Key Takeaways EM equities lead developed markets in 2025 on improving conditions and valuation discounts.IBN benefits from rising digital adoption and stronger loan demand across key EM regions.TSM and MELI gain from supply-chain shifts, manufacturing growth and expanding e-commerce demand.Emerging-market (EM) economies today present a compelling alternative to developed markets, and recent data offers a fresh lens. Going by the International Monetary Fund’s (IMF) October 2025 update, emerging and developin ...

Core Insights - The article emphasizes that the artificial intelligence industry will continue to be a key focus in the hard technology sector in 2025, with significant growth in the global wafer foundry market, which reached $47.119 billion in Q3, a year-on-year increase of 27% [3][4]. Industry Overview - In Q3, TSMC accounted for 70% of the wafer foundry market share, an increase of 7 percentage points compared to the same period last year, positioning it as the leader in growth within the industry [3]. - The growth drivers in the wafer foundry sector are identified as data centers, industrial and automotive applications, and smartphones, with TSMC's advanced process and packaging orders contributing to a nearly 41% year-on-year growth in its foundry business [4]. Performance Metrics - The average capacity utilization rate for global wafer foundry businesses was 71% in Q3 2023, showing a recovery trend as it is expected to rise to 80% by Q3 2024 and reach 86% in 2025, indicating a return to a healthy operational phase [6]. - The semiconductor industry is projected to experience sustained high-quality growth through 2026, with a significant industry correction anticipated in Q2 2027 [6].

Core Viewpoint - Intel has identified its foundry business as a crucial avenue for revitalization and growth in the competitive semiconductor industry [1] Group 1 - The company has long considered the foundry business as a strategic path to recovery [1]

Core Viewpoint - Taiwan Semiconductor Manufacturing Company Limited (TSM) is highlighted as a highly profitable stock with a Buy rating and a price target of $390 from Bank of America Securities [1][2]. Group 1: Financial Performance and Projections - TSM announced a budget approval of $14.98 billion aimed at enhancing long-term capacity, including fab construction and R&D funding for 2026 [2]. - The company is expected to maintain robust gross margins around 60% through 2027, with sales projected to grow at a CAGR of 21% [3]. - Analyst Yang anticipates a 5% CAGR supply growth from 2025 to 2027, driven by TSM's technological advancements [4]. Group 2: Competitive Positioning - TSM is recognized as the world's largest dedicated semiconductor foundry, serving various global industries such as technology, communications, and automotive [5]. - The company's technological capabilities in 2nm expansion and high-end packaging are seen as significant competitive advantages over peers [4].

Core Viewpoint - Taiwan Semiconductor Manufacturing Co. (TSMC) is the world's largest contract manufacturer of chips and is expected to report strong earnings for Q4 2025, with significant growth in both EPS and revenue compared to the previous year [1][2]. Financial Performance - TSMC is set to report Q4 2025 earnings on January 15, with analysts expecting an EPS of $2.73, up from $2.24 in the prior-year period [2]. - Quarterly revenue is anticipated to reach $32.60 billion, an increase from $26.88 billion a year earlier [2]. - For Q3 2025, TSMC reported an EPS of $2.92, exceeding the consensus estimate of $2.59, and revenues of $33.09 billion, surpassing the consensus of $31.50 billion [6]. Historical Investment Performance - If an investor had purchased TSMC stock 10 years ago at approximately $22.35 per share, a $10,000 investment would have grown to $126,264 based on stock price appreciation alone [3]. - Over the same period, TSMC paid about $19.79 in dividends per share, resulting in an additional $8,855 from dividends, bringing the total investment value to $135,119, equating to a total return of 1,251.19% [4]. Analyst Ratings and Price Target - TSMC has a consensus rating of "Positive" with a price target of $328.75, indicating a potential upside of over 16% from the current stock price [5]. Future Outlook - For Q4 2025, TSMC expects revenue to be between $32.2 billion and $33.4 billion, indicating continued strong demand for its leading-edge process technologies [7].

