Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong expectation for future growth [4]. Core Insights - The company reported Q2 2025 revenue of $30.07 billion, a year-on-year increase of 44.4% and a quarter-on-quarter increase of 17.8%. The gross margin was 58.6%, up 5.4 percentage points year-on-year but down 0.2 percentage points quarter-on-quarter. Net profit reached $12.8 billion, reflecting a year-on-year increase of 60.7% and a quarter-on-quarter increase of 10.2% [2]. - The company has raised its full-year revenue growth guidance to approximately 30%, driven primarily by demand for advanced processes. In Q2 2025, revenue from N3, N5, and N7 processes accounted for 24%, 36%, and 14% of total wafer revenue, respectively, totaling 74% [3]. - The company is expected to benefit significantly from the growing demand for AI chips, with projections for net profits of $49.686 billion, $60.379 billion, and $66.768 billion for the years 2025 to 2027, respectively [4]. Summary by Sections Performance Review - In Q2 2025, the company achieved revenue of $30.07 billion, with a gross margin of 58.6% and net profit of $12.8 billion [2]. Operational Analysis - The decline in gross margin is attributed to the appreciation of the New Taiwan Dollar (TWD), which impacts revenue when converted from USD. A 1% appreciation in TWD results in a 1% revenue loss and a 40 basis points loss in gross margin. In Q2 2025, TWD appreciated by 4.4%, leading to a 180 basis points decline in gross margin, with further expected appreciation causing an additional 260 basis points loss [3]. - The company anticipates the first-generation N2 process to enter mass production in H2 2025, with subsequent processes expected in 2026 and 2028 [3]. Profit Forecast, Valuation, and Rating - The company is positioned as a leader in the wafer foundry industry, with a competitive edge in advanced processes, expected to benefit from the rise in AI chip demand. The projected net profits for 2025, 2026, and 2027 are $49.686 billion, $60.379 billion, and $66.768 billion, respectively [4].

Core Viewpoint - TSMC's Q2 2025 performance shows strong growth driven by AI semiconductor demand, with revenue reaching NT$933.79 billion, a 38.6% year-on-year increase, and net profit at NT$398.27 billion, up 60.7% [1] Group 1: Financial Performance - TSMC's revenue for Q2 2025 was NT$933.79 billion, reflecting a 38.6% year-on-year growth [1] - Net profit for the same period was NT$398.27 billion, marking a 60.7% increase compared to the previous year [1] - The company expects revenue growth to approach 30% year-on-year in 2025, driven by strong AI semiconductor demand [2] Group 2: Business Segments - High-performance computing (HPC) revenue grew by 14% quarter-on-quarter, now accounting for 60% of total revenue [2] - Smartphone revenue increased by 7% quarter-on-quarter, representing 27% of total revenue [2] - Digital consumer electronics (DCE) saw the fastest growth at 30% quarter-on-quarter, but only accounts for 1% of total revenue [2] Group 3: Advanced Process Technology - TSMC's advanced process technology accounted for 74% of wafer revenue in Q2 2025 [2] - The N2 process, utilizing advanced nanosheet technology, is expected to achieve mass production in the second half of 2025, with a 10-15% speed improvement and 22-30% energy efficiency improvement compared to previous generations [4] - The A16 process, deemed most suitable for HPC, is anticipated to begin mass production in the second half of 2026, with an 8-10% speed improvement over N2 [4] Group 4: Market Dynamics and Supply Chain - The demand for AI semiconductors is expected to increase due to the growth in token numbers and AI model usage, leading to higher chip demand [2] - NVIDIA's resumption of H20 supply to China is seen as a positive development, although TSMC has not yet observed significant changes in customer behavior [3] - The company is preparing to meet demand but acknowledges potential uncertainties in customer orders [2][3] Group 5: International Expansion - TSMC is advancing its overseas expansion plans, including factories in Arizona, USA, and Kumamoto, Japan, with an expected annual impact of 2-3% on gross margin over the next five years [5] - The total investment in advanced manufacturing in the USA is projected to reach $165 billion, including a $100 billion increase announced in March [5] - The expansion includes six advanced process factories and two advanced packaging factories, with the first factory already in large-scale production [5]

