Core Viewpoint - SMIC reported a strong year-on-year increase in revenue and net profit for Q1 2025, but did not meet revenue guidance, with expectations of a sequential decline in Q2 revenue due to production fluctuations and pricing pressures in the market [1][2]. Financial Performance - The company achieved total revenue of 16.301 billion yuan, a year-on-year increase of 29.4%, and a net profit of 1.356 billion yuan, up 166.5% year-on-year [1]. - Despite a decline in average selling prices, the gross margin increased to 22.5%, exceeding the guidance of 19% to 21%, driven by a 27.7% year-on-year increase in wafer shipments [1]. Revenue Breakdown - Wafer revenue accounted for 95.2% of total revenue, with a year-on-year increase of 2.2% and a sequential increase of 2.7% [2]. - Revenue by application: - Smartphones: 24.2% (down 7% YoY) - Computers and tablets: 17.3% (down 0.2% YoY) - Consumer electronics: 40.6% (up 9.7% YoY) - IoT and wearables: 8.3% (down 4.9% YoY) - Industrial and automotive: 9.6% (up 2.4% YoY) [2]. Market Outlook - The company anticipates downward adjustments in customer inventory targets for smartphones and stable but lackluster growth in PC sales, with overall supply exceeding demand in the panel market [2]. - SMIC will support customers in facing market price competition but will not engage in proactive price cuts to gain market share [2]. Regional Performance - Revenue by region: - China: 84.3% (up 2.7 percentage points YoY, down 4.8 percentage points QoQ) - USA: 12.6% (down 2.3 percentage points YoY, up 3.7 percentage points QoQ) - Eurasia: 3.1% (down 0.4 percentage points YoY, up 1.1 percentage points QoQ) [3]. Impact of Tariffs - The company noted minimal direct impact from new tariffs, estimating the effect to be less than one percentage point, with continued strong capacity utilization and positive signals of recovery in various sectors [3].

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Core Viewpoint - The rise of artificial intelligence (AI) has significantly impacted various industries, leading to increased investments in companies associated with AI, particularly in software and hardware sectors [1][2]. Company Analysis - Nvidia has seen a remarkable increase in its stock price, climbing nearly 680% since the release of ChatGPT on November 30, 2022, which has added trillions to its market value [2]. - Despite Nvidia's strong performance and promising future, its current market cap of nearly $3 trillion raises concerns about the sustainability of further growth [3]. - Taiwan Semiconductor Manufacturing Company (TSMC) is identified as a top pick among AI chip stocks, with significant potential for growth compared to Nvidia [4]. Industry Position - TSMC is the leading player in the foundry business, crucial for manufacturing advanced chips, and holds a commanding 67% share of the global third-party foundry market as of the end of 2024 [6]. - TSMC collaborates closely with major tech companies, including Nvidia, AMD, and Apple, which positions it favorably within the AI narrative [6]. - The company has demonstrated impressive sales growth and has successfully widened its profit margins during a period of rapid expansion [7]. Investment Strategy - TSMC is reinvesting profits into expanding its capacity, with a $65 billion investment in Arizona and an additional $100 billion planned for R&D and fabrication facilities in the U.S. [8][9]. - Despite a challenging start to 2025 for the stock market, TSMC shares have declined about 12% year-to-date, presenting a potential buying opportunity [10][11]. - TSMC's forward price-to-earnings (P/E) ratio of 19.2 is consistent with its three-year average, yet the company has become a key player in the AI chip industry, suggesting undervaluation [12]. - The long-term prospects for TSMC appear bright due to increasing infrastructure spending on data centers and chips, making its shares an attractive investment for those with a long-term horizon [12][13].