Summary of SMIC Conference Call Company Overview - **Company**: Semiconductor Manufacturing International Corporation (SMIC) - **Ticker**: 0981.HK - **Industry**: Semiconductor Foundry Key Points Demand and Market Outlook - **Near-term Demand**: No material change expected in near-term demand, with full loadings anticipated in a seasonally slower 4Q25E due to supply chain localization and domestic customer share gains [1][2] - **Memory Prices**: Memory prices are a critical factor influencing the end-demand outlook for 2026E, with management expressing concerns about memory shortages impacting handset and consumer electronics production [1][2] - **Customer Planning**: Customers are cautious in their 2026 business planning due to uncertainties regarding adequate memory supply [1][2] Financial Performance and Projections - **Revenue Forecasts**: Revenue projections for FY25F, FY26F, and FY27F are largely unchanged, with slight adjustments made to gross margin (GM) and operating profit margin (OPM) reflecting efficiency gains [1][3] - **Earnings Per Share (EPS)**: Revised EPS for 2026F and 2027F increased by 20% and 29% respectively, reflecting the anticipated 100% net profit consolidation of SMNC starting from 2Q26F [1][3] - **Target Price (TP)**: The target price has been raised to HKD75.0, based on a price-to-book (P/B) ratio of 3.5x for 2026F [1][4] Financial Metrics - **Revenue Growth**: Projected revenue growth rates are 15.2% for FY25F, 18.1% for FY26F, and 12.0% for FY27F [3][9] - **Profitability Ratios**: - Gross margin expected to improve to 21.1% in FY25F and 21.7% in FY26F [3][16] - Operating margin projected at 10.9% for FY25F and 9.4% for FY26F [3][16] - **Net Profit**: Expected net profit for FY25F is USD590 million, increasing to USD734 million in FY26F [3][9] Capital Expenditure and Capacity - **Capex Plans**: SMIC plans to maintain a capex budget of USD7.5 billion for 2025E, similar to 2024 levels, with capacity additions expected to be uneven quarter to quarter [2][3] - **Supply and Competition**: SMIC will add more supply into 2026E, driven by domestic semiconductor localization demand, but will not engage in aggressive pricing unless necessary [2][3] Risks and Challenges - **Upside Risks**: Include better-than-expected end-demand, slower-than-expected technology migration by competitors, successful mergers and acquisitions, and increased policy support from the Chinese government [12][24] - **Downside Risks**: Include weak end-demand and intensifying geopolitical issues [24] Additional Insights - **Market Capitalization**: As of November 14, 2025, SMIC's market cap is approximately USD56.76 billion [4][8] - **Stock Performance**: The stock has shown significant growth over the past year, with a 12-month absolute return of 176.8% [8] This summary encapsulates the key insights from the SMIC conference call, highlighting the company's outlook, financial performance, and market dynamics.

Core Viewpoint - Semiconductor Manufacturing International Corporation (SMIC) is projected to achieve record full-year revenue exceeding US$9 billion due to tight foundry capacity and supply-chain localization efforts [1][2]. Financial Performance - SMIC reported third-quarter revenue of US$2.38 billion, with a gross margin of 22%, reflecting a strong performance driven by clients shifting to local supply chains amid geopolitical tensions [3]. - Quarterly revenue increased by 7.8% quarter on quarter, surpassing the management's forecast of 5 to 7%, while gross margin also exceeded guidance [4]. - Gross profit for the quarter rose 17.7% year on year to US$522.8 million, and profits attributed to SMIC increased 28.9% year on year to US$191.75 million [6]. Capacity and Utilization - SMIC's monthly capacity expanded to 1,022,750 standard 8-inch-equivalent wafers in the third quarter, up from 991,250 in the previous quarter, with capacity utilization rising to 95.8%, an increase of 3.3 percentage points from the prior quarter [4]. Market Position and Demand - As the only fab in mainland China capable of processing 7-nanometre-grade chips, SMIC plays a crucial role in China's strategy to overcome US technology restrictions, benefiting from increased demand for advanced chip foundry services from local fabless chip developers [5]. - Co-CEO Zhao Haijun noted that the ongoing supply squeeze and the localization rush by Chinese chip designers have eliminated the typical seasonal lull, keeping SMIC's factories operating at near full capacity [2].

