Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - The report highlights that the electric vehicle (EV) battery sector is expected to see an optimization in its structure, leading to a potential recovery in profitability. Factors contributing to this include a long-term significant correction in the lithium battery sector, a potential turning point in the oversupply of lithium batteries, and a decrease in lithium carbonate prices which may lower battery costs and stimulate downstream demand. Additionally, advancements in fast charging technology and new materials are expected to enhance the penetration rate of EVs [2][3] - In the power equipment and energy storage sectors, 2025 is anticipated to be a significant year for grid investment, with the grid becoming a bottleneck for renewable energy development. The report suggests that the demand for power equipment will increase due to rising electricity needs from emerging industries like AI, and the rapid development of renewable energy will drive the construction and upgrade of grids globally [2][3] - The energy storage market is projected to maintain high growth in 2025, with improvements in the electricity market and auxiliary service market expected to enhance the commercial viability of large-scale energy storage. The report also notes that the demand for household energy storage is likely to rebound as inventory levels decrease and summer electricity demand rises [3] - The photovoltaic (PV) sector is experiencing sustained high demand in Europe, with domestic ground power station demand remaining strong. The report indicates that cost reductions in the supply chain are expected to accelerate global PV market demand, with new technologies like TOPCON and HJT entering mass production [3][15] Summary by Sections New Energy Vehicles - The report indicates that battery-grade cobalt sulfate prices increased by 0.5%, and battery-grade lithium carbonate prices rose by 2.4% [9] - In June 2025, the installed capacity of power batteries reached 58.2 GWh, marking a year-on-year increase of 45.9% and a month-on-month increase of 7.6% [12] - In June 2025, the sales of new energy vehicles reached 1.329 million units, a year-on-year increase of 26.7% [14] Power Equipment and Energy Storage - The report emphasizes that 2025 is expected to be a significant year for grid investment, with a favorable outlook for the power equipment sector due to increased electricity demand from emerging industries and the need for grid upgrades [2][3] Photovoltaic Industry - The report notes that the price of polysilicon increased by 5.7%, indicating a positive trend in the PV supply chain [15][16] Wind Power Industry - The report states that from January to May 2025, the newly installed wind power capacity reached 46.28 GW, representing a year-on-year increase of 134.2% [17]

Investment Rating - The industry investment rating is "Cautious" based on the current market conditions and projections for the petrochemical sector [127]. Core Insights - The report highlights a weak demand for polyester end products, leading to a decline in prices and profitability [1]. - The Brent crude oil average price for the week ending July 18, 2025, was $69.09 per barrel, reflecting a decrease of 0.91% from the previous week [1][2]. - Domestic and international refining project price differentials are tracked, with domestic projects showing a price differential of 2462.77 CNY/ton, down 1.21% week-on-week, while international projects increased by 3.84% to 1100.64 CNY/ton [2]. Refining Sector Summary - The report discusses the impact of U.S. tariffs on Brazil and OPEC's downward revision of global oil demand growth forecasts, which raised concerns about future demand [1]. - International oil prices experienced fluctuations, with Brent and WTI prices at $69.28 and $67.34 per barrel, respectively, as of July 18, 2025 [1]. - Domestic refined oil prices have generally declined, while Southeast Asian refined oil prices remain relatively stable [1]. Chemical Sector Summary - The report notes a weak performance in chemical product prices due to anticipated supply increases, with polyolefins showing slight price declines [1]. - Specific chemical products such as EVA and styrene have shown stable yet declining prices, while pure benzene prices have increased slightly [1]. Polyester Sector Summary - The polyester sector is experiencing a downward shift in price levels, with PX market supply remaining tight but raw material support weakening [1]. - The average price for PTA is reported at 4732.14 CNY/ton, with an average loss of 253.97 CNY/ton in profitability [1][91]. - The report indicates that the demand for polyester products remains weak, with textile market orders being low [1]. Performance of Major Refining Companies - The report tracks the stock performance of six major refining companies, with notable weekly changes including Rongsheng Petrochemical (+2.33%) and Xin Fengming (+2.11%) [1][114]. - Over the past month, Rongsheng Petrochemical has increased by 5.28%, while Hengli Petrochemical has decreased by 2.81% [1][114].

