Group 1 - SMIC reported Q3 revenue of $2.382 billion, a 7.8% increase quarter-over-quarter and a 9.7% increase year-over-year, with a net profit of $315 million, reflecting a significant 115.1% quarter-over-quarter growth and a 41.3% year-over-year growth, driven by increased wafer sales and optimized product mix [1] - For Q4, despite being a traditional off-season, SMIC expects revenue to remain flat to grow by 2% quarter-over-quarter, with a gross margin guidance of 18% to 20% [1] - TSMC is actively expanding its AI capacity, planning to raise prices for advanced processes starting January 2026, with an average price increase of 3%-5% over four years, reflecting rising production costs and capital expenditures [1] Group 2 - The semiconductor industry is experiencing robust demand, particularly in AI, with companies like NVIDIA and AMD actively securing capacity for 2026 [1] - The demand for AI-related products is expected to drive significant growth in the ASIC market, with companies like Google, Amazon, Meta, OpenAI, and Microsoft anticipated to see explosive growth in ASIC quantities from 2026 to 2027 [1] - The PCB industry is also benefiting from strong AI demand, with many AI-PCB companies reporting robust orders and full production capacity, indicating high growth potential for Q4 and next year [1][2]

Core Viewpoint - The report from Guojin Securities highlights a positive outlook for AI-PCB, core computing hardware, the Apple supply chain, and industries benefiting from self-control, driven by increasing demand for CoWoS and strong orders in the AI-PCB sector [1][2]. Industry Summary - The demand for CoWoS has been revised upwards, with additional orders for 800G and 1.6T optical modules and AI-PCB, indicating a robust growth trajectory [1][2]. - The explosive growth in ASIC demand is driven by surging inference needs, with Nvidia's technology upgrades contributing to rising PCB prices and volumes [1][2]. - Several AI-PCB companies are experiencing strong orders and are operating at full capacity, with expectations for high growth in the second half of the year [1][2]. - Nvidia's CEO Jensen Huang reported strong business momentum, with the production of the next-generation Rubin chips underway, supported by major memory suppliers expanding capacity [1]. - SanDisk's FY26Q1 revenue reached $2.31 billion, reflecting a quarter-over-quarter increase of 23% and a year-over-year increase of 21%, with guidance for the next quarter indicating continued growth [1]. - The data center market is projected to become the largest market for NAND flash memory by 2026, with ongoing supply shortages expected to persist until the end of 2026 [1]. - Current market conditions show a significant increase in the spot prices of DDR5 and NAND Flash, driven by supply constraints and strong demand from AI applications [1][2]. - The report suggests that the upcoming Broadcom earnings call in December may revise ASIC revenue forecasts upwards, driven by explosive growth in token numbers and strong demand from major tech companies [1][2]. Investment Recommendations - The report maintains a positive outlook on AI-PCB, core computing hardware, the Apple supply chain, and industries benefiting from self-control, with expectations for sustained high growth in the second half of the year [2]. - The report identifies a robust upward trend in various sectors, including consumer electronics, PCB, semiconductor chips, and passive components, indicating overall industry health [2].

Core Viewpoint - The report from Guojin Securities highlights optimism towards AI-PCB, core computing hardware, the Apple supply chain, and self-controllable beneficiary industries, driven by increased demand for CoWoS and strong orders in the AI-PCB sector [1][3][4] Industry Insights - The demand for ASICs is expected to surge due to a significant increase in downstream inference demand, with NVIDIA's technology upgrades contributing to rising PCB prices and volumes [1][4] - NVIDIA's CEO Jensen Huang indicated strong business momentum, with the production of the next-generation Rubin chips already underway, supported by major memory suppliers expanding their capacities [2][4] - SanDisk reported a revenue of $2.31 billion for FY26Q1, reflecting a quarter-over-quarter increase of 23% and a year-over-year increase of 21%, with guidance for the next quarter set between $2.55 billion and $2.65 billion [2] Market Trends - The NAND flash market is experiencing tight supply conditions, with prices for DDR5 chips rising from approximately $22.0 to $28.0, indicating a nearly 30% increase [2] - The data center market is projected to become the largest market for NAND flash by 2026, with ongoing supply shortages expected to persist until the end of 2026 [2] - The overall sentiment in the semiconductor industry remains positive, with various segments such as consumer electronics, PCB, and semiconductor manufacturing showing stable to upward trends [4]

Group 1 - NVIDIA CEO Jensen Huang visited TSMC to request more chips, with the exact quantity being confidential [1] - Huang emphasized the strong and growing business demand for chips, particularly for the Blackwell platform, which includes GPUs, CPUs, network chips, and switches [1] - TSMC's Chairman C.C. Wei confirmed Huang's visit was to encourage and thank TSMC for their hard work in meeting the increasing demand [1] Group 2 - Huang stated that AI is the most important technology of this era, impacting every country and company, and reaffirmed Taiwan's critical role in the global semiconductor manufacturing landscape [2] - Huang mentioned ongoing communication with governments worldwide to help them understand the importance of AI technology and its development [2]

