J P M O R G A N North America Equity Research 16 May 2025 Semiconductors/Semicap TMC Conference Summary: Sustained Strength in AI/ Datacenter Demand; Broad-based Semi Cyclical Improvements; Solid WFE Trends..No Signs Yet Of Potential Tariff/Trade Headwinds This week, we hosted 13 semiconductor and semiconductor capital equipment companies at our 53rd annual Global Technology, Media, and Communications Conference. Overall we came away with a view that the industry is in the early stages of the semi up-cycle ...

May 16, 2025 07:35 AM GMT 半导体 AI眼镜⸺聚焦亚洲供应链 有何调整 如今，生成式AI驱动眼镜2.0产品崛起：EssilorLuxottica与Meta合作开发的的雷 朋(Ray-Ban)智能眼镜自2023年9月推出第二代以来已售出超过200万副，部分得益 于其内置的前沿AI大语言模型(LLM) Llama 2。Meta表示，其训练的Llama 3大模型 将在今年晚些时候推动Ray-Ban Meta眼镜进行升级。谷歌也在4月推出了Android XR，并展示了基于Gemini AI 的轻量化 XR 眼镜。值得注意的是，根据我们的供应 链调查，谷歌在4月所展示的AI+XR眼镜由Avegant制造，采用了LCOS+光波导显示 方案（LCOS芯片由Raontech提供）。奇景光电拥有强大的LCoS制造能力，但其是 否会成为量产合作方尚待观察。 哪些半导体零部件有望成为"眼镜2.0"的关键抓手？ 我们认为系统级芯片 （SoC）和显示半导体可能是关键驱动因素。 SoC作为与AI模型交互的大脑，负责：1）数据运算； 2）将处理后的请求传输到配 对的智能手机，并进行云端的AI推理； 3）将AI大模 ...

May 18, 2025 09:04 PM GMT Investor Presentation | Asia Pacific M Foundation What's Next After the Tariff Truce? US-China Tariff Cut: Sooner and Deeper (12 May 2025) M Less Prohibitive, Yet Still Elevated Tariffs Morgan Stanley Asia Limited Robin Xing Chief China Economist Robin.Xing@morganstanley.com +852 2848-6511 Zhipeng Cai Economist Zhipeng.Cai@morganstanley.com +852 2239-7820 For important disclosures, refer to the Disclosure Section, located at the end of this report. 20% 20% 34% tariff hikes by 90 da ...

May 19, 2025 04:20 AM GMT China Economics | Asia Pacific Stronger 2Q GDP Tracking on Tariff Truce; Deflation Still Lingers Key Takeaways Still decent production, weaker-than-expected domestic demand: April production moderated to 6.1%Y (Consensus: 5.7%Y; 6.5%Y in 1Q) on accelerated export re-rerouting. On the other hand, both FAI and retail sales softened more than the market expected, due to: (1) tariff shock on sentiment; (2) a modest payback of front-loaded infrastructure boost in 1Q and marginally weake ...

Investment Rating - The stock rating for JD Health International Inc. is Underweight [5] - The industry view is Attractive [5] Core Insights - JD Health International Inc. maintained its 2025 targets despite a strong performance in Q1 2025, aiming for mid-teens revenue growth and flat operating profit [3][8] - The company expects over 20% growth in drug sales, mid-teens growth in nutritional products, and high single-digit growth in medical devices for the full year 2025 [3] - The gross profit margin (GPM) is anticipated to improve due to supply chain management efficiencies and increased advertising income, particularly in nutritional products [3] - JD Health's strategic focus includes enhancing B2C drug sales, especially for originator drugs, which currently represent approximately 30% of total drug sales [4] - The company plans to increase offline investments through greenfield projects rather than large-scale mergers and acquisitions [4] Financial Performance - In Q1 2025, JD Health reported revenue of RMB 16.6 billion, reflecting a year-over-year increase of 25.5%, which was 11% above consensus estimates [8] - The adjusted operating profit grew by 73% year-over-year to RMB 1.31 billion, with an adjusted operating profit margin of 7.9%, up 2.2 percentage points year-over-year [8] - Adjusted net profit rose by 47.7% year-over-year to RMB 1.77 billion, with an adjusted net margin of 10.6% [8]

