Summary of the Conference Call on Greater China Semiconductors Industry Overview - **Industry**: Greater China Semiconductors - **Current View**: Attractive [6][9] Key Company Insights - **Company Mentioned**: CXMT (ChangXin Memory Technologies) - Plans to increase capacity for DDR4/LPDDR4 and accelerate DDR5/LPDDR5 supply to alleviate shortages in 2-3 months [1] - Analysts express skepticism about CXMT switching back to DDR4/LPDDR4 due to required changes in circuit design and smaller total addressable market (TAM) compared to DDR5 [2] - CXMT is expected to increase capacity by 10-20 kilowatts per month (kwpm) next year, focusing on advanced products like HBM3e or DDR5, but ramp-up will take time [2] Market Sentiment - Despite market volatility, analysts remain bullish on old memory players, reiterating a top pick on Winbond Electronics Corp [3] Valuation Methodology - **Winbond Electronics Corp**: - Base case valuation at 3.0x 2026 estimated price-to-book (P/B) ratio, reflecting the industry's high volatility [9] - Analysts believe the stock deserves a multiple beyond its historical range of 0.5x-1.5x since 2017 due to strong DRAM pricing and sustainable NOR price increases [9] Risks Identified - **Upside Risks**: - Increase in NOR Flash pricing driven by stronger-than-expected demand [11] - Stronger-than-expected DRAM pricing due to ongoing supply shortages [11] - Faster-than-expected development of SLC NAND [11] - **Downside Risks**: - NOR Flash downcycle due to weaker demand [11] - Lower-than-expected DRAM pricing due to oversupply [11] - Slower-than-expected SLC NAND development [11] Analyst Team - **Analysts Involved**: - Daniel Yen, CFA - Charlie Chan - Daisy Dai, CFA - Tiffany Yeh - Ethan Jia [5] Important Disclosures - Morgan Stanley may have conflicts of interest due to business relationships with companies covered in the research [6][4] - The report includes various regulatory disclosures and compliance information relevant to the companies mentioned [4][12] Conclusion - The Greater China semiconductor industry is currently viewed as attractive, with specific focus on CXMT's capacity expansion and Winbond's strong market position. Analysts are cautious yet optimistic about the potential for pricing increases in the memory sector, while also highlighting significant risks that could impact market dynamics.