Economic Overview - The U.S. inflation rate has reached 3% in September, the highest level since January, with consumer prices rising by 0.3% in that month, up from an annual rate of 2.9% [1][9]. Investment Opportunities - Amid rising inflation, dividend growth stocks present a favorable investment option as their increasing payouts can help maintain purchasing power [2][9]. - Companies with a strong history of dividend growth tend to have robust financial health, providing a defensive hedge against economic uncertainty [4][5]. Selected Dividend Growth Stocks - Five dividend growth stocks identified as solid investment choices include: - **Vertiv (VRT)**: Expected revenue growth of 27.5% for 2025, long-term earnings growth rate of 30%, and an annual dividend yield of 0.08% [10][11]. - **Taiwan Semiconductor (TSM)**: Projected revenue growth of 33.8% for 2025, long-term earnings growth rate of 29.2%, and an annual dividend yield of 0.88% [11]. - **Oracle (ORCL)**: Anticipated revenue growth of 16.5% for fiscal 2026, long-term earnings growth rate of 17.2%, and an annual dividend yield of 0.71% [12]. - **Lam Research (LRCX)**: Expected revenue growth of 11.9% for fiscal 2026, long-term earnings growth rate of 19.6%, and an annual dividend yield of 0.69% [13]. - **Elbit Systems (ESLT)**: Projected revenue growth of 16.4% for 2025, long-term earnings growth rate of 23.3%, and an annual dividend yield of 0.51% [14]. Investment Criteria - Stocks selected for their strong fundamentals include criteria such as: - Positive 5-Year Historical Dividend Growth, Sales Growth, and EPS Growth [6][7]. - Price/Cash Flow ratio less than the industry average, indicating undervaluation [8]. - 52-Week Price Change greater than the S&P 500, ensuring better performance over the past year [8].

Core Viewpoint - United Microelectronics Corporation (UMC) has launched its 55nm Bipolar-CMOS-DMOS (BCD) platform, which enhances performance and power efficiency for various applications including mobile devices, consumer electronics, automotive, and industrial sectors [1] Group 1: Product Launch - The new 55nm BCD platform is designed to meet the increasing complexity of power management in electronic devices [1] - This platform aims to deliver smaller and more efficient solutions for next-generation applications [1]

Summary of Hua Hong Semiconductor Conference Call Company Overview - **Company**: Hua Hong Semiconductor - **Sector**: Semiconductors - **Focus**: Pure foundry primarily engaged in 200mm and 300mm wafer processing, specializing in semiconductors for specialty applications such as embedded non-volatile memory (eNVM) and power discrete [12][13] Key Points and Arguments Downgrade and Price Objective - **Rating Change**: Downgraded from Buy to Underperform due to cautious outlook on wafer ASP and margin recovery in 2026 [1][3] - **New Price Objective**: HK$59, based on a 2x P/B (2026E), reflecting a more conservative valuation compared to the previous HK$44.5 [3][44] Inventory and Demand Dynamics - **Inventory Pressure**: Rising inventory levels among China's semiconductor chipmakers are expected to limit ASP increases in 2026, with a revised assumption of 5% ASP growth (down from 10%) [2][16] - **Demand Growth**: Chip shipment growth in China has slowed significantly, with 0%/11%/6% YoY growth in June/July/August 2025, compared to 16-40% YoY in the previous periods [2][15] Financial Forecasts - **Profitability Outlook**: Estimated operating profit margin (OPM) of 4% in 2026, improving from -4% in 2025 but below the 10-year average of 10% [2][31] - **Net Income Projections**: Adjusted net income forecast for 2026 is US$216 million, with a gradual recovery expected in subsequent years [4][42] Capacity Expansion and Acquisitions - **Acquisition of Huali Micro**: Plans to acquire Huali Micro (Fab5) announced, but details are pending. This acquisition is expected to enhance long-term competitiveness by increasing revenue and capacity [1][3] - **Capacity Growth**: Completion of Fab9 in 2026 could increase total 12" wafer capacity by 38%, with total wafer shipment expected to grow by 26% in 2026 [31][37] Market Position and Valuation - **Market Share Risks**: Aggressive capacity expansion by competitors like SMIC poses downside risks to Hua Hong's market share and profitability [3][13] - **Valuation Comparison**: Hua Hong's current P/B of 2.6x (2026E) is higher than the average of 3.2x for China foundry/OSATs, indicating a rich valuation [60] Cash Flow and Capital Expenditure - **Free Cash Flow**: Negative free cash flow expected due to high capital expenditures for Fab9 construction, projected at US$2-3 billion per year [45][46] - **Operating Cash Flow**: Operating cash inflow is expected to remain below US$1.5 billion, leading to negative free cash flow in the near term [45][46] Additional Important Insights - **Sales Mix**: Sales exposure to overseas markets has decreased from over 40% in 2017-2019 to less than 20% by 2024, indicating a shift towards domestic markets [42] - **ASP and Margin Trends**: Wafer ASP stabilization is anticipated in 1H25, but overall margins are expected to remain below 20% by the end of 2026 due to inventory pressures [39][40] This summary encapsulates the critical insights from the conference call regarding Hua Hong Semiconductor's current position, challenges, and future outlook in the semiconductor industry.