In this articleNVDADado Ruvic | ReutersNvidia has approval from the U.S. government to sell its more advanced H200 AI chips to China. But the question is whether Beijing wants it or will let companies buy it.The company can now ship its H200 chip to "approved customers", provided the U.S. government gets a 25% cut of those sales. It had been effectively banned from selling any semiconductors to China earlier this year, but since July sought to resume H20 sales, a less advanced chip designed specifically to ...

Core Viewpoint - Tencent Holdings has withdrawn from the takeover bid for Warner Bros Discovery by Paramount Skydance Corp to avoid increased scrutiny of foreign investments in the US [1][2][4] Group 1: Tencent's Involvement - Tencent had initially pledged US$1 billion as part of Paramount's proposal to acquire Warner Bros, but was removed as a financing partner in the latest all-cash offer of US$30 per share [2][4] - The decision to remove Tencent was influenced by concerns from Warner Bros regarding potential reviews by the Committee on Foreign Investment in the United States (CFIUS) [2][4] Group 2: Regulatory Environment - Tencent's withdrawal highlights the tightening regulatory environment for Chinese investments in significant US media and technology deals [4] - The US Department of Defense designated Tencent as a "Chinese military company" in January 2025, leading to increased scrutiny of its activities in the US [5][6] Group 3: Tencent's Financial Position - Tencent has a market capitalization of approximately US$700 billion and over US$20 billion in cash and equivalents as of the end of September, indicating strong financial capacity for overseas acquisitions [5] - The company holds stakes in several US tech and gaming firms, including Epic Games and Snap Inc., despite the regulatory challenges it faces [5]

4 December 2025 ab Global Research China AI Intelligence What is ahead: Our take on the recent key debates in China AI What are the key focal points in 2026? Over the course of 2025, we note increasing investor interest in and recognition of China's AI development, supported by encouraging progress across LLM technology, computing infrastructure and enterprise/consumer adoption. AI investment (eg, internet leaders' CAPEX), application and commercialisation, domestic substitution (especially chips) are among ...

Summary of China Internet Sector Outlook for 2026 Industry Overview - The report focuses on the **China Internet sector**, providing insights into the expected developments and stock preferences for 2026 [1][12]. Key Themes and Insights AI and Content Growth - The dominant theme in 2025 was "AI AI AI", but for 2026, the focus will shift to companies demonstrating tangible results in AI implementation and content growth [2][8]. - China is expected to remain a fast follower in AI, leveraging its large user base and data resources to enhance AI capabilities [3][17]. E-commerce Dynamics - The competition in e-commerce, particularly between food delivery and traditional e-commerce, will be a significant focus in 2026. The ability of companies to maintain performance while scaling back spending will be critical [4][22]. - Alibaba is anticipated to exert pressure on Meituan, with average order values (AOVs) converging as merchants utilize multiple platforms [4][22]. Policy Environment - The retail consumption growth in China is projected to remain around 3%, influenced by government policies that may shift from supporting the private sector to revenue generation through taxation [5][10][15]. - The approval pipeline for new video games is expected to remain favorable, which could benefit companies like Tencent and NetEase [5][13]. Stock Preferences Tencent - Tencent is highlighted as the top pick, with expectations of strong gaming revenue growth and advertising growth in 2026. The company is well-positioned to leverage its Mini Programs ecosystem for AI services [6][34]. - The gaming business is performing better than perceived, with new game launches expected to drive revenue [26][34]. Alibaba - Alibaba is viewed as a key player in AI growth, with the potential for its new Qwen app to enhance user engagement across its platforms. The focus will be on consolidating its various ecosystems into a coherent super app experience [6][41][42]. - Concerns about ongoing food delivery losses could impact the valuation of its e-commerce business [42][43]. NetEase - NetEase's outlook has improved, with successful game launches expected to contribute to revenue growth. The company is anticipated to achieve close to 10% growth in gaming and value-added services revenue in 2026 [38][39]. PDD and Meituan - PDD faces challenges in user engagement and competition in quick commerce, with potential headwinds from increased delivery charges and tax changes [48][49]. - Meituan's future performance is uncertain, relying on a reduction in food delivery subsidies and a stable competitive environment [50][51]. Valuation Insights - The average forward PE for the China Internet sector is projected at 16.0x for 2026, indicating that while valuations are not excessively high, they are not as low as in previous years [56][59]. - The shift in investor sentiment towards AI and the competitive landscape in e-commerce could impact share price performance across the sector [54][55]. Conclusion - The China Internet sector is expected to navigate a complex landscape in 2026, with a focus on AI implementation, e-commerce competition, and evolving government policies. Companies that can effectively leverage AI and content growth while managing costs will likely emerge as leaders in this environment [1][8][25].

