Core Viewpoint - The electronic sector is leading the A-share market, with the electronic ETF (515260) showing strong performance, closing up 2.7% and achieving a premium rate of 0.93% at the end of the trading day, indicating strong buying interest [1] Group 1: Market Performance - The electronic sector received a net inflow of 30.511 billion, ranking first among all 31 Shenwan primary industries [2][3] - Major stocks in the electronic ETF, including Zhaoyi Innovation and Changdian Technology, attracted 4.538 billion and 3.181 billion respectively, topping the A-share inflow rankings [2][3] - Semiconductor leaders such as Changdian Technology, Zhaoyi Innovation, and Tongfu Microelectronics hit the daily limit, while Huazhong Microelectronics rose over 13% [4] Group 2: Industry Trends - TSMC's recent earnings report for Q4 2025 exceeded expectations, marking the seventh consecutive quarter of double-digit growth, and raised its 2026 capital expenditure guidance to 52-56 billion USD, reflecting strong and sustainable demand in the AI industry chain [5] - The U.S. government's recent imposition of a 25% tariff on specific semiconductors may create a stronger "accelerated replacement" window for domestic equipment amid increasing supply chain uncertainties [5] - The trend of "self-control and AI resonance" is expected to strengthen further in 2026, with a focus on domestic computing power and semiconductor equipment [5] Group 3: Investment Tools - The electronic ETF (515260) and its linked funds are designed to passively track the electronic 50 index, heavily investing in semiconductor and consumer electronics sectors, including AI chips, automotive electronics, and PCB [5] - The ETF serves as an efficient tool for investors to gain exposure to core assets in the electronic sector [5]

Core Insights - The rise of artificial intelligence (AI) is seen as a transformative technological leap, comparable to the internet revolution [2][3] - Billionaire investor Stanley Druckenmiller has divested his entire stake in Nvidia, a leading AI hardware company, and shifted his focus to Taiwan Semiconductor Manufacturing Company (TSMC) [4][12] Company Insights - Nvidia has a dominant position in the AI hardware market, with its GPUs accounting for over 90% of those deployed in enterprise data centers [5] - Despite its competitive advantages, Druckenmiller sold his Nvidia stake, possibly due to profit-taking and concerns about overhyped AI expectations [7][9] - TSMC has been a consistent investment for Druckenmiller, with purchases made in four of the last five quarters, driven by the demand for AI GPUs [12][13] - TSMC's growth is not solely dependent on AI, as it also manufactures CPUs and chips for various applications, providing a diversified revenue stream [15] Market Insights - Analysts estimate that AI could contribute $15.7 trillion to the global economy by 2030, indicating a significant market opportunity [3] - TSMC's stock has seen substantial growth, with a market cap exceeding $1 trillion, supported by the increasing demand for AI-related chips [12][13] - The forward price-to-earnings ratio for TSMC is currently at 25, reflecting a valuation that, while not as attractive as before, still presents a value proposition [16]

Group 1 - TSMC's Kumamoto Factory (Kumamoto Plant 1) is set to begin mass production by the end of 2024, with a second factory (Kumamoto Plant 2) under construction, although its construction has reportedly been halted [1] - The halt in construction of Kumamoto Plant 2 may be due to TSMC's consideration to produce more advanced products, specifically 2nm chips, in response to increasing demand for Physical AI applications [1][2] - TSMC's Chairman Wei Zhejia stated that the types of semiconductors and the mass production timeline for Kumamoto Plant 2 will depend on customer demand and market conditions [1] Group 2 - Originally, Kumamoto Plant 2 was planned to produce 6nm chips for applications such as autonomous driving, but reports indicate that the project has shifted focus to potentially producing 4nm chips instead [2] - The construction of Kumamoto Plant 2 was officially initiated in October 2025, but equipment was removed from the site around December 2025, indicating a significant pause in the project [2]

Core Insights - TSMC expects a nearly 30% increase in overall revenue in 2026 when calculated in USD [1] - The global "foundry 2.0" industry is projected to grow by 14% year-on-year in 2026, with TSMC's revenue reaching 35.9% in 2025 [1] Revenue Growth - TSMC's revenue growth in the "foundry 2.0" sector was 16% in 2025, while the company anticipates a 14% growth for the industry in 2026 [1] - AI accelerators contributed over 10% to TSMC's revenue in 2025, with a projected CAGR of nearly 60% from 2024 to 2029 [1] - TSMC forecasts a CAGR of nearly 25% for overall revenue in USD from 2024 to 2029 [1] Segment Contributions - Advanced packaging is expected to contribute approximately 8% to TSMC's total revenue in 2024, increasing to over 10% in 2025, and exceeding ten percentage points by 2026 [1] - Advanced packaging and mask manufacturing will account for 10-20% of TSMC's capital expenditures in 2026, higher than previous levels [1] Market Conditions - TSMC has not observed changes in customer behavior in the PC and mobile sectors due to the memory supply crisis, as high-value mobile chip supplies are less sensitive to memory price fluctuations [3] - The company has confirmed a reduction in 8-inch and 6-inch production capacity but will continue to support customers in these areas [3]

This story was originally published on Manufacturing Dive. To receive daily news and insights, subscribe to our free daily Manufacturing Dive newsletter. Dive Brief: Taiwan Semiconductor Manufacturing Co. ended 2025 with a net revenue of $122.4 billion, a 35.9% increase compared to last year, due to continued demand for artificial intelligence. Net revenue for TSMC’s fourth quarter increased 25.5% year over year to $33.7 billion, slightly higher than its guidance of $33.4 billion, CFO Jen-Chau Huang sai ...