Core Viewpoint - The Japanese government is considering investing in the semiconductor foundry Rapidus, with the condition of holding a "golden share" to exercise veto rights on important operational matters [3][4]. Group 1: Government Support and Funding - The Japanese government plans to invest 100 billion yen (approximately 1 billion USD) in Rapidus this fiscal year, alongside a total support package of about 1.72 trillion yen (approximately 12 billion USD) [4][8]. - Rapidus aims to achieve mass production of 2-nanometer (nm) chips by 2027, requiring an estimated total funding of around 5 trillion yen (approximately 35 billion USD) [4][8]. - Existing shareholders, including major companies like Fujitsu and Honda, have expressed interest in additional funding for Rapidus [4][5]. Group 2: Company Background and Market Position - Rapidus was established in August 2022, backed by eight major Japanese companies, including Toyota, Sony, and NTT [5][8]. - The company is in discussions with 40-50 potential clients, including major U.S. tech firms and AI chip startups, indicating a growing demand for alternative suppliers in the advanced semiconductor market [5][6]. Group 3: Technological Development and Production Strategy - Rapidus has initiated its 2-nm chip trial production line, utilizing advanced equipment, including a cutting-edge extreme ultraviolet (EUV) lithography system valued at over 300 million USD [6][10]. - The company plans to adopt a single-wafer processing method, which allows for customized chip production aimed at niche markets, contrasting with the mass production strategies of competitors like TSMC [9][10]. - Rapidus is implementing a new design-manufacturing collaborative optimization (DMCO) approach to enhance design speed and yield through AI-driven data analysis [10][11]. Group 4: Market Outlook and Competitive Landscape - The demand for 2-nm chips is expected to surge due to the anticipated growth in AI applications, with projections indicating a potential 30% reduction in power consumption compared to current leading-edge chips [11][12]. - Rapidus's timeline for achieving mass production by 2027 may lag behind industry leaders like TSMC, Intel, and Samsung, which are expected to begin large-scale production of 2-nm chips in the latter half of this year [9][11].

Group 1 - TSMC's Vice President of Material Management, Li Wenru, has resigned due to personal reasons and will leave the company on July 13, 2025 [1] - Li Wenru joined TSMC in 2022 and was promoted to Vice President of Material Management in August 2022, where he established a comprehensive work model and system for demand forecasting and monitoring supplier delivery status [1] - The role of Material Management will be taken over by senior Vice President and co-COO, Hou Yongqing, who has been with TSMC since 1997 and is also the chairman of the Taiwan Semiconductor Industry Association [2] Group 2 - TSMC is currently in an expansion phase, focusing on the construction of its facility in Arizona, USA [1] - The company is managing a significant number of suppliers, which indicates a heavy organizational responsibility [1]

Core Viewpoint - The article discusses the retirement of TSMC's Vice President of R&D, Dr. Yu Zhenhua, highlighting his significant contributions to the semiconductor industry, particularly in advanced packaging technologies and the establishment of TSMC as a leader in the foundry sector [3][5][7]. Group 1: Contributions of Dr. Yu Zhenhua - Dr. Yu Zhenhua joined TSMC in 1994 and played a pivotal role in the development of advanced packaging technologies such as CoWoS and InFO, which have been crucial for TSMC's success in the semiconductor industry [3][5][9]. - He has accumulated over 190 U.S. patents and 173 Taiwanese patents, focusing on low dielectric materials and packaging integration technologies [9]. - Dr. Yu's leadership in the development of 3D chip integration and TSV technology has strengthened the Taiwanese semiconductor supply chain [9]. Group 2: Transition of Leadership - Following Dr. Yu's retirement, his responsibilities will be taken over by Xu Guojin, who has over 30 years of experience in the semiconductor industry and previously held senior positions at Micron [5][11][13]. - Xu Guojin is currently the Vice President of Integrated Interconnect & Packaging at TSMC, focusing on 3D IC and advanced packaging technologies [13]. Group 3: Historical Context and Achievements of TSMC - TSMC's rise to prominence in the semiconductor industry is attributed to key technological breakthroughs, including the 0.13-micron copper process developed in 2003, which significantly enhanced its market position [16][17]. - The article refers to the "Six Knights of TSMC," a group of key figures, including Dr. Yu, who have been instrumental in TSMC's technological advancements and overall success [15][17][22]. - TSMC's focus on advanced packaging has become a major area of growth, with the establishment of the "3D Fabric" brand for its 2.5D and 3D packaging products [25].