8 December 2025 | 12:19AM HKT Equity Research NAVIGATING CHINA INTERNET What to do from here & key focuses/debates post results season; China Internet Trip takeaways We lift the Cloud & Data Centers sub-sector to our top preferred (to #1, from #3) post 3Q results/after our recent China Internet Trip, given our expectations of sustained AI growth momentum on the back of AI training/inference demand, hyperscalers' multi-chip approach and data centers' positive order volume outlook, capex expansion and capital ...

Accessible version The Wild Cards: AI chatbot rivalry, capex, macro AI Chatbot rivalry: we anticipate an intensifying AI chatbot promotion war as Bytedance and BABA aggressively push their offerings, while smartphone OEMs accelerate adoption of AI assistant apps. User adoption patterns remain unclear – whether the market converges on a single agent or multiple platform-specific agents. AI Capex vs. Monetization Debate: heading into a high base of Chinese internet capex, chip supply constraints may cause qua ...

Summary of Key Points from the Conference Call on China's Gaming Sector Industry Overview - The Chinese gaming sector is expected to show a notable recovery in 2025, driven by a strong product release schedule across the industry [1][5] - Major players like Tencent and NetEase are leading this recovery with innovative content and successful game launches [5] Core Insights - **Cyclical Recovery**: The recovery is characterized as a cyclical rebound rather than a temporary sentiment rally, with significant content innovations reaching the launch stage in 2025 [5] - **Extraction Shooter Genre**: This new genre has emerged as a significant innovation in first-person shooters, combining tactical shooting with high-risk, high-reward gameplay, which has attracted a substantial user base [5] - **Strategic Focus**: Tencent is integrating the extraction shooter genre into large platform-level games, while NetEase is expanding its offerings with titles like Naraka: Bladepoint [2][5] Market Dynamics - **SLG Sub-sector**: Simulation/strategy games (SLG) in China have long life cycles (5-10 years) and high lifetime value from top gamers, but the entry barriers have increased significantly, with development costs exceeding hundreds of millions of renminbi [2][5] - **Global Expansion**: Chinese developers are transitioning from mobile to PC/console markets, exemplified by the success of Black Myth: Wukong, which has sold nearly 30 million copies with a reported cost of approximately Rmb540 million, generating Rmb5.4 billion in profit [7] Future Outlook - **Casual and Puzzle Markets**: The global casual and puzzle gaming market presents significant opportunities, with companies like Microfun generating monthly revenues exceeding Rmb500 million [7] - **Genre Fusion**: The transformation of traditional single-player genres into long-term service games is seen as a key opportunity for Chinese developers to capture market share in high-barrier segments [7] Additional Considerations - The restoration of NetEase's partnership with Blizzard has revitalized its offerings, particularly with World of Warcraft, contributing to a strong pipeline of new releases [5] - Tencent's performance has improved with titles like Delta Force, marking a shift from a saturated market to one driven by high-quality content supply [5] This summary encapsulates the key points discussed in the conference call regarding the recovery and future prospects of the Chinese gaming sector, highlighting the roles of major companies and emerging trends within the industry.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **China Internet and AI industry**, particularly the competitive landscape of AI chatbots and their global aspirations. Core Insights and Arguments 1. **AI Adoption and Competition**: The rapid adoption of AI is expected to intensify competition among Chinese AI players in 2026, covering areas from AI cloud infrastructure to chatbots and applications [1][3][5]. 2. **Global Market Penetration**: Chinese Internet and AI companies are increasingly looking to penetrate global markets to export AI technology and explore monetization opportunities, as direct-to-consumer monetization in China is challenging [1][5]. 3. **ByteDance's Position**: ByteDance's AI assistant, Dola, along with Doubao, has achieved a combined total of approximately **250 million MAUs**, ranking it as the **3 AI chat globally** [1][3][11]. 4. **Dola's Growth in Emerging Markets**: Dola has shown significant growth in emerging markets, with MAUs in Indonesia rising from **7.8 million in July 2025 to 17.4 million in November 2025**, and in the Philippines from **9 million to 12.5 million** in the same period [4][30]. 