Investment Rating - The investment rating for the steel industry is "Positive" [2] Core Viewpoints - The report indicates that the steel sector is experiencing a value reassessment due to the implementation of anti-involution policies, suggesting a turning point has been reached [2][3] - Despite facing supply-demand contradictions and overall profit decline, the steel demand is expected to stabilize or slightly increase due to supportive policies in real estate, infrastructure investment, and manufacturing [3][5] - The report highlights that the profitability of ordinary steel is currently favorable, and under the backdrop of anti-involution, profit margins may continue to expand, leading to potential performance improvements for steel companies [3][5] Weekly Market Performance - The steel sector rose by 0.45%, underperforming the broader market, which saw the CSI 300 index increase by 1.09% [10] - Among the sub-sectors, long products increased by 2.53%, while special steel decreased by 0.02% [10][13] Key Data Supply - As of July 18, the average daily pig iron output was 2.4244 million tons, a week-on-week increase of 2.63 thousand tons [26] - The capacity utilization rate for blast furnaces was 90.9%, up by 0.99 percentage points week-on-week [26] - The total output of five major steel products was 7.562 million tons, a decrease of 0.63% week-on-week [26] Demand - The consumption of five major steel products was 8.701 million tons, down by 0.34% week-on-week [37] - The transaction volume of construction steel by mainstream traders was 94 thousand tons, a decrease of 5.59% week-on-week [37] Inventory - Social inventory of five major steel products increased to 9.221 million tons, up by 0.89% week-on-week [45] - Factory inventory decreased to 4.156 million tons, down by 2.35% week-on-week [45] Prices & Profits - The comprehensive index for ordinary steel was 3,462.3 CNY/ton, an increase of 0.99% week-on-week [51] - The profit for rebar steel was 171 CNY/ton, down by 12.76% week-on-week [60] - The average cost of pig iron was 2,228 CNY/ton, an increase of 55 CNY/ton week-on-week [60] Investment Suggestions - The report suggests focusing on companies with advanced equipment and strong environmental standards, as well as those benefiting from the new energy cycle and high-margin special steel enterprises [3][5]

Investment Rating - The investment rating for the environmental sector is "Positive" [2] Core Viewpoints - The report highlights the ongoing promotion of a dual pricing system for heating, indicating that the reform of heating prices is continuously advancing. The centralized heating area in China has shown a growth trend, increasing from 8.309 billion square meters in 2017 to 11.549 billion square meters in 2023, with a compound annual growth rate of 5.6% [3][14] - The report emphasizes that the heating pricing mechanism is expected to be further streamlined with policy support, as local governments have initiated price adjustment policies in response to rising operational pressures on heating enterprises [3][24][25] Summary by Sections Market Performance - As of July 18, the environmental sector declined by 0.49%, underperforming the broader market, which saw the Shanghai Composite Index rise by 0.69% to 3534.48 [3][9] Industry Dynamics - The Central Urban Work Conference held on July 14-15 emphasized building green and low-carbon cities and improving urban biodiversity [29] - New national ecological standards for air quality monitoring were approved, set to be implemented on August 1, 2025 [31] Special Topic: Heating Price Reform - The report details the dual pricing system for heating, which combines a basic heating price and a metered heating price. The basic price can be set between 30%-60% of the total heating price, with encouragement for a 30% ratio in practice [22][24] - The total heating supply through hot water has increased from 2.765 billion gigajoules in 2014 to 3.63 billion gigajoules in 2023, with a compound annual growth rate of approximately 3.1% [17][19] Investment Recommendations - The report suggests that the "14th Five-Year Plan" will maintain high demand for energy conservation and environmental protection, with a focus on quality operational assets in the water and waste incineration sectors. Key recommendations include companies like Hanlan Environment, Xingrong Environment, and Hongcheng Environment, with additional attention to companies such as Wangneng Environment and Junxin Co [3][46]