U.S. Stock Market Factors to Watch Out on FridayThe frenzy around AI has sent Nvidia and other superstar stocks to dizzying heights, stirring criticism that their prices had shot too high. Nvidia rose 2.1 per cent on Thursday after TSMC’s Chief Financial Officer Wendell Huang said it’s seeing “continued strong demand” in an encouraging signal for the entire AI industry.TSMC’s stock that trades in the United States rose 4.4 per cent on Thursday. Wall Street steadied on Thursday as stocks related to artificia ...

Core Viewpoint - TSMC's recent financial report signifies not just growth but a transformative era driven by AI, marking the onset of the fourth industrial revolution [5][21]. Financial Performance - TSMC reported a net profit of NT$505.7 billion, exceeding expectations of NT$467 billion, with a year-on-year increase of 35% [7]. - The gross margin reached 62.3%, surpassing the anticipated ceiling of 60.6% [8]. - For Q1 2026, TSMC's revenue guidance is set between $34.6 billion and $35.8 billion, significantly above the expected $33.22 billion [15]. - The gross margin guidance for Q1 2026 is projected at 63%-65%, outpacing market expectations of 59.6% [16]. - Capital expenditures for 2026 are expected to reach $52 billion to $56 billion, far exceeding the previous year's $40.9 billion and market expectations of $46 billion [17]. AI and Technology Leadership - TSMC's advanced 3nm, 5nm, and 7nm processes contributed 77% of total revenue, with 3nm and 5nm alone accounting for 63% [12]. - The company anticipates a nearly 30% growth in revenue in 2026, surpassing the 25% market expectation, with a five-year compound annual growth rate (CAGR) of 25% starting in 2024 [24]. - TSMC has raised its CAGR forecast for AI accelerators from 45% to a range of 55%-59% for 2024-2029, indicating a robust growth trajectory [26]. Advanced Packaging Technologies - CoWoS (Chip-on-Wafer-on-Substrate) is TSMC's proprietary advanced packaging technology, with expected monthly production capacity reaching 115,000 pieces by the end of 2026 [30]. - The demand for CoWoS is so high that it has created an overflow capacity of approximately 15,000 pieces per month, benefiting other packaging companies [32]. - CoWoP (Chip-on-Wafer-on-PCB) is a revolutionary technology that bypasses the capacity constraints of ABF substrates, simplifying structure and reducing costs [37][38]. Global Expansion Strategy - TSMC is executing an unprecedented global factory expansion plan, with key sites in Taiwan, the USA, Japan, and Germany, to meet demand and strategically position itself in the geopolitical landscape [58][59][60][61]. - The company is establishing a 2nm core base in Hsinchu and Kaohsiung, which will serve as the heart of its operations [59]. Conclusion - TSMC is not merely a semiconductor company; it is a pivotal player in the evolution of technology and the AI revolution, shaping the future of the global digital economy [63].