Core Viewpoint - The global wafer foundry industry is expected to see a 26% year-on-year revenue growth and a 9% quarter-on-quarter growth in Q4 2024, driven primarily by strong AI demand and the ongoing recovery of the Chinese market [1][3]. Summary by Sections Industry Performance - The advanced process capacity utilization remains high, driven by AI and flagship smartphone demand, particularly for TSMC's N3 and N5 processes [1][3]. - The overall utilization rate for global (excluding China) mature process foundries hovers between 65%-70%, with 12-inch processes recovering faster than 8-inch processes due to weaker demand in automotive and industrial sectors [1][3]. Demand Recovery - Non-AI demand is gradually recovering, particularly in consumer electronics and PC semiconductor sectors, supported by pre-production demand related to U.S. tariffs and demand driven by Chinese subsidies [1][3]. - Advanced packaging demand remains strong and stable, with TSMC actively expanding its CoWoS-L and CoWoS-R capacities, alleviating previous market concerns regarding capacity and order adjustments [1][3]. Company-Specific Insights - TSMC's revenue share reached a record 67% in Q4 2024, up from 64% in the previous quarter, primarily due to high capacity utilization in advanced processes [4]. - Samsung Foundry experienced a slight quarter-on-quarter revenue decline in Q4 2024, attributed to lower-than-expected demand for Android smartphones, leading to a decrease in its market share from 12% to 11% [5]. - SMIC's performance in Q4 2024 met expectations, with revenue growth driven by the recovery in consumer electronics and domestic localization efforts, although overall capacity utilization decreased from 90.4% to 85.5% [6]. - UMC's performance in Q4 2024 was stable, supported by occasional urgent orders in consumer electronics, but faced pricing pressure and a negative impact from a January earthquake [7]. - GlobalFoundries reported stable performance in Q4 2024, with strong wafer shipments offsetting seasonal weakness in the smartphone sector, driven by automotive demand and growth in communication infrastructure [8]. Analyst Commentary - The strong performance of the wafer foundry industry in Q4 2024 is largely attributed to the surge in AI and flagship smartphone demand, maintaining high capacity utilization in advanced processes [9].

根据 Counterpoint Research 的 《晶圆代工季度追踪报告》 数据，全球晶圆代工行业在 2024 年 Q4 收 入同比增长 26% ，环比增长 9% ，主要受强劲的 AI 需求以及中国市场持续复苏的推动。先进制程 的产能利用率依然维持在高位，主要受 AI 及旗舰智能手机需求驱动，尤其是TSMC的 N3 和 N5 制 程。与此同时，全球（不含中国）的成熟制程晶圆代工厂仍面临较低的产能利用率困境，本季度整 体利用率徘徊在 65%-70% 之间。其中，12 英寸制程的复苏势头强于 8 英寸制程，后者受汽车和工 业领域需求低迷的影响更大。不过，非 AI 需求正逐步回暖，尤其是在消费电子和 PC 半导体领域， 这得益于与美国关税相关的预先生产需求以及中国补贴驱动的需求，这为更广泛的市场稳定带来了 一些乐观因素。 随着 AI 和高性能计算（HPC）持续推动先进制程需求增长，先进封装在支撑行业增长方面发挥了关 键作用。TSMC 积极扩展 CoWoS-L 和 CoWoS-R 产能，进一步强化这一趋势，并缓解了市场此前对 产能及订单调整的担忧。 数据来源：《2024 年 Q4 全球晶圆代工行业收入追踪报告》， ...

Core Viewpoint - The global wafer foundry industry experienced a polarized development in Q4 2024, with advanced processes benefiting from the growth of emerging applications like AI servers and new flagship smartphone APs, leading to a nearly 10% quarter-on-quarter revenue increase for the top ten foundries, reaching a record high of $38.48 billion [1][2]. Group 1: Industry Overview - The advanced process segment saw growth due to increased demand from AI-related chips and new smartphone platforms, offsetting the decline in mature process demand [1]. - The top ten wafer foundries collectively achieved a revenue of $38.48 billion in Q4 2024, marking a 9.9% increase from Q3 2024 [2]. Group 2: Company Performance - TSMC's revenue grew to $26.85 billion in Q4 2024, a 14.1% increase from Q3 2024, maintaining a market share of 67.1% [2][4]. - Samsung's revenue slightly decreased by 1.4% to $3.26 billion, with a market share of 8.1% due to challenges in offsetting losses from major customer transitions [5]. - SMIC's revenue increased by 1.7% to $2.21 billion, with a market share of 5.5%, benefiting from new 12-inch capacity and optimized product mix [6]. - UMC's revenue was $1.87 billion, a slight decrease of 0.3%, maintaining a market share of 4.7% due to better-than-expected capacity utilization [7]. - GlobalFoundries reported a revenue increase of 5.2% to $1.83 billion, with a market share of 4.6% [8]. - HuaHong Group's revenue grew by 6.1% to $1.04 billion, driven by increased capacity utilization and demand from the home appliance sector [9]. - Tower's revenue increased by 4.5% to $387 million, maintaining a market share of 1.0% [10]. - VIS experienced a revenue decline of 2.3% to $357 million, with a market share of 0.9% [11]. - Nexchip's revenue grew by 3.7% to $344 million, rising to the ninth position in market share [12]. - PSMC's revenue decreased, resulting in a drop to the tenth position, although it remained slightly above Nexchip for the full year [13].