Report Industry Investment Rating No information regarding the industry investment rating is provided in the given content. Core Viewpoints of the Report - In the volatile market, credit bonds outperformed interest - rate bonds. Interest - rate bond yields slightly declined, while credit bond yields dropped more significantly. Credit spreads mostly decreased slightly, with the 3Y variety showing a relatively larger decline [2][5]. - Urban investment bond spreads generally compressed slightly. Spreads of external ratings AAA, AA +, and AA platforms decreased by 1BP respectively. Spreads also declined when classified by administrative levels [2][9][15]. - Most industrial bond spreads decreased. Central and state - owned enterprise real - estate bond spreads declined, mixed - ownership real - estate bond spreads decreased, and private - enterprise real - estate bond spreads increased. Spreads of coal, steel, and chemical bonds also decreased [2][18]. - The yields of secondary and perpetual bonds followed the decline of certificates of deposit, with the short - to - medium - term performing relatively strongly [2][21]. - The excess spreads of 5Y industrial bonds and 3Y urban investment bonds slightly decreased [2][24]. Summary by Directory 1. Credit Bonds Outperformed Interest - Rate Bonds in the Volatile Market - Interest - rate bond yields slightly declined. The yields of 1Y, 5Y, and 7Y China Development Bank bonds decreased by 2BP, 1BP, and 1BP respectively, while the 3Y and 10Y remained flat [2][5]. - Credit bond yields dropped more significantly. The yields of 1Y, 3Y, 5Y, 7Y, and 10Y credit bonds decreased to varying degrees [2][5]. - Credit spreads mostly decreased slightly, with the 3Y variety showing a relatively larger decline. Rating spreads and term spreads showed obvious differentiation [5]. 2. Urban Investment Bond Spreads Slightly Compressed - By external ratings, the spreads of AAA, AA +, and AA platforms decreased by 1BP respectively, with different changes in different regions [9]. - By administrative levels, the spreads of provincial, municipal, and district - level platforms decreased by 2BP, 1BP, and 1BP respectively, with different changes in different regions [15]. 3. Most Industrial Bond Spreads Decreased - Real - estate bonds: Central and state - owned enterprise real - estate bond spreads decreased by 2 - 4BP, mixed - ownership real - estate bond spreads decreased by 1BP, and private - enterprise real - estate bond spreads increased by 7BP [2][18]. - Other industrial bonds: The spreads of AAA, AA +, and AA coal bonds decreased by 2BP, 2BP, and 1BP respectively; the spreads of AAA and AA + steel bonds decreased by 2BP and 4BP respectively; and the spreads of all levels of chemical bonds decreased by 3BP [2][18]. 4. The Yields of Secondary and Perpetual Bonds Followed the Decline of Certificates of Deposit, with the Short - to - Medium - Term Performing Relatively Strongly - 1Y secondary and perpetual bonds: Yields decreased by 2 - 3BP, and spreads compressed by 1 - 2BP [21]. - 3Y secondary and perpetual bonds: The yields of secondary capital bonds decreased by 2BP, and spreads decreased by 2 - 3BP; the yields of perpetual bonds decreased by 3 - 4BP, and spreads decreased by 3 - 4BP [21]. - 5Y secondary and perpetual bonds: The yields of secondary capital bonds decreased by 1 - 2BP, and spreads compressed by 0 - 1BP; the yields of AA + and above perpetual bonds decreased by 1BP, and spreads increased by 1BP, while the yields of AA perpetual bonds decreased by 4BP, and spreads decreased by 2BP [21]. 5. The Excess Spreads of 5Y Industrial Bonds and 3Y Urban Investment Bonds Slightly Decreased - AAA 3Y industrial perpetual bond excess spreads remained at 3.82BP, at the 1.32% quantile since 2015; 5Y industrial perpetual bond excess spreads decreased by 0.86BP to 7.65BP, at the 4.18% quantile since 2015 [24]. - Urban investment AAA 3Y perpetual bond excess spreads decreased by 0.65BP to 3.75BP, at the 0.29% quantile; urban investment AAA 5Y perpetual bond excess spreads increased by 0.09BP to 10.21BP, at the 10.93% quantile [24]. 6. Credit Spread Database Compilation Instructions - Market - wide credit spreads, commercial bank secondary and perpetual spreads, and industrial/urban investment perpetual bond credit spreads are calculated based on ChinaBond medium - and short - term notes and ChinaBond perpetual bond data. Historical quantiles are since the beginning of 2015 [28]. - Industrial and urban investment bond credit spreads are compiled and statistically analyzed by Cinda Securities R & D Center, with historical quantiles since the beginning of 2015 [28]. - Specific calculation methods and sample selection criteria are provided, including how to calculate spreads, which samples to select, and which samples to exclude [31].

