Investment Rating - The report assigns a "Buy" rating to several companies including NVIDIA, AMD, and TSMC, indicating a positive outlook for these firms in the technology sector [33]. Core Insights - The resumption of NVIDIA's H20 GPU sales to China is expected to positively impact the APAC technology supply chain, particularly benefiting companies like Inventec and Wistron [2][4]. - AMD's MI308X license applications for export to China are moving forward, which could lead to a recovery in revenue after significant write-downs [3]. - The overall demand for NVIDIA's RTX GPU series may moderate due to the increased availability of H20 GPUs, suggesting a shift in market dynamics [4][6]. Summary by Sections NVIDIA and AMD Developments - NVIDIA is filing applications to resume sales of the H20 GPU, with government assurances for license approval, and has introduced a compliant RTX PRO GPU [2]. - AMD's license applications for MI308X are under review, with expectations of resuming shipments as approvals are granted, despite prior inventory write-downs of approximately US$800 million [3]. APAC Technology Supply Chain - Inventec is positioned to benefit significantly from the H20 server rack business, with 10% of shipments to China potentially generating over 20% of sales due to higher average selling prices (ASPs) [4]. - Other ODMs like Wistron and Hon Hai are also expected to gain from the H20 export relief, enhancing their revenue prospects [4]. Semiconductor and HBM Market - The relaxation of export controls on NVIDIA's AI GPUs is anticipated to benefit upstream suppliers like TSMC and KYEC, with projections of significant growth in CoWoS demand [8]. - Samsung is expected to be the main beneficiary in the HBM market due to the resumption of H20 sales, with forecasts indicating substantial quarter-over-quarter growth in HBM bit demand [10]. Price Dynamics and Market Trends - The report notes a potential moderation in RTX GPU sales due to cannibalization from H20, with expectations of price adjustments in the secondary market [6]. - The demand for HBM is projected to surge with the resumption of H20 shipments, despite ongoing localization efforts in China [9].

Investment Ratings - The report maintains a "Buy" rating for TSMC, MediaTek, and ASE, indicating a positive outlook for these companies in the semiconductor industry [30][12][20]. Core Insights - There is a resurgence in investor sentiment around AI, particularly following Computex in mid-May, although many investors remain underexposed and cautious as they approach the typically soft third quarter [2][1]. - TSMC is expected to benefit from easing concerns over AI order cuts and increasing demand for advanced packaging technologies like CoWoS, with a projected revenue growth of 28.7% YoY in 2025 [5][6]. - MediaTek's AI ASIC project faces potential delays, but the long-term growth story in the ASIC market remains intact, with expectations of a 16% revenue CAGR from 2025 to 2027 [8][17]. - ASE is seeing increased investor interest due to its advancements in advanced packaging technology, with expectations for significant capacity increases in the coming years [10][11]. Summary by Company TSMC - TSMC is positioned as a leading global foundry with over 60% market share, expected to achieve a 20% revenue CAGR driven by AI and HPC demand [12][15]. - The target price for TSMC is set at NT$1,210, based on a P/E multiple of 20x [13][14]. MediaTek - MediaTek is transitioning towards AI applications, with a focus on smartphone processors and enterprise ASICs, aiming for a significant share in the US$45 billion ASIC market [17][8]. - The target price for MediaTek is NT$1,800, based on a P/E multiple of 20x [18]. ASE - ASE is recognized for its leadership in semiconductor assembly and test services, with a focus on advanced packaging technologies [19]. - The target price for ASE is NT$165, derived from a P/E multiple of 18x [21].