Group 1 - The trend of "local for local" manufacturing is strengthening, with wafer foundry demand returning to domestic sources. In Q1 2025, UMC's market share was 4.7%, down from 7% in Q1 2021, while SMIC's market share increased from 5% in Q1 2021 to 6% in Q1 2025. UMC primarily focuses on mature processes, with 53% of its production in 40nm and below nodes, and a capacity utilization rate of 69% in Q1 2025, up from 85.5% in Q4 2024 [1][2] - UMC's average selling price (ASP) in Q1 2025 was 71.12 million yuan per wafer, which is relatively low compared to previous quarters. The company expects ASP to return to a healthy long-term trend after the impact of special events in the first quarter subsides [1] Group 2 - The downstream market is experiencing a mild recovery, driven by policies such as trade-in programs and consumer subsidies, leading to increased demand for bulk products. The industrial and automotive supply chains are replenishing inventory, with strong demand for BCD processes, MCUs, and special memory products, particularly in the automotive electronics sector [2] - The company is increasing its 12-inch wafer capacity by approximately 50,000 pieces annually, maintaining steady growth. The demand for logic chips in leading industries is growing rapidly, with high technical requirements across chip design, foundry, and packaging processes. Domestic companies still lag behind overseas giants, but leading industries are expected to drive continuous iteration of process nodes [2] - As a leading wafer foundry in mainland China, the company is benefiting significantly from the trend of localized manufacturing. Revenue projections for 2025-2027 are 67.503 billion, 77.408 billion, and 90.180 billion yuan, with net profits of 5.070 billion, 6.075 billion, and 7.092 billion yuan respectively [2]

Core Viewpoint - The article discusses United Microelectronics Corporation (UMC) actively advancing into high-voltage process technology and its collaboration with Qualcomm and Intel, indicating a strategic shift in the semiconductor industry towards advanced packaging solutions [2][3]. Group 1: UMC's Strategic Moves - UMC is extending its collaboration with Intel from 12nm to 6nm process technology, while also securing significant orders for advanced packaging from Qualcomm for high-performance computing (HPC) [2]. - The company emphasizes advanced packaging as a key development area and is working with subsidiaries and partners to create an advanced packaging ecosystem [3]. Group 2: Advanced Packaging Market Dynamics - UMC's current offerings in advanced packaging are limited to interposers, which contribute minimally to revenue, as TSMC dominates the global advanced packaging market [3]. - The partnership with Qualcomm is expected to open new business opportunities for UMC, potentially disrupting TSMC's exclusive hold on the advanced packaging market [3]. Group 3: Technical Capabilities - UMC possesses the necessary equipment for producing interposers and has previously applied Through-Silicon Via (TSV) technology in GPU chip orders, positioning it well for mass production of advanced packaging [4]. - The first batch of interposers with 1500nF/mm² capacitance has passed Qualcomm's electrical testing, with trial production underway and potential mass production expected by Q1 2026 [3].

Core Viewpoint - United Microelectronics Corporation (UMC) is making significant strides in advanced packaging technology, securing a major contract with Qualcomm and developing its own high-end interposer, which has been validated by Qualcomm, indicating a countdown to mass production [1][2]. Group 1: Advanced Packaging Developments - UMC's collaboration with Qualcomm focuses on advanced packaging for high-performance computing applications, particularly in AI PCs, automotive, and AI server markets, with initial production expected in Q1 2026 [1][2]. - The first batch of interposers with a capacitance of 1500nF/mm² has passed Qualcomm's electrical testing, showcasing UMC's capability in advanced packaging [1][2]. - UMC's advanced packaging technology, including 2.5D and 3D packaging, relies heavily on interposer capacitors, which are crucial for connecting stacked or side-by-side chips [2]. Group 2: Competitive Positioning - UMC's entry into advanced packaging allows it to differentiate itself from competitors in the mature process wafer foundry market, particularly against the backdrop of low-cost competition from the "red supply chain" [2]. - The partnership with Qualcomm not only involves orders but also includes Qualcomm purchasing equipment to be placed in UMC's facilities, indicating a deep and trusting collaboration [2]. Group 3: Process Technology Advancements - UMC is advancing its wafer foundry business by developing high-voltage process technologies, including a 14nm FinFET embedded high-voltage process platform, and is exploring collaboration with Intel to extend its process capabilities from 12nm to 6nm [3][4]. - UMC invested NT$15.6 billion in R&D last year, focusing on process technologies required for 5G communications, AI, IoT, and automotive electronics, with progress in special processes and 3D IC advanced packaging [3]. Group 4: Performance Enhancements - The 12nm FinFET process technology platform offers significant improvements over the 14nm technology, achieving a 10% performance increase and a 20% reduction in power consumption, while also reducing chip area by over 10% [4]. - UMC's advancements in process technology enhance its cost competitiveness and position in the semiconductor market [4].

