Vi e w p o i n t | 26 Oct 2025 21:28:42 ET │ 11 pages China Technology & Communications Post 2Q25 US/EU Marketing Feedback CITI'S TAKE We met with 49 institutional investors in US/EU in the past two weeks. We saw increasing interest in China tech from LO investors. Investors agreed that more quality tech names listing on the H-share market would attract more attention and fund flows. Key discussion topics included AI supply chain beneficiaries and expectation including optical transceivers (future scale-up, ...

Summary of VeriSilicon's Conference Call Company Overview - **Company**: VeriSilicon (688521.SS) - **Industry**: Semiconductor and IP Solutions Key Points Acquisition Announcements - VeriSilicon announced an agreement to acquire Pixelworks Semiconductor Technology (Shanghai) Co., Ltd. for Rmb929 million (US$130 million) in cash, acquiring 97.89% of the subsidiary's shares, with plans to hold 100% post-transaction closure expected by the end of 2025 [1][2][3] - This acquisition follows a proposed acquisition of Nuclei, a RISC-V CPU IP development company [1] Strategic Synergies - The integration of Pixelworks' image post-processing capabilities is expected to enhance VeriSilicon's total image solutions for smartphone clients and expand its reach into AI ASIC projects for devices such as AI glasses, AI TVs, and AI projectors [3] - Management anticipates that the combined technologies will allow VeriSilicon to offer GPU IP solutions with improved performance and lower power consumption, targeting data center and gaming clients [3] Industry Trends - The semiconductor industry in China is experiencing a consolidation trend, with several acquisitions announced since May 2025, including VeriSilicon's acquisition of Nuclei and others by Primarius and Sai Micro [4] - The average deal size for recent semiconductor M&A transactions is US$77 million, indicating a positive outlook for the semiconductor ecosystem in China [4] Financial Projections - Revenue projections for VeriSilicon show a significant increase from Rmb2,338 million in 2023 to Rmb5,269 million in 2026, representing a 48% year-over-year growth [10] - The company expects to achieve a net income of Rmb1,338 million by 2026, with an EPS of Rmb2.54 [10][14] Risks and Challenges - Potential risks include slower-than-expected technology development, higher costs for talent acquisition and retention, and weaker customer spending on IP and new chipset projects [12] Investment Rating - Goldman Sachs maintains a "Buy" rating on VeriSilicon with a 12-month target price of Rmb284, indicating an upside potential of 68.5% from the current price of Rmb168.50 [11][14] Financial Metrics - The company’s gross margin is projected to stabilize around 44.2% in 2026, while operating margins are expected to improve significantly from -2.4% in 2025 to 20.2% in 2027 [10] - R&D expenses are projected to be 40% of revenue in 2025, reflecting a strong commitment to innovation [10] Conclusion VeriSilicon is strategically positioning itself for growth through acquisitions and enhanced capabilities in the semiconductor industry, with optimistic financial projections and a solid investment rating from Goldman Sachs. However, the company must navigate potential risks associated with technology development and market conditions.

AI Demand & Capacity - AI供应链中的每个参与者都面临产能限制，需求超过了供应能力 [3][4] - 对消费者和企业AI服务的需求持续存在，满足需求仍然是一个挑战 [6] - 许多首席财务官表示，在内部部署AI已带来实际的生产力提升 [6] Infrastructure & Beneficiaries - 目前仍处于AI基础设施建设阶段，基础设施提供商受益 [7][8] - 半导体行业和云计算公司（如谷歌云）是主要受益者 [8] - 谷歌云的积压订单可能在未来两年内转化为接近其当前收入两倍的收入 [8] Digital Advertising Disruption - AI可能对数字广告行业产生颠覆性影响，广告的创建、投放和衡量将更多地由AI系统完成 [10] - 利润池可能从传统广告系统转移到数字广告生态系统，规模高达3000亿美元 [11] - Meta等公司在收入增长方面看到了持续的势头 [11]