Summary of ASE's Role in the Next Heterogeneous Revolution Industry Overview - The document discusses the semiconductor packaging industry, specifically focusing on ASE's advancements in heterogeneous integration and photonic packaging technologies, particularly Silicon Photonics (SiPh) and Co-Packaged Optics (CPO) [4][12][18]. Core Points and Arguments 1. **Technological Evolution**: ASE is at the forefront of a significant technological evolution, transitioning from traditional electrical interconnects to photonic solutions, which are essential for meeting the demands of AI computing and high-performance computing (HPC) [4][5][12]. 2. **Heterogeneous Integration Strategy**: ASE's comprehensive strategy includes chiplet-based architectures, advanced fan-out, and 2.5D/3D integration, redefining semiconductor packaging boundaries [11][20]. 3. **Photonic Integration**: ASE emphasizes the critical role of photonic integration in enhancing bandwidth and reducing latency, addressing the limitations of traditional electrical interconnects [12][20][22]. 4. **VIPack™ Platform**: ASE's VIPack™ platform is designed to support advanced packaging technologies, enabling high-density integration and optimized design workflows, which can reduce time-to-market by up to 50% [27][33]. 5. **Market Growth Forecast**: ASE anticipates revenue from advanced packaging and testing to grow from USD $600 million in 2024 to over USD $1.6 billion in 2025, with over 75% of this growth attributed to cutting-edge packaging technologies [29]. Additional Important Content 1. **CPO Development**: ASE is positioning VIPack™ as a foundation for optical-electrical convergence, integrating SiPh and optical engines within a single package, which supports high-bandwidth, low-power applications [28][60]. 2. **System-Level Integration**: The integration of optical interconnects into packaging is seen as a fundamental architectural transformation, enabling better performance for AI accelerators and high-bandwidth memory modules [42][45]. 3. **Challenges in Transition**: The shift to CPO introduces challenges in packaging, interconnect, and testing, necessitating robust supply chain collaboration and new testing protocols [72][93]. 4. **New Value Creation**: The emergence of SiPh and CPO is redefining how chips, packages, and systems interact, creating a new value chain that emphasizes tighter integration across the semiconductor ecosystem [95][100]. Conclusion - ASE is not only responding to the rise of AI but is actively shaping the future of semiconductor packaging through innovative technologies and strategic investments in photonic integration and heterogeneous systems, positioning itself as a key enabler in the evolving landscape of AI and HPC [22][33][101].

Investment Rating - Industry view is cautious [1] Core Insights - The report highlights a cautious outlook for the semiconductor industry, particularly in the context of AI and memory sectors, with a focus on potential recovery in the second half of 2025 impacted by tariff costs [7] - Long-term demand drivers include the reacceleration of AI semiconductor demand due to generative AI, which is expected to proliferate across various verticals outside the semiconductor industry [7] - The report indicates that the global semiconductor revenue peaked in the third quarter of 2024, with a forecasted decline in semiconductor exports from Korea since February 2025 [12][19] Summary by Sections Semiconductor Market Dynamics - The cyclical downturn is characterized by a shift from euphoria to pessimism, as indicated by the SOX Index performance [8] - Historical data shows that declines in semiconductor inventory days have historically signaled positive stock price appreciation [41] - The report notes that the domestic GPU supply chain may face dilution due to shipments of NVIDIA B30, impacting inferencing AI demand [7] Memory and Logic Cycles - Memory stock prices are seen as leading indicators for logic semiconductors, with the report suggesting that memory share price peaks lead logic semis [42][43] - The report forecasts a significant increase in HBM (High Bandwidth Memory) market size, projecting it to reach US$64 billion by 2027, with a CAGR of 107% from 2023 to 2027 [67] AI and Technology Trends - The report emphasizes the shift in value from hardware to application in the AI investment stack, indicating a growing focus on software and application development [73] - It is projected that local GPU revenue in China could grow to RMB 287 billion by 2027, driven by advancements in local manufacturing capabilities [90]