Core Viewpoint - United Microelectronics Corporation (UMC) reported a consolidated revenue of NT$18.823 billion for June, showing a month-over-month decline for the second consecutive month, but a slight growth of 1.55% quarter-over-quarter, aligning with the company's expectations [1] Group 1: Revenue Performance - UMC's June consolidated revenue was NT$18.823 billion, reflecting a month-over-month decrease of 3.37% and a year-over-year growth of 7.26% [1] - For the second quarter, UMC's consolidated revenue reached NT$58.758 billion, which is a slight increase of 1.55% compared to the previous quarter and a 3.45% increase year-over-year [1] - Cumulatively, UMC's revenue for the first half of the year was NT$116.617 billion, marking a year-over-year growth of 4.65% [1] Group 2: Market Strategy and Future Plans - Due to the oversupply in the mature process market driven by increased capacity from Chinese manufacturers, UMC is considering a gradual shift towards advanced processes to enhance long-term competitiveness [2] - Reports suggest that UMC is contemplating expanding its partnership with Intel, potentially moving from a 12nm process to a 6nm process, although UMC has refrained from commenting on market speculation [2] - UMC plans to diversify its expansion beyond traditional wafer manufacturing to include advanced packaging and other high-value areas, with ongoing investments in 2.5D packaging processes in Singapore [2] - The company aims to develop a comprehensive advanced packaging solution rather than focusing solely on process technology, integrating wafer foundry services with packaging to create a complete service system [2]

Core Viewpoint - The Hong Kong stock market is experiencing significant volatility in the first half of 2025, with Chinese technology assets undergoing a profound value reassessment, making them a focal point for global investors [1] Group 1: Market Dynamics - Southbound capital has accelerated its inflow into the Hong Kong stock market, with a total net inflow of 731.19 billion HKD in the first half of the year, marking a historical high for the same period [2] - Monthly net inflows exceeded 100 billion HKD for four consecutive months from January to April, with April alone seeing a net inflow of 166.67 billion HKD, the second highest on record [2] - The overall trend of southbound capital shows a "buy the dip" strategy, with 30 trading days in the first half recording net inflows exceeding 10 billion HKD, even during market downturns [2] Group 2: Valuation Insights - The Hong Kong stock market, particularly the Hang Seng Index, remains attractive from a valuation perspective, with a price-to-earnings (PE) ratio in January 2025 hovering in single digits, indicating a significant valuation advantage [3] Group 3: Technology Sector Focus - The "Magnificent Seven" technology giants in the U.S. have seen robust growth, and similar companies in Hong Kong, such as Xiaomi, Lenovo, BYD, SMIC, Alibaba, Tencent, and Meituan, are gaining investor attention [6] - Xiaomi is positioned to benefit from AI applications and is expanding into the electric vehicle market, with a focus on new car releases and growth in smart hardware [6][8] - Lenovo is expected to see demand recovery in PCs and servers driven by AI investments, with a strategic focus on emerging markets [7] - BYD aims to achieve a sales target of 5.5 million vehicles in 2025, leveraging its smart transformation strategy [8] - SMIC is benefiting from the restructuring of the global supply chain, with a focus on maintaining high utilization rates in its mature production lines [8] - Alibaba is poised to capitalize on the surge in AI demand, enhancing its cloud services and e-commerce market share [9] - Tencent is focusing on AI integration in social advertising and gaming, with expectations for significant advancements in its product offerings [9] - Meituan is exploring growth opportunities in local consumption, particularly in the food delivery market and through its retail and technology strategy [9] Group 4: Future Outlook - Analysts are optimistic about the Hong Kong stock market in the second half of 2025, suggesting a "barbell" strategy that balances growth and dividend opportunities [10][11] - Key sectors to watch include technology driven by AI, innovative pharmaceuticals, emerging consumer markets, and stable high-yield sectors like banking and utilities [10][11]