Investment Rating - The report does not provide a specific investment rating for the industry [2] Core Insights - The People's Bank of China, along with the Financial Regulatory Administration and the China Securities Regulatory Commission, issued the "Green Finance Support Project Directory (2025 Edition)" to enhance green finance tools for environmental improvement and sustainable development [3][11] - The UK government announced on July 15 that it would no longer pursue its sustainable finance taxonomy, indicating a shift in focus towards other policies [3][17] Summary by Sections Domestic Developments - The issuance of the "Green Finance Support Project Directory (2025 Edition)" aims to align with green development goals and enhance the green finance system [11] - Changzhou has launched an action plan to promote ESG system construction, targeting a 60% disclosure rate for listed companies by 2027 [12] - Hainan's low-carbon island construction plan aims for carbon peak by 2030 and carbon neutrality by 2060 [13] - Shandong's zero-carbon park construction plan emphasizes high standards and gradual implementation [14] - Fujian has issued trial regulations for forestry carbon credits [15] - Guizhou is organizing applications for national-level zero-carbon parks [16] ESG Financial Products Tracking - As of July 19, 2025, China has issued 3,631 ESG bonds with a total outstanding amount of 5.59 trillion RMB, where green bonds account for 61.80% [4][28] - The market has 906 existing ESG public funds with a total net asset value of 10,418.17 billion RMB, with ESG strategy products making up 51.78% [4][34] - There are 994 existing ESG bank wealth management products, with pure ESG products constituting 55.53% [4][39] Index Tracking - As of July 18, 2025, major ESG indices have shown positive performance, with the CSI 300 ESG index increasing by 0.21% and the Shenzhen ESG 300 index rising by 1.14% [5][40] Expert Opinions - The report highlights the acceleration of ESG policy development in China, emphasizing the need for systematic planning, international cooperation, and innovative thinking to enhance ESG practices [6][41]

Investment Rating - The industry investment rating is "Positive" [2] Core Views - The report highlights that the new consumption adjustments are in place, and the valuation of the export chain is expected to rise [2] - The report emphasizes the recovery of pulp prices and the potential for price stabilization in the paper industry, suggesting a focus on companies with integrated pulp and paper operations [2][3] - The report notes robust overseas demand and anticipates a strong replenishment in Q3, particularly benefiting companies with established overseas production capabilities [2][3] - The new tobacco sector is seeing positive developments with Juul receiving FDA authorization, which may accelerate compliance processes [2][3] - The jewelry sector is expected to see a recovery in performance, with companies like Lai Shen Tong Ling forecasting a return to profitability [2][3] - The electric two-wheeler market is showing strong sales trends, with companies like Yadi maintaining good sales momentum [2][3] - The cross-border e-commerce sector is thriving, with Amazon's Prime Day achieving significant sales growth [2][3] - The IP retail sector, represented by Pop Mart, is experiencing substantial profit growth, driven by brand recognition and global sales [2][3] - The mother and baby industry is expected to benefit from policy catalysts, with companies like Ai Ying Shi showing positive growth [2][3] - The report indicates that the home furnishing sector is under pressure but may benefit from upcoming consumption stimulus policies [2][3] - The packaging industry is facing profitability challenges, but consolidation and efficiency improvements may lead to recovery [2][3] - The tools sector is entering a growth phase, with companies like Ju Xing Technology securing significant contracts [2][3] Summary by Sections Pulp and Paper - Pulp supply disruptions continue, with price increases expected as the market stabilizes [2] - Companies like Tai Yang Paper and Xian He Co. are recommended for their profit improvement potential [2][3] Exports - Overseas demand remains strong, with expectations for Q3 replenishment [2] - Companies with overseas production capabilities are likely to see order recovery [2][3] New Tobacco - Juul's FDA authorization is a significant positive development for the sector [2] - Companies like Smoore are highlighted for their long-term confidence [2][3] Jewelry - Lai Shen Tong Ling forecasts a return to profitability, indicating a recovery in the sector [2][3] Electric Two-Wheelers - Strong sales trends reported for companies like Yadi and Ninebot [2][3] Cross-Border E-Commerce - Amazon's Prime Day achieved a GMV of $24.1 billion, a 30.3% increase year-on-year [2][3] IP Retail - Pop Mart expects significant profit growth, driven by brand recognition and global sales [2][3] Mother and Baby - Ai Ying Shi shows positive growth, with expectations for continued performance improvement [2][3] Home Furnishing - The sector is under pressure but may benefit from upcoming consumption stimulus policies [2][3] Packaging - Profitability challenges persist, but consolidation may lead to recovery [2][3] Tools - Ju Xing Technology secures significant contracts, indicating growth potential [2][3]