Investment Rating - The report maintains an "Overweight" rating for Netflix Inc (NFLX) with a price target of $1,150 by December 2025 [5][11]. Core Insights - The report highlights that NFLX shares have outperformed the S&P 500, driven by its defensive subscription model and streaming leadership amid macroeconomic uncertainties [1]. - Expectations for NFLX's upcoming Upfronts include updated Ad Tier Monthly Active Users (MAUs) projected to exceed 100 million, expansion of the Netflix Ads Suite internationally, and a focus on key live/sports content [1][15]. - The report projects significant growth in advertising revenue, estimating $3.0 billion in 2025, more than doubling from $1.4 billion in 2024 [1][15]. Financial Projections - Revenue growth is projected at +15.1% for 2025, with subscriber growth of +8.5% and an increase in Average Revenue per Member (ARM) of +2.1% [16]. - The report anticipates average growth rates of +13% for foreign exchange-neutral (FXN) revenue, +22% for operating income, +24% for GAAP EPS, and +30% for free cash flow (FCF) in 2025 and 2026 [2]. - The 2025 content slate is expected to drive subscriber growth, with key releases including "Squid Game S3" and several returning series [16]. Market Position and Trends - NFLX is positioned as a key beneficiary of the ongoing disruption in linear TV, with a strong global subscriber base of over 300 million [10]. - The report notes that NFLX's ad-supported tier is expected to expand its subscriber base while generating high-margin incremental revenue [10]. - The streaming industry is rationalizing, and NFLX is expected to benefit from the proliferation of internet-connected devices and consumer preference for on-demand video [10]. Valuation Metrics - The December 2025 price target of $1,150 is based on approximately 38 times the estimated 2026 GAAP EPS of $30.46, which is a premium compared to mega-cap tech peers [11]. - The report indicates that NFLX's valuation is justified by its top-line growth and faster bottom-line growth compared to peers [11].

Investment Rating - The report maintains a cautious view on the memory industry, indicating a W-shaped cycle rather than a V-shaped recovery [7][9]. Core Insights - The memory cycle is currently demand-led, characterized by stockpiling in the first half of the year and a payback period in the second half [1][2]. - Despite a strong recovery in memory stocks, the real demand outlook is deteriorating, particularly in the second half of 2025, with AI server strength unlikely to offset growth contraction [2][9]. - Pricing dynamics for DRAM and NAND are expected to show initial strength in the second quarter of 2025 but are likely to decline in the latter half of the year [3][10]. Summary by Sections Memory Pricing - DRAM contract prices are tracking +5% in 2Q25, with DDR4 prices up 20% due to stockpiling ahead of year-end production phase-outs [3][10]. - NAND contracts are tracking +6% in 2Q25, +4% in 3Q25, and likely flat by 4Q25, assuming production cuts remain in effect [3][20]. Market Dynamics - HBM consumption has been reduced to 15.5 billion Gb from 18 billion Gb in 2025 due to inventory excesses and adjustments in product demand [4][27]. - The report anticipates a potential shortfall of 4 billion Gb in HBM supply for 2025 if Samsung cannot secure HBM4 orders in the second half of the year [4][30]. Stock Implications - The report suggests that memory stocks will continue to trade within a range, with DRAM appearing toppy after extreme volatility [5][9]. - Samsung is currently out of favor but is priced at cycle trough multiples, while Hynix is favored for its HBM leadership and is priced at a premium [5][31]. Tactical Considerations - The report favors HBM over commodity memory, highlighting robust AI demand as a positive factor [31][32]. - For DRAM, the report prefers stocks like Winbond and GigaDevice, while remaining cautious about overall pricing trends [33][34].