Core Viewpoint - ZTE Corporation's stock has declined nearly 5% following the release of its Q3 earnings report, indicating significant challenges in profitability despite revenue growth [1] Financial Performance - For the first three quarters, ZTE reported revenue of 100.52 billion yuan, an increase of 11.63% year-on-year [1] - Net profit for the same period was 5.322 billion yuan, a decrease of 32.69% year-on-year [1] - In Q3 alone, the company achieved revenue of 28.97 billion yuan, up 5% year-on-year, but net profit dropped to 264 million yuan, down 88% year-on-year [1] Market Analysis - Huatai Securities attributes the profit decline primarily to a decrease in high-margin operator business revenue, which has reduced its proportion in the overall revenue structure, shifting towards lower-margin computing services [1] - Jefferies' report indicates that ZTE's projected revenue, core operating profit, and net profit for Q3 2025 are expected to grow by 5%, but with declines of 115% and 88% respectively, significantly below market expectations [1] - The gross margin has decreased from 40% to 26% year-on-year, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Future Outlook - Jefferies anticipates an improvement in gross margin for Q4, but overall, with Chinese telecom operators further cutting capital expenditures, high-margin telecom revenue may see a double-digit decline in 2025 [1] - There is no indication that new business areas, such as servers and switches, will provide sufficient offset to these declines [1]

Core Viewpoint - ZTE Corporation's stock has declined nearly 5% following the release of its Q3 earnings report, indicating market concerns over profitability and revenue structure [1] Financial Performance - For the first three quarters, ZTE reported revenue of 100.52 billion yuan, an increase of 11.63% year-on-year [1] - Net profit for the same period was 5.322 billion yuan, a decrease of 32.69% year-on-year [1] - In Q3 alone, ZTE achieved revenue of 28.97 billion yuan, up 5% year-on-year, but the net profit attributable to shareholders was only 264 million yuan, down 88% year-on-year [1] Market Analysis - Huatai Securities attributes the profit decline primarily to a drop in high-margin operator business revenue, which has decreased in proportion, while the revenue structure has shifted towards lower-margin computing services [1] - Jefferies' report indicates that ZTE's projected revenue, core operating profit, and net profit for Q3 2025 are expected to grow by 5%, but with declines of 115% and 88% respectively, significantly below market expectations [1] - The gross margin has fallen from 40% to 26% year-on-year, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Future Outlook - Jefferies anticipates an improvement in gross margin for Q4, but overall, with Chinese telecom operators further cutting capital expenditures, high-margin telecom revenue may see a double-digit decline in 2025 [1] - The report suggests that new business areas such as servers and switches are unlikely to provide sufficient offset to these declines [1]

Core Viewpoint - The report from Jefferies indicates that ZTE Corporation (00763) is overvalued, maintaining a "Underperform" rating after a 100% increase in stock price, with a projected P/E ratio of 24 times for 2025 and a negative CAGR of -6.5% for earnings per share [1] Financial Performance - ZTE's Q3 2025 revenue, core operating profit, and net profit showed year-on-year growth of 5%, but declines of 115% and 88% respectively, significantly missing market expectations [1] - Gross margin fell from 40% to 26% year-on-year, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Market Consensus and Projections - Jefferies' net profit forecasts for 2026 and 2027 are 35% and 48% lower than market consensus, respectively [1] - The firm anticipates that high-margin telecom revenues may experience double-digit declines in 2025 due to further capital expenditure cuts by Chinese telecom operators [1] Valuation Adjustments - The target price for ZTE has been reduced from HKD 27.27 to HKD 25.71 [1] - There is a risk of valuation downgrades as investor optimism regarding new business ventures is unlikely to materialize [1]

Core Viewpoint - Jefferies has downgraded ZTE Corporation's target price to HKD 25.71, citing overvaluation and a significant miss in Q3 performance compared to market expectations [1] Financial Performance - ZTE's Q3 2025 revenue, core operating profit, and net profit saw year-on-year growth of 5%, but core operating profit and net profit dropped by 115% and 88% respectively, significantly underperforming market expectations [1] - Gross margin decreased from 40% to 26%, leading to a 33% decline in gross profit, attributed to delays in telecom equipment delivery and weak telecom demand [1] Valuation and Forecast - Following a 100% increase in stock price, ZTE is currently trading at a forecasted P/E ratio of 24x for 2025, with a projected compound annual growth rate (CAGR) of -6.5% for earnings per share [1] - Jefferies' net profit forecasts for 2026 and 2027 are 35% and 48% lower than market consensus, indicating potential risks for valuation adjustments [1] Market Outlook - The company anticipates an improvement in gross margin for Q4, but overall, there is a risk of double-digit declines in high-margin telecom revenue in 2025 due to further capital expenditure cuts by Chinese telecom operators [1] - New business areas such as servers and switches are not expected to provide sufficient offset to the declining telecom revenue [1]