Core Insights - Intel is at a critical juncture with reports indicating that NVIDIA and Broadcom are evaluating its advanced 18A manufacturing process, which is pivotal for Intel Foundry Services and its IDM 2.0 strategy [1][2][3] - The market reacted negatively to Intel's foundry comeback bid, with stock prices dropping nearly 7%, reflecting the high stakes and uncertainty surrounding this endeavor [2][11] - The 18A process is Intel's most advanced technology, aimed at reclaiming technological leadership and potentially surpassing competitors like TSMC and Samsung [2][9] Group 1: Foundry Services and Market Position - Securing NVIDIA and Broadcom as clients would validate Intel's technology and significantly enhance its credibility in the foundry market [3][4] - These companies are considered "anchor clients" that could drive substantial revenue and attract additional customers, positioning Intel as a serious contender in the foundry space [4][6] - Current evaluations by NVIDIA and Broadcom are preliminary and do not guarantee long-term contracts, making the outcome uncertain [5][6] Group 2: Internal Innovations - Intel continues to innovate with the launch of Xeon 6 processors, which offer improved performance and efficiency, particularly for AI applications [7][8] - The Xeon 6 launch demonstrates Intel's commitment to maintaining a competitive edge while pursuing its foundry ambitions [8][10] Group 3: Challenges and Market Dynamics - The semiconductor foundry industry is highly competitive, with established players like TSMC and Samsung creating significant barriers for Intel [9][10] - Intel Foundry Services is still in its early stages, and achieving profitability and market share will be a long and challenging process [10][12] - Despite potential rewards, the path to success in the foundry market requires patience and exceptional execution amid intense competition [10][12] Group 4: Investor Sentiment and Stock Forecast - The stock market's response to Intel's news has been volatile, with lingering skepticism from analysts regarding Intel's turnaround and financial challenges [11][14] - Analysts have set a 12-month price target of $26.88 for Intel, indicating a potential upside of 29.17% from current levels [13][14] - A strategic approach is recommended for investors, focusing on tangible metrics such as customer wins and improvements in manufacturing processes [15][16]