5. **Competitive Landscape in China**: In China, Doubao leads with **197 million MAUs** and **54 million DAUs** as of October, followed by DeepSeek and Tencent's Yuanbao [2][8]. Additional Important Insights 1. **Challenges in Monetization**: Many AI chatbots face difficulties in charging subscription fees directly from consumers, prompting a shift towards global markets for potential revenue [5][49]. 2. **Potential Threats to Local Services**: If Dola becomes a dominant AI gateway in emerging markets, it could challenge the relevance of local e-commerce platforms like Shopee and superapps like Grab [5][49]. 3. **Dola's Compliance Issues**: Dola, which was recently rebranded from Cici, faces compliance challenges due to its need to access local content and understand cultural nuances, opting for widely accepted overseas models like GPT and Gemini instead of Doubao's LLM [48][46]. 4. **Future Monitoring**: Continuous monitoring of both Doubao and Dola is essential to assess their impact on the competitive landscape in China and globally, particularly regarding their potential challenges to major players like Alibaba, Tencent, and Baidu [50]. This summary encapsulates the key points discussed in the conference call, highlighting the competitive dynamics and growth opportunities within the AI chatbot sector, particularly for Chinese companies like ByteDance.

Summary of China AI Semiconductor Conference Call Industry Overview - The focus is on the **China AI semiconductor industry**, particularly the advancements in AI chip supply and demand dynamics leading up to 2026 [1][2][3]. Key Insights - **Strong Performance**: China's AI-related stocks have shown robust performance in 2025, driven by innovations from **DeepSeek** and local AI chip advancements [1]. - **Consolidation Phase**: The market has entered a consolidation phase since October 2025, raising concerns about the sustainability of growth in the AI sector [1]. - **Future Projections**: The supply chain upside is expected to take center stage in 2026, with significant growth anticipated in AI capital expenditures (capex) [2][12]. Financial Projections - **AI Capex Growth**: AI capex is projected to grow at a **25% CAGR** from 2025 to 2028, reaching **USD 172 billion** by 2028 [2][29]. - **Total Capex for CSPs**: Total capex for China’s Cloud Service Providers (CSPs) and telecommunications is expected to grow at **13% CAGR**, reaching **USD 267 billion** by 2028 [2][27]. - **Healthy Spending**: Total capex for listed players is only **40-60%** of their free cash flow, indicating healthy spending levels [2]. Supply Chain Dynamics - **Bottlenecks**: The primary bottleneck currently is the constrained local advanced logic production capacity, which limits AI chip output [3]. - **Capacity Expansion**: Advanced logic capacity is expected to accelerate starting in 2026/27, leading to a significant increase in local AI chip sales by 2027/28 [3][55]. - **Market Share Shift**: Local players are projected to capture over **90%** of the market share by 2028, especially as NVIDIA's sales in China are not expected to resume due to ongoing investigations [3]. Company-Specific Insights - **Cambricon**: Upgraded to **Outperform** with a price target of **CNY 2,000**, reflecting strong growth potential due to increased AI chip demand [7][10]. - **Hygon**: Rated **Outperform** with a price target of **CNY 280**, based on projected earnings growth [7]. - **Hua Hong**: Rated **Outperform** with price targets of **HKD 100** for H-shares and **CNY 140** for A-shares [8]. - **SMIC**: Rated **Outperform** with price targets of **HKD 100** for H-shares and **CNY 150** for A-shares, driven by advanced logic capacity expansion [9]. - **NAURA and Piotech**: Both rated **Outperform** with price targets of **CNY 600** and **CNY 375**, respectively [10]. Investment Implications - **Sector Ranking**: The investment ranking is **AI chip > Semicap > Foundry**, with a strong preference for AI chip vendors like Cambricon due to growth momentum [15]. - **Defensive Stocks**: Semicap stocks are viewed as more defensive with reasonable valuations, benefiting from the shift in memory demand towards local suppliers [4]. Risks and Challenges - **NVIDIA Resumption**: The biggest risk is if NVIDIA resumes sales in China, which could undermine local vendors [14]. - **Market Sensitivity**: Chinese AI stocks may be affected by broader market trends, including potential crashes in US AI stocks [14]. - **Supply Chain Self-Sufficiency**: The advanced logic supply chain is not fully self-sufficient, which could delay capacity expansion in extreme scenarios [14]. Conclusion - The China AI semiconductor industry is poised for significant growth, driven by local innovations and increasing demand for AI chips. However, potential risks from global competitors and market dynamics must be closely monitored.