Core Viewpoint - The U.S. stock market is experiencing a pre-market rally in technology stocks, with notable gains from major companies such as Micron Technology, AMD, and TSMC [1] Company Performance - Micron Technology saw an increase of over 3% in pre-market trading [1] - AMD experienced a rise of more than 2% [1] - TSMC recorded a gain of over 1% [1]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - The upward trend of the stock index remains unchanged, and the adjustment is expected to end in the first half of next week, followed by a resumption of the upward trend. Global funds are re - investing in the Chinese stock market, and the inflow of off - site funds continues, maintaining a capital - driven upward trend. The semiconductor sector is expected to take over from the commercial aerospace sector, with the high - prosperity of the semiconductor equipment sector indicated by TSMC's performance and capital expenditure plans [2][16]. Summary by Relevant Catalogs Stock Market and Index Trends - Policy aims for a slow - bull market, as shown by recent policy regulations. The satellite ETF declined significantly after commercial aerospace - related listed companies announced risks on Monday. The adjustment of the margin trading guarantee ratio led to a sharp decline in the CSI 500 index on Wednesday afternoon [4][7][10]. - TSMC's Q4 performance was strong, with revenue of about $337.3 billion, a 20.5% year - on - year increase, and a net profit up 35% year - on - year and 11.82% quarter - on - quarter. It expects Q1 revenue to increase by 40% year - on - year to $358 billion in 2026, and its dollar revenue to grow by nearly 30%. Capital expenditure is estimated to be $520 - 560 billion, a 27% - 37% increase from 2025, indicating a high - growth trend in the semiconductor sector [13]. - Global funds are re - increasing their investment in the Chinese stock market. Foreign capital is shifting from passive inflows to an expected return of active funds. The RMB is appreciating, accelerating the return of overseas - hoarded dollars of foreign trade enterprises. The inflow of off - site funds continues, and the upward trend driven by market funds remains unchanged. The adjustment is expected to end in the first half of next week, and the stock index will resume its upward trend. Long - term multi - orders for stock index futures should be held, and the CSI 500 and CSI 1000 indices have stronger offensive capabilities. For stock index options, consider buying deep - out - of - the - money call options on the CSI 1000 index with a long - term maturity [16][17]. Macroeconomic Indicators in China - In December, the year - on - year growth rate of the core CPI was 1.2%, and the real interest rate has been negative for consecutive periods, with a 0.2% month - on - month increase. In December, the month - on - month increase of the industrial producer purchase price index was 0.4%, indicating that the Chinese economy is moving towards re - inflation [18][21]. - The balance of margin trading is approaching 2.7 trillion yuan, reaching a new high. In December, there were 2.59 million new A - share accounts opened [23]. - In December, China's export value reached $357.7 billion, a new record, with a year - on - year growth rate of 6.6%, showing export resilience [26]. - In November, the monthly value of manufacturing fixed - asset investment was 2.94 trillion yuan, with a year - on - year growth rate of - 4.4%, indicating a slowdown in manufacturing investment [29]. - In November, the monthly value of infrastructure investment was 2.08 trillion yuan, with a year - on - year growth rate of - 11.9%, indicating a slowdown in infrastructure investment and reflecting local fiscal difficulties [32]. - In November, the year - on - year growth rate of real estate development investment was - 31.3%, reaching a new low [35]. - In November, the monthly value of total social consumer goods retail sales was 4.38 trillion yuan, with a year - on - year growth rate of 1.3%. In the context of expected decline in exports and slowdown in investment, consumption has become the main driving force for economic growth [38]. US Macroeconomic Indicators - The US unemployment rate has risen to 4.6%, and the employment boom has declined, with a rapid increase in the number of voluntary lay - offs by US enterprises [41][44]. - In November, the total retail and food sales in the US increased by 0.6% month - on - month, which may be related to seasonal factors, but overall US consumption has weakened [47]. - In December, the price index of the US manufacturing PMI and the service - sector PMI continued to expand, indicating that the US is moving towards stagflation [50]. International Market Impact - The Bank of Japan raised interest rates by 25 basis points to 0.75%, and the yield of the 10 - year Japanese government bond soared to 2.18%. The large - scale return of yen carry - trade will have a negative impact on US bonds, US stocks, and Chinese bonds [53]. - The accelerating appreciation of the RMB is conducive to the accelerated inflow of international capital into China [56].

Core Viewpoint - TSMC's recent earnings report exceeded market expectations, igniting a new wave of AI-themed market enthusiasm, with a record capital expenditure plan of up to $56 billion by 2026, boosting confidence across the semiconductor industry [1] Group 1: Impressive Earnings - TSMC's Q4 2025 revenue reached approximately $33.7 billion, with a net profit of $16 billion, showing significant year-on-year growth [2] - The gross margin increased to 62.3%, indicating strong pricing power and technological advantages in advanced processes [2] - High-performance computing revenue, including CPU, GPU, and AI acceleration chips, grew significantly, accounting for 55% of total revenue, surpassing smartphone business for the first time [2] - The 3nm and 5nm processes contributed over 60% of revenue, demonstrating the financial returns from technological leadership [2] Group 2: Bold Future Investments - TSMC provided an optimistic revenue growth forecast of nearly 30% for 2026 and raised its capital expenditure plan to $52 billion to $56 billion, a nearly 30% increase from the previous year [3] - This investment decision was made after extensive discussions with major clients like NVIDIA, Apple, and AMD, aimed at addressing confirmed long-term structural demand driven by AI [3] - A significant portion of the capital expenditure (10%-20%) will be allocated to advanced packaging technology to enhance AI chip production capacity [3] Group 3: Industry Chain Revaluation - TSMC's positive outlook has triggered a value reassessment across the semiconductor supply chain, particularly benefiting semiconductor equipment manufacturers [4] - ASML, the sole supplier of extreme ultraviolet lithography machines, saw its market value soar past $500 billion following TSMC's report, becoming one of Europe's highest-valued tech companies [4] - The optimistic sentiment spread to the broader chip sector, with stocks of companies like NVIDIA, AMD, and Micron Technologies rising [4] Group 4: Evolving AI Demand - The underlying logic supporting TSMC and the industry's confidence is the qualitative shift in AI demand, moving from model training to inference needs driven by widespread application [5][6] - As AI transitions from experimental phases to various industries, the demand for computing power is expected to grow exponentially, indicating a more sustainable demand base [6] Group 5: Challenges Ahead - Despite the optimism, there are cautious voices regarding the sustainability of high profitability and capital returns amid geopolitical pressures and cyclical risks [7] - TSMC's $56 billion capital expenditure requires sustained high customer orders over several years to avoid potential overcapacity risks [7] - The high costs of building fabs in regions like the U.S., Japan, and Europe compared to Taiwan pose long-term profitability challenges [7]