Summary of Global Technology Outlook 2026 Industry Overview - **Industry Focus**: Global Technology, specifically in sectors such as semiconductors, AI hardware, and telecommunications equipment [17][20][23] Key Insights and Arguments - **AI and Semiconductor Growth**: - Global semiconductor revenues are projected to reach **US$1 trillion** in 2026, with a **35% YoY increase** expected [18] - AI spending and a commodity rally are anticipated to continue into the first half of 2026, although demand destruction may challenge these trends in the second half [18] - EPS growth is forecasted to be **48% higher** in 1H26 compared to previous periods [18] - **Market Dynamics**: - The semiconductor cycle is expected to be transformative, with pullbacks providing opportunities for attractive entry points [18] - Tech inflation and demand destruction are likely to impact pricing power, with rising costs for wafers and memory affecting margins [18] - **Memory Market**: - Memory is identified as a new bottleneck in AI, with a capacity-constrained cycle expected to lead to unprecedented capital expenditures by 2028 [18] - DRAM pricing is projected to move past all-time highs, with significant earnings backing this trend [22] - **China's Tech Resurgence**: - Chinese technology stocks outperformed the S&P tech index in 2025, driven by a weaker USD and increased AI adoption [18] - The demand for domestic GPUs in China is under scrutiny, particularly with the introduction of DeepSeek, which may impact the GPU supply chain [18] - **Investment Recommendations**: - A barbell strategy is recommended, favoring AI-themed stocks while also considering undervalued stocks with good prospects [18] - Specific stock picks include **NVIDIA** and **Broadcom** for processors, and **Samsung**, **SK Hynix**, and **Micron** for memory [21] Additional Important Insights - **Sector Performance**: - The semiconductor sector is expected to maintain a **20% revenue CAGR** over the next five years, driven by leading-edge AI demand [22] - The AI hardware market is projected to see total Nvidia GPU server rack shipments double year-over-year in 2026 [23] - **Pricing Trends**: - The pricing for various DRAM types is expected to fluctuate significantly, with DDR4 and DDR5 prices projected to increase by **93-98%** and **80-85%** respectively in 2026 [93] - **Cautionary Notes**: - There is a caution against over-investment in AI technologies, with concerns about the sustainability of returns on such investments [49] - The potential for margin pressure due to rising costs and pricing power dynamics is highlighted [49] Conclusion The global technology sector, particularly semiconductors and AI, is poised for significant growth in 2026, driven by strong demand and evolving market dynamics. However, investors should remain cautious of potential pitfalls related to pricing pressures and over-investment in AI technologies.

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Semiconductor industry, particularly AI and memory sectors - **Investment Outlook**: Preference for AI-related investments over non-AI, with both logic and memory segments deemed attractive [5][8][74] Core Insights and Arguments - **Top Investment Picks**: - AI: TSMC (Top Pick), SMIC, Aspeed, MediaTek, Alchip, GUC, KYEC, ASE, FOCI, ASMPT, AllRing - Memory: Winbond (Top Pick), Phison, Nanya Tech, APMemory, GigaDevice, Macronix [5] - **Long-term Demand Drivers**: - **Tech Inflation**: Anticipated price elasticity affecting demand for tech products, with rising costs in wafers, OSAT, and memory impacting margins for chip designers into 2026 [5] - **AI Cannibalization**: AI's potential to replace certain jobs may weaken demand, while the semiconductor supply chain is prioritizing AI semiconductors over non-AI [5] - **Tech Diffusion**: Reacceleration of AI semiconductor demand driven by generative AI, expanding into various sectors like robotics and AI glasses [5] - **China AI Demand**: DeepSeek's influence on inferencing AI demand raises questions about the sufficiency of domestic GPU supply [5] Financial Metrics and Valuation - **Valuation Comparisons**: - TSMC's target price is set at 1,888.0 TWD, indicating an 11% upside potential [6] - UMC's target price is 52.5 TWD, with a 0% upside [6] - SMIC's target price is 80.0 HKD, with a 5% upside [6] - **P/E Ratios**: - TSMC's P/E ratio is projected to decrease from 26.1 in 2025 to 16.3 in 2027, indicating expected growth [6] - UMC's P/E ratio is relatively stable, while SMIC's is not measurable due to expected losses [6] Market Dynamics - **Semiconductor Cycle**: Logic semiconductor foundry utilization is at 70-80% in the first half of 2026, indicating a recovery phase [10] - **Non-AI Semiconductor Growth**: Excluding NVIDIA's AI GPU revenue, non-AI semiconductor growth was only 10% year-over-year in 2024 [12] - **Memory Prices**: Memory stock prices are seen as leading indicators for logic semiconductors, with an attractive industry view on global tech semiconductors [14] Additional Insights - **AI Semiconductor Growth**: TSMC's AI semiconductor revenue is expected to grow at a CAGR of 60% from 2024 to 2029 [25] - **Cloud Capex**: Major cloud service providers' capex is projected to reach nearly US$632 billion in 2026, indicating robust demand for cloud-related semiconductors [78] - **NAND and NOR Flash Supply**: Anticipated shortages in NAND and NOR flash memory due to increased demand from AI storage solutions [64][68] This summary encapsulates the key points discussed in the conference call, highlighting the semiconductor industry's current landscape, investment opportunities, and financial metrics.