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call focuses on the Asia Pacific region, particularly highlighting investment themes and opportunities for 2026, with a strong emphasis on AI and corporate reforms in China, Korea, and Japan [2][4][14]. Core Themes and Insights 1. **China's AI Path**: Remains the top-ranked theme due to strong growth prospects, reasonable valuations, and low ownership levels. This theme is expected to drive significant investment interest in 2026 [2][7][28]. 2. **AI Capital Expenditure**: Analysts predict that the capital expenditure to sales ratio for key US companies will double to approximately 20% in 2026 and 2027, compared to 10% in 2022. In contrast, Asian AI players are expected to maintain a capital intensity around 12% [5][30][33]. 3. **Corporate Reform Opportunities**: Significant reforms are anticipated in Japan, Korea, and China, which are expected to enhance capital efficiency and shareholder returns. This includes governance reforms and changes in corporate tax structures [6][44][46]. 4. **Thematic Ranking**: The latest thematic ranking shows that besides China's AI Path, other high-ranking themes include Asian AI Adoption Leaders and AI & Healthcare, indicating a diversified investment landscape [7][28][13]. Investment Opportunities and Risks 1. **Stock Valuations**: Key Asian AI stocks are generally trading at lower valuations than their US counterparts, but they also have lower earnings growth expectations over the next two years [5][33]. 2. **Governance and Market Reforms**: Ongoing reforms in Asia are expected to support value-oriented investments, with a focus on improving capital allocation and increasing total payout ratios [37][38][40]. 3. **Sector-Specific Trends**: The rise of AI and clean energy is reshaping investment priorities, with significant implications for resource allocation and sustainability [49][50]. Additional Insights 1. **Demographic Changes**: Long-term trends such as Japan's demographic transformation and the nuclear renaissance are expected to influence consumption patterns and energy security well into the 2040s [51]. 2. **Correlation Analysis**: There is a relatively high correlation within AI & Tech Diffusion sub-themes, while Japan Longevity and Corporate Reform sub-themes show lower correlations, suggesting diversification opportunities [54][56]. 3. **Market Performance**: The performance of Asian equities in 2025 has been significantly driven by thematic investments, particularly in AI and technology diffusion sectors [20][37]. This summary encapsulates the key themes, insights, and potential investment opportunities discussed during the conference call, providing a comprehensive overview of the Asia Pacific investment landscape heading into 2026.