Investment Rating - The report maintains an "In-Line" industry view for the AI supply chain sector [6]. Core Insights - There are no cuts to NVIDIA's CoWoS-L booking, with a forecast of 390k units for 2025, despite speculation of reductions to 340-350k units [3][11]. - The newly announced AI company Humain in Saudi Arabia has a project size of US$10 billion to deploy 500 megawatts of AI compute capacity over five years, with NVIDIA's GB300 Grace Blackwell AI supercomputer being a key component [2]. - The report anticipates strong demand for NVIDIA's chips, with expected consumption of 160k CoWoS-L in 1H25 and over 100k in 3Q25, while assembly issues remain a concern [3][19]. Summary by Sections AI Supply Chain Overview - The AI supply chain is experiencing robust demand, particularly for NVIDIA's CoWoS-L chips, with no expected cuts in bookings [3][11]. - The report highlights the importance of assembly capabilities as a potential bottleneck in meeting demand [19]. Market Developments - The establishment of Humain in Saudi Arabia signifies a strategic investment in AI infrastructure, with a total project size of US$10 billion [2]. - The upcoming Computex event is expected to showcase significant developments, although the launch of NVIDIA/MediaTek's WoA AI PC chip may be delayed due to software support requirements [5][31]. Chip Production and Forecasts - TSMC is projected to produce 5.1 million chips in 2025, with a breakdown of shipments expected for various NVIDIA products [9][19]. - The report outlines a detailed forecast for CoWoS bookings, with specific allocations for NVIDIA, Broadcom, and AMD, indicating a strong growth trajectory for AI semiconductors [12][14]. Capital Expenditure Trends - The report notes that US AI capital expenditure remains strong, with expectations of continued investment from major cloud service providers, potentially reaching around US$160 billion in AI server TAM for 2025 [36]. - The top four US hyperscalers are forecasted to generate US$550 billion in operating cash flow in 2025, supporting ongoing investments in AI infrastructure [36][45].

Investment Rating - The industry investment rating is Attractive [4]. Core Insights - The financial system cycle in China is showing signs of bottoming, supported by government bond issuance and a review of local government financing [2][4]. - Total Social Financing (TSF) growth rebounded to 8.7% year-on-year in April 2025, driven primarily by government bonds, which saw a growth of 20.9% year-on-year [7][10]. - Corporate bond net issuance increased year-on-year in April 2025, reversing a decline from the previous year due to stricter controls on Local Government Financing Vehicles (LGFVs) [7][10]. Summary by Sections TSF and Loan Growth - TSF growth is expected to moderate in the latter half of 2025 due to reduced government bond support and more rational loan extensions by banks [2]. - New TSF in April 2025 was Rmb1.16 trillion, a significant increase from a negative figure in April 2024 [7]. - RMB loans recorded a growth of 7.1% year-on-year in April 2025, indicating stability since January [7]. Government and Corporate Bonds - Year-to-date government bonds added Rmb4.85 trillion, up Rmb3.58 trillion year-on-year, reflecting a recovery in issuance [10]. - A broad-based review of the quality of projects supported by special local government bonds led to a slowdown in issuance in the first half of 2024, but a resumption of normal issuance is expected for 2025 [7][10]. Deposits and Financial Stability - Household deposit growth remained high at 10.7% year-on-year, while corporate deposit growth recovered to 2.1% year-on-year in April 2025, indicating a stabilizing financial environment [7][10].

Investment Rating - The report does not explicitly provide an investment rating for the clean energy sector, but it indicates a generally positive outlook for power demand and potential positive revisions based on upcoming policy clarity [1][7]. Core Insights - Overall power demand trends remain solid post-DeepSeek, with companies like GEV and ENR reporting strong orders and visibility, supported by capital expenditure guidance from hyperscalers [2]. - Recent slowdowns in renewables order activity are attributed to tariff and policy uncertainties, particularly affecting energy storage projects [1][3]. - Anticipation of clarity regarding the Inflation Reduction Act (IRA) could positively influence investor sentiment and stock ratings as legislative discussions progress [7]. Summary by Sections Power Demand - Power demand is robust, with utility-scale product companies and developers reporting solid pipelines, although residential demand has weakened, as seen in the results from ENPH and GNRC [2]. Tariff Uncertainty - Companies have adjusted guidance based on current tariffs, with a universal 10% and a China-specific 145% tariff impacting outlooks. FSLR has updated its guidance to reflect potential punitive tariffs, while FLNC has seen significant negative revisions due to project delays [3][6]. Upcoming Events - Key upcoming events include a tax equity market update webinar on May 12, a potential Ways and Means Committee update on May 13, and participation in the American Clean Power Conference on May 21 [8][10][12].