated demand for TSMC's chips, with projections indicating growth in data center buildouts through at least 2030 [12]. - The overall market environment shows that major tech companies trade at about 30 times forward earnings, while TSMC's growth rate is expected to accelerate, making it a potentially stronger investment [8][10].

Core Insights - Artificial intelligence (AI) continues to drive market gains, with the eight highest-value stocks being AI-related companies, indicating ongoing massive opportunities in the sector [1] Company Summaries Alphabet - Alphabet, the parent company of Google, holds a dominant position in various sectors, including search engines, Android, and YouTube, providing diversification and low-risk investment potential [4] - The company is leveraging AI through features like AI summaries in Google searches, which have attracted 75 million active daily users, and it has 650 million monthly active users for its Gemini LLMs [5] - Revenue growth accelerated to 16% in Q3 2025, with AI revenue being a significant growth driver; capital expenditure is expected to increase from approximately $92 billion in 2025, and the company is developing its own tensor processing units (TPUs) to meet demand [6] - All business segments are performing well, with cloud services showing a $155 billion backlog (up 46% year-over-year) and advertising revenue increasing by 15% [7] Taiwan Semiconductor Manufacturing - Taiwan Semiconductor is a key player in AI development, fabricating AI chips for companies like Nvidia and Alphabet, with high-performance computing (HPC) revenue accounting for 58% of total revenue in 2025, reflecting a 48% increase from the previous year [8] - Total revenue for Taiwan Semiconductor increased by 26%, with management projecting a compound annual growth rate of at least 25% through 2029 [8]

Investment Rating - The investment rating for the electronics industry is "Positive" (maintained) [4] Core Insights - TSMC's Q4 2025 performance indicates a thriving AI industry driving the upstream supply chain into a growth cycle, with expected revenue of $33.7 billion, a year-on-year increase of 25.5%, primarily due to AI chip demand [4] - The semiconductor testing industry is entering an "inflation" cycle, driven by increased complexity in AI chips, leading to a rise in both demand and prices for testing services and equipment [4] - The global smartphone shipment volume for Q4 2025 is approximately 336 million units, with Apple and Samsung showing resilience against rising storage chip prices, while domestic Android manufacturers face significant sales pressure [4] Summary by Sections Industry Dynamics - Limited supply of H200 chips continues to be a pain point in the domestic market, with demand expected to diversify into a multi-layered structure [7] - Nvidia's CEO Jensen Huang visited China, indicating potential strategic shifts in the semiconductor landscape [7] - Alibaba's T-Head semiconductor unit is planning for an independent listing, reflecting the growing importance of domestic chip design [7] - Baidu's Wenxin assistant has surpassed 200 million monthly active users, highlighting the competitive landscape in AI services [7] Weekly Market Analysis - The electronics sector saw a weekly increase of 1.39% from January 19 to January 23, 2026, with integrated circuit packaging and testing, LED, and analog chip design leading the gains [9][12] Testing Industry Analysis - The semiconductor testing market is projected to grow significantly, with the global testing equipment market expected to reach $32.7 billion by 2025, growing at a CAGR of 3.43% from 2025 to 2032 [19][23] - The demand for testing equipment and consumables is expected to rise due to the increasing complexity of AI chips, with testing times for AI chips expected to increase significantly [30][39] - The global probe card market is also experiencing growth, with a projected increase in revenue driven by the demand for advanced logic and high-performance memory testing [40][42] Investment Recommendations - Recommended companies for investment include testing equipment manufacturers such as Huafeng Measurement and Control, Changchuan Technology, and testing service providers like Weicai Technology and Changdian Technology [45]

Group 1 - The QDII funds have shown impressive performance since 2025, with an average net value increase of 27.9%, particularly driven by funds heavily invested in Hong Kong innovative pharmaceuticals [2] - Notable funds such as Huatai-PB Korea Semiconductor ETF and E Fund Global Growth Select Mixed A have seen net value increases of 127.55% and 102.91% respectively, with several other funds also exceeding 80% growth [2] - The top holdings of these high-performing funds predominantly include Hong Kong innovative pharmaceutical stocks, with examples like Kelun-Botai Biotech and Innovent Biologics among the top five holdings of Huatai-PB Hong Kong Advantage Select Mixed A [2] Group 2 - The technology sector is also a key focus for many high-performing products, with E Fund Global Growth Select Mixed A holding major global tech stocks such as TSMC and Google-A among its top ten holdings [3] - Fund managers express optimism for the future of the innovative pharmaceutical and technology sectors, citing a recent phase of adjustment in the innovative drug industry as a temporary market sentiment issue rather than a fundamental change [4][5] - The innovative drug sector's valuation has become attractive, with expectations of upward potential, and the industry is anticipated to show resilience and technological attributes over the next 2 to 3 years [5] Group 3 - The pharmaceutical industry is expected to see positive changes in 2026, with contract development organizations (CXO) gaining confidence from solid data, and new technologies like artificial intelligence and brain-machine interfaces opening new application scenarios [5] - The semiconductor sector, particularly in storage, is projected to continue its cycle, with local market trends favoring leading storage manufacturers and potential IPOs supporting capacity expansion [6]

Core Insights - The AI boom is expected to continue, with significant investments flowing into AI infrastructure, including data centers and chips [1][2] - Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC) are predicted to be the major beneficiaries of the ongoing AI spending [3] Nvidia - Nvidia has established itself as the leading provider of GPU chips for AI, holding a market share of 85% to 90% [5] - The company's revenue has surged by 1,000% over the past five years, driven by its dominance in the AI data center market [5] - Nvidia's next-generation architecture, Rubin, is in full production, and the company has a backlog of $500 billion extending through 2026 [7][8] - The stock's price-to-earnings ratio is currently 45, with analysts projecting a 36% annualized earnings growth over the long term [8] Taiwan Semiconductor Manufacturing Company (TSMC) - TSMC is the world's leading foundry with a market share of 72%, significantly ahead of its closest competitor [9][10] - The company is increasing its capital expenditures to $52 billion-$56 billion in 2026, up from $41 billion in 2025, indicating strong growth expectations [12] - Analysts forecast TSMC's earnings to grow nearly 30% annually over the next three to five years [12] - The stock trades at a price-to-earnings ratio of 30, which is considered a compelling valuation given its growth prospects [13]