Investment Rating - The report does not explicitly state an investment rating for the semiconductor industry, but it highlights preferred stocks for investment in the US and internationally, indicating a positive outlook for certain companies [2]. Core Insights - Total semiconductor sales in April declined by 11.7% month-over-month (M/M), aligning with the 5-year seasonal average but approximately 120 basis points below the 10-year average. Year-over-year (Y/Y) sales increased for the 19th consecutive month, reaching a growth rate of 21.7% [2]. - The semiconductor industry is projected to experience a 3-6% quarter-over-quarter (Q/Q) growth in revenue for Q2 2025, with current street estimates at 3.4% Q/Q [4]. - Memory sales fell significantly by 23.3% M/M, driven by a 22.1% decrease in units sold. However, DRAM average selling price (ASP) increased by 2.8% M/M, while NAND ASP rebounded by 19.6% M/M [3]. Summary by Sections Semiconductor Sales and Trends - April semiconductor sales saw an 11.7% M/M decline, with a 21.7% Y/Y increase. The ASP dropped by 4.9% M/M, which is 360 basis points worse than the 10-year average [2]. - The decline in units sold across major product segments was noted, with a 7.1% M/M decline in units outperforming seasonal averages by 100-200 basis points [2]. Memory Market Insights - Memory sales decreased by 23.3% M/M, with DRAM revenue dropping by 29.0% M/M and NAND sales falling by 9.4% M/M. The report anticipates a weakening memory cycle in the second half of 2025 due to oversupply [3]. - The June forecast predicts a blended DRAM ASP increase of 6% Q/Q and NAND ASP increase of 3% Q/Q for Q2 2025 [3]. Preferred Stocks - In the US, preferred stocks include AVGO, MRVL, ARM, MU, NVDA, and TXN. Internationally, preferred stocks are ASE, Hon Hai Precision, NXP, Infineon, JCET, MediaTek, Quanta, Renesas Electronics, Samsung Electronics, SK Hynix, TSMC, and Wiwynn [2].

Summary of Conference Call on Taiwan Technology: Semiconductors Industry Overview - The semiconductor industry is experiencing a shift towards more complex chip designs, particularly in the AI and High-Performance Computing (HPC) segments, which is driving demand for advanced chip testing [1][11][58]. - The probe card and socket markets are projected to grow steadily, with the probe card market reaching US$2.5 billion and the socket market reaching US$1.6 billion in 2024, representing approximately 17% and 11% of the total testing equipment market, respectively [52]. Key Companies MPI (6223.TWO) - MPI is ranked as the 4th largest probe card provider globally, with 57% of its revenue in 2024 derived from probe cards [10][52]. - The company is expected to achieve a revenue CAGR of 19% from 2024 to 2027, driven by increased demand in the AI/HPC segments [14][33]. - MPI's market share in the probe card market is projected to rise from 7% in 2024 to 11% by 2027 [13]. WinWay (6515.TW) - WinWay is the 2nd largest socket provider globally, generating 71% of its revenue from test and burn-in sockets [10][52]. - The company is expected to see a revenue CAGR of 23% from 2024 to 2027, benefiting from its expansion into the probe card market [14][37]. - WinWay's market share in the socket market is expected to increase from 8% in 2024 to 14% by 2027 [13]. Investment Opportunities - Both MPI and WinWay are initiated with a Buy rating and target prices of NT$1,000 and NT$1,500, respectively, implying potential upsides of approximately 41% and 54% [3][16]. - The investment thesis is supported by: 1. Increasing dollar content in the testing industry due to AI and HPC trends, leading to a doubling of average selling prices (ASPs) for probe cards and sockets [3][11][59]. 2. Local advantages for Taiwanese vendors, including proximity to leading foundries like TSMC and OSAT companies, which are expected to enhance market share [13][12]. 3. Expansion into new markets, particularly in high-margin segments like MEMS probe cards for MPI and probe cards for WinWay [14][58]. Financial Performance - MPI's earnings are forecasted to grow at a CAGR of 28% from 2024 to 2027, while WinWay's earnings are expected to grow at a CAGR of 37% during the same period [39][41]. - MPI's 2024 revenue is projected at NT$10.17 billion, with net income expected to reach NT$2.30 billion [10][33]. - WinWay's 2024 revenue is projected at NT$5.80 billion, with net income expected to reach NT$1.19 billion [18][37]. Risks - Potential downside risks include softer demand in AI and HPC markets, slower penetration into new total addressable markets (TAM), and intensifying competition [4]. Conclusion - The semiconductor testing industry, particularly for advanced chip testing, is poised for significant growth driven by increasing complexity in chip designs and the demand for faster time to market. MPI and WinWay are well-positioned to capitalize on these trends, making them attractive investment opportunities despite current market volatility.