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $1,715 million, up 4.3% sequentially [5] - Gross margin decreased to 13.7%, down 2.7 percentage points sequentially [5] - Profit attributable to the company was RMB 72 million [5] - Total assets at the end of Q1 were RMB 48.2 billion, with total cash on hand of RMB 15.4 billion [6] - Total liabilities were RMB 17.3 billion, with total debt at RMB 10.3 billion [6] - EBITDA was RMB 887 million, with an EBITDA margin of 50.7% [5] Business Line Data and Key Metrics Changes - 8-inch equivalent wafer shipments increased by 7% sequentially to 17.95 thousand pieces [12] - Wafer revenue accounted for 93% of total revenue, while other revenue accounted for 7% [13] - Wafer revenue by application: smartphones (31%), computers and tablets (18%), consumer electronics (31%), connectivity and IoT (13%), industrial and automotive (7%) [14] Market Data and Key Metrics Changes - Revenue from China accounted for 82%, while revenue from America and Eurasia accounted for 15% and 3%, respectively [13] - Utilization rate increased by 4 percentage points sequentially to 80.8% [12] Company Strategy and Development Direction - The company is focusing on capacity construction and R&D to enhance core competitiveness and corporate value [8] - Plans not to pay dividends for 2023 to align with long-term development needs [9] - The company is accelerating the development of technology platforms for mainstream applications, including automotive and IoT [15] - The company aims to maintain its leading position in the market through strategic partnerships and technology leadership [19] Management's Comments on Operating Environment and Future Outlook - The company observed improved IC inventory levels and increased willingness from global customers to build inventory [11] - Revenue and gross margin both exceeded guidance in Q1 [12] - For Q2 2024, revenue is expected to grow by 5% to 7%, with gross margin projected to be between 9% and 11% [7][16] - The company is cautiously optimistic about the second half of the year, with a revenue growth target exceeding the industry average [18][20] Other Important Information - The company is in a continuous high investment phase to expand 12-inch high-quality capacity [20] - The company has achieved laboratory accreditation for its Automotive Reliability Testing Center, supporting its automotive process platform development [15] Q&A Session Summary Question: Inventory levels and customer demand - Management noted that global customers are more willing to build inventory due to market uncertainties [11] Question: Revenue guidance and market conditions - Management provided guidance for Q2, expecting revenue growth and a cautious outlook for the second half of the year [18][20] Question: Dividend policy and long-term strategy - Management explained the decision not to pay dividends for 2023 aligns with long-term development needs [9]

Financial Data and Key Metrics Changes - In Q4 2023, revenue was $1.678 billion, up 3.6% sequentially, while gross margin decreased to 16.4%, down 3.4 percentage points sequentially [5][12] - For the full year 2023, revenue was CNY 6.322 billion, down 13% year-over-year, with a gross margin of 19.3% [6][13] - EBITDA for Q4 was RMB 1.011 billion, with an EBITDA margin of 60.2%, while full year EBITDA was RMB 4.064 billion, with an EBITDA margin of 64.3% [6][8] Business Line Data and Key Metrics Changes - Revenue from CMOS image sensors (CIS) and image signal processors (ISP) increased by over 60% sequentially, while revenue from display driver ICs (DDIC) and touch display driver ICs (TDDI) increased by nearly 30% sequentially [12][13] - The company reported strong competitiveness in the 40nm and 55nm markets [13] Market Data and Key Metrics Changes - By region, revenue distribution was 80% from China, 16% from America, and 4% from Eurasia [14] - Wafer revenue by size was 26% from 8-inch and 74% from 12-inch wafers, while revenue by application was distributed as follows: Smartphones 27%, Computers and Tablets 27%, Consumer Electronics 25%, Connectivity and IoT 12%, and Industrial and Automotive 10% [14] Company Strategy and Development Direction - The company plans to continue progress on 12-inch fabs and capacity building projects, with capital expenditure expected to remain flat compared to the previous year [15][16] - The company aims for revenue growth not less than the industry average, targeting mid-single-digit percentage growth year-over-year for 2024 [16] Management's Comments on Operating Environment and Future Outlook - The company experienced a downturn in the semiconductor industry in 2023, with high inventories and macroeconomic challenges impacting demand [10][15] - Management noted that while there are signs of recovery in certain areas, the overall market demand is not strong enough for a comprehensive rebound [15] - The company emphasized its resilience due to its local manufacturing capabilities and market advantages in China [18] Other Important Information - Capital expenditure for 2023 was RMB 7.47 billion, and the company generated RMB 3.358 billion in cash from operating activities [7][8] - The company reported a total asset value of RMB 47.8 billion, with total liabilities of RMB 16.9 billion and total equity of RMB 30.8 billion [7] Q&A Session Summary Question: What are the revenue contributions from different product lines? - Revenue contributions were noted as follows: 30% from BCD analog power, 25% from high voltage drivers, 20% from microcontrollers (MCUs), 10% from memory, and 10% from CMOS imagers [22] Question: What is the outlook for the semiconductor market? - The company indicated that the semiconductor market is facing challenges from macroeconomic factors, geopolitical tensions, and inventory issues, which may hinder a strong recovery [15][17]