Quantitative Models and Construction Methods 1. Model Name: Continuous Hedging Strategy - **Model Construction Idea**: This strategy is based on the convergence of basis in stock index futures and optimizes hedging by continuously rolling over contracts[47] - **Model Construction Process**: - **Backtesting Period**: From July 22, 2022, to July 18, 2025[48] - **Spot Side**: Hold the total return index of the corresponding underlying index[48] - **Futures Side**: Use 70% of the funds for the spot side and the remaining 30% for shorting futures contracts with the same nominal principal[48] - **Rebalancing Rules**: Continuously hold quarterly/monthly contracts until the remaining days to maturity are less than 2, then roll over to the next contract at the closing price[48] - **Assumptions**: No transaction fees, impact costs, or indivisibility of futures contracts are considered[48] 2. Model Name: Minimum Discount Hedging Strategy - **Model Construction Idea**: This strategy selects futures contracts with the smallest annualized basis discount to optimize hedging performance[49] - **Model Construction Process**: - **Backtesting Period**: From July 22, 2022, to July 18, 2025[49] - **Spot Side**: Hold the total return index of the corresponding underlying index[49] - **Futures Side**: Use 70% of the funds for the spot side and the remaining 30% for shorting futures contracts with the same nominal principal[49] - **Rebalancing Rules**: Calculate the annualized basis discount for all tradable futures contracts and select the one with the smallest discount. Contracts are held for 8 trading days or until the remaining days to maturity are less than 8[49] - **Assumptions**: No transaction fees, impact costs, or indivisibility of futures contracts are considered[49] --- Model Backtesting Results 1. Continuous Hedging Strategy - **IC (CSI 500 Futures)**: - Annualized Return: -2.86% (monthly), -2.06% (quarterly)[51] - Volatility: 3.86% (monthly), 4.75% (quarterly)[51] - Maximum Drawdown: -8.40% (monthly), -8.34% (quarterly)[51] - Net Value: 0.9173 (monthly), 0.9400 (quarterly)[51] - Annual Turnover: 12 (monthly), 4 (quarterly)[51] - **IF (CSI 300 Futures)**: - Annualized Return: 0.50% (monthly), 0.75% (quarterly)[56] - Volatility: 3.00% (monthly), 3.35% (quarterly)[56] - Maximum Drawdown: -3.95% (monthly), -4.03% (quarterly)[56] - Net Value: 1.0149 (monthly), 1.0225 (quarterly)[56] - Annual Turnover: 12 (monthly), 4 (quarterly)[56] - **IH (SSE 50 Futures)**: - Annualized Return: 1.04% (monthly), 1.99% (quarterly)[60] - Volatility: 3.11% (monthly), 3.53% (quarterly)[60] - Maximum Drawdown: -4.22% (monthly), -3.76% (quarterly)[60] - Net Value: 1.0314 (monthly), 1.0603 (quarterly)[60] - Annual Turnover: 12 (monthly), 4 (quarterly)[60] - **IM (CSI 1000 Futures)**: - Annualized Return: -6.06% (monthly), -4.43% (quarterly)[64] - Volatility: 4.73% (monthly), 5.78% (quarterly)[64] - Maximum Drawdown: -14.01% (monthly), -12.63% (quarterly)[64] - Net Value: 0.8411 (monthly), 0.8718 (quarterly)[64] - Annual Turnover: 12 (monthly), 4 (quarterly)[64] 2. Minimum Discount Hedging Strategy - **IC (CSI 500 Futures)**: - Annualized Return: -1.08%[51] - Volatility: 4.65%[51] - Maximum Drawdown: -7.97%[51] - Net Value: 0.9683[51] - Annual Turnover: 17.50[51] - **IF (CSI 300 Futures)**: - Annualized Return: 1.32%[56] - Volatility: 3.13%[56] - Maximum Drawdown: -4.06%[56] - Net Value: 1.0397[56] - Annual Turnover: 15.48[56] - **IH (SSE 50 Futures)**: - Annualized Return: 1.72%[60] - Volatility: 3.13%[60] - Maximum Drawdown: -3.91%[60] - Net Value: 1.0521[60] - Annual Turnover: 16.15[60] - **IM (CSI 1000 Futures)**: - Annualized Return: -3.85%[64] - Volatility: 5.58%[64] - Maximum Drawdown: -11.11%[64] - Net Value: 0.8839[64] - Annual Turnover: 16.02[64] --- Quantitative Factors and Construction Methods 1. Factor Name: Cinda-VIX - **Factor Construction Idea**: Reflects investors' expectations of future volatility in the options market, with a term structure to capture different time horizons[66] - **Factor Construction Process**: - Based on methodologies from international markets, adjusted for China's options market[66] - Tracks volatility expectations for major indices (e.g., SSE 50, CSI 300, CSI 500, CSI 1000)[66] - **Factor Evaluation**: Provides insights into market sentiment and risk expectations[66] 2. Factor Name: Cinda-SKEW - **Factor Construction Idea**: Measures the skewness of implied volatility across different strike prices, capturing market expectations of extreme events[71] - **Factor Construction Process**: - Analyzes the slope of implied volatility curves for options with varying strike prices[71] - Higher SKEW values indicate increased concerns about tail risks[71] - **Factor Evaluation**: Useful for identifying market fears of extreme downside risks[72] --- Factor Backtesting Results 1. Cinda-VIX - **30-Day VIX Values**: - SSE 50: 18.43[66] - CSI 300: 17.92[66] - CSI 500: 27.44[66] - CSI 1000: 21.58[66] 2. Cinda-SKEW - **SKEW Values**: - SSE 50: 99.29[72] - CSI 300: 101.47[72] - CSI 500: 102.11[72] - CSI 1000: 103.83[72]