Investment Rating - The report maintains a positive outlook on the Taiwan Electronics and Semiconductors sector, particularly favoring TSMC as the most preferred stock in the semiconductor space [1][2]. Core Insights - April sales in the technology sector were robust, with TSMC reporting NT$349.6 billion in revenue, reflecting a 48% year-over-year increase and a 22% month-over-month increase [2][10]. - The semiconductor supply chain is expected to face challenges in the second half of 2025 due to early order pull-ins and tariff uncertainties, although supply constraints are easing [1][2]. - Companies like Gold Circuit and Quanta are highlighted for their strong sales momentum and improving product mix and margins, particularly in the AI ASIC and server supply chain segments [1][3]. Summary by Sections Semiconductor - TSMC's April revenue was significantly above expectations, driven by solid AI demand and a healthy order flow, with a year-over-year growth of 48% [2][10]. - UMC and other fabless companies are also showing steady recovery, with April revenues tracking positively [2]. Server and ODMs - Server sales in April increased by 167% year-over-year, with companies like Wiwynn and Accton outperforming expectations due to strong ASIC server demand [3][14]. - ODMs reported a 1% month-over-month increase and a 33% year-over-year increase in sales, indicating a positive trend in the server supply chain [3]. Component and PCB - Largan is noted for its 28% year-over-year growth, attributed to market share gains and resilient ASP trends [5]. - Gold Circuit is expected to benefit from rising AI ASIC demand, while Unimicron is projected to capture a significant market share in AI GPU applications [6][10]. Overall Market Trends - The overall revenue trend for the Taiwan technology supply chain shows a 24% year-over-year increase, with significant contributions from the semiconductor and server sectors [14]. - The report anticipates a decline in sales for May due to NTD appreciation, but the long-term outlook remains positive as demand for AI-related products continues to grow [2][3].

Investment Rating - The report maintains a positive outlook on the semiconductor industry, particularly in advanced packaging, driven by increasing demand from AI and high power chips [2]. Core Insights - There is a growing demand for advanced packaging tools, with management indicating that both non-China and China clients are expanding their capacities, benefiting the business growth of Capcon [9][10]. - Capcon's competitive edge lies in its ability to provide tools with higher throughput, enhancing manufacturing efficiency and profitability for clients [10]. - The adoption of Fan-out Panel-level Packaging (FOPLP) technology is expected to increase, particularly with glass substrates, which are cost-effective and perform well in heat dissipation [11]. Company Profile - Capcon Semi is an equipment manufacturer specializing in semiconductor advanced assembly and packaging, offering products such as Flip-Chip Bonder and Multi-Chip Die Bonder. Key clients include ASE, TSMC, and JCET [3].

Investment Rating - The report indicates a significant vulnerability in Asian companies correlated with Nvidia, particularly in the technology and financial sectors, suggesting a cautious investment stance [3][10][14]. Core Insights - Nvidia experienced an 8.7% decline, marking its second drop of over 8% in three days, driven by tariff fears and potential export controls to China [3]. - A notable correlation exists between Nvidia and Bitcoin at 91.5%, indicating that liquidity plays a crucial role in price movements [4][5]. - The weakening price momentum of Nvidia suggests that equities must continue to rise to justify their positions in investment portfolios, especially in a high-yield bond environment [7]. - Asian companies with high correlations to Nvidia include TSMC (98%), Mediatek, Hon Hai, ASE, Softbank, and Hynix, indicating a concentrated risk in the tech sector [10][11]. - Financial institutions in Australia and China also show significant correlations with Nvidia, highlighting unexpected vulnerabilities in the financial sector [14][20]. Summary by Sections Correlation Analysis - The report highlights that over 35% of India's Nifty index has a correlation greater than 90% with Nvidia, affecting companies like ICICI Bank and State Bank of India [20]. - TSMC's correlation with Nvidia is particularly high at 98.2%, making it and the Taiwan Stock Exchange vulnerable to Nvidia's performance [11][25]. Market Positioning - Current positioning suggests that Nvidia bulls are facing a critical test, with potential declines leading to significant impacts on correlated stocks and indices [23][24]. - A drop in Nvidia's stock price to $100 could lead TSMC to fall towards $850, affecting the TWSE and indicating Taiwan's unique vulnerability [25][26].