Group 1 - The report highlights the transition of China's electricity market into a new phase, driven by the comprehensive entry of renewable energy and the initiation of the spot trading era [3][28] - The "13th Five-Year Plan" marked the beginning of a dual-track system in electricity pricing, balancing planned and market-driven approaches [7][10] - The "14th Five-Year Plan" has accelerated electricity market reforms due to the pressures of low-carbon transformation and energy inflation, leading to significant advancements in the electricity market [13][16] Group 2 - The current electricity industry context indicates a shift to a relaxed supply-demand cycle, with renewable energy installations growing beyond expectations [28][29] - The "136" document officially announces the full market entry of renewable energy, introducing a mechanism price as a safety net, which has led to a surge in renewable project installations [3][28] - The "394" document promotes the acceleration of spot market development, with expectations for 2025-2026 to be significant years for spot trading [3][28] Group 3 - The report discusses the characteristics of the spot trading era, where real supply and demand will guide electricity price fluctuations, and stable scarce power sources are expected to see a repricing [3][4] - The impact on the generation side includes a market that reflects true electricity supply and demand, with spot prices influencing long-term trading negotiations [3][4] - On the user side, the adjustment of time-of-use pricing based on renewable energy output characteristics aims to encourage active demand-side management [4][30] Group 4 - Investment strategies suggest focusing on flexible thermal power, which is expected to benefit from short-term cost reductions and long-term reform dividends [4][30] - High-dividend assets in hydropower are recommended due to their scarcity and growth potential, indicating long-term investment value [4][30] - The importance of predictive and optimization services is highlighted, as the ability to accurately forecast weather, prices, and demand will provide a competitive edge in market operations [4][30]

Investment Rating - The investment rating for the company is "Positive" [2] Core Insights - The company reported a revenue of $30.07 billion in Q2 2025, which is a year-on-year increase of 44.4% and a quarter-on-quarter increase of 17.8%, exceeding the previous guidance of $28.4 to $29.2 billion [2][3] - The gross margin was 58.6%, up 5.4 percentage points year-on-year, while the operating margin was 49.6%, up 7.1 percentage points year-on-year [2][3] - The company has raised its full-year revenue growth target for 2025 to nearly 30%, up from the previous estimate of around 25% [2] Revenue and Profitability - Q2 2025 net revenue was $30.07 billion, with a net income attributable to shareholders of $398.27 million, reflecting a 10.2% increase from the previous quarter and a 60.7% increase year-on-year [3] - The company expects Q3 2025 revenue to be between $31.8 billion and $33 billion, with a midpoint of $32.4 billion, representing a 7.7% quarter-on-quarter increase [2] Advanced Process and Downstream Distribution - In Q2 2025, 74% of revenue came from processes of 7nm and below, with 3nm accounting for 24%, 5nm for 36%, and 7nm for 14% [2] - High-Performance Computing (HPC) revenue increased by 14% quarter-on-quarter, making up 60% of total revenue, while smartphone revenue accounted for 27% [2] Capital Expenditure - Capital expenditure (CapEx) for Q2 2025 was $9.63 billion, a decrease of $430 million from Q1 2025 [2] - The company anticipates total capital expenditures for 2025 to reach between $38 billion and $42 billion, maintaining previous expectations [2] AI Business Outlook - The company aims for a compound annual growth rate (CAGR) of approximately 45% for AI business revenue from 2024 to 2028, citing strong demand in the AI sector [2] Global Capacity Planning - The company has invested a total of $165 billion in the U.S., with the first factory in Arizona expected to start mass production in Q4 2024 [2] - Plans include building 11 wafer fabs and 4 advanced packaging plants in Taiwan over the next few years [2]