Core Insights - The semiconductor industry is experiencing an explosive growth phase driven by AI, marking a significant shift from previous cycles led by consumer electronics [3][6] - The demand for advanced semiconductor processes is expected to surpass that of mature processes, indicating a reversal of the traditional market structure [4][6] Group 1: Industry Trends - The semiconductor sector is entering a new growth phase characterized by "asymmetric growth," where AI-related fields are seeing explosive demand while traditional markets are in a digestion phase [3] - The advanced process market share is projected to exceed that of mature processes, forming an inverted pyramid structure in the industry [4] - The three main trends in semiconductor process development include density enhancement, advanced packaging technologies, and system-level optimization [5][6] Group 2: Technological Developments - The most advanced semiconductor processes, such as 3nm, have been in mass production for three years, with 2nm expected to enter mass production in the second half of 2025 [5] - The demand for 2.5D and 3D packaging technologies has surged, indicating a significant market shift and the importance of these technologies [5] - System-level optimization is becoming a critical trend, requiring collaboration from system companies from the initial design phase [5] Group 3: Investment Opportunities - The current AI-driven semiconductor boom is likened to an industrial revolution, with a growing gap between market demand and actual supply chain capacity [6] - Long-term investment opportunities are anticipated in advanced semiconductor equipment, materials, manufacturing, and packaging [6]

Investment Rating - The report rates the electronic industry as "stronger than the market" [1]. Core Insights - The semiconductor industry is experiencing an explosive growth phase driven by AI, marking a significant shift from previous cycles driven by consumer electronics [4]. - The demand for advanced processes is expected to surpass that of mature processes, indicating a reversal of the traditional pyramid structure in semiconductor manufacturing [4]. - The report identifies three main trends in semiconductor process development: density enhancement, 2.5D and 3D packaging technologies, and system-level optimization [4]. Summary by Sections Industry Overview - The semiconductor industry is undergoing a transformation characterized by asymmetric growth, where AI-related sectors are seeing explosive demand while traditional sectors are in a digestion phase [4]. - Concerns about the sustainability of AI-driven demand have diminished as major international clients begin to implement AI solutions [4]. Market Trends - Advanced processes are becoming more critical, with the market share of advanced processes expected to exceed that of mature processes [4]. - The report highlights the importance of energy efficiency in advanced processes, with examples showing significant power savings from newer technologies [4]. Investment Recommendations - The report suggests that the current AI-driven semiconductor boom is comparable to an industrial revolution, with a growing gap between market demand and supply chain capacity [4]. - Long-term investment opportunities are identified in advanced equipment, materials, manufacturing, and packaging within the semiconductor sector [4].

Core Viewpoint - TSMC's recent disclosure of a leak regarding its 2nm technology has shocked the global semiconductor industry, leading to legal actions against three engineers for allegedly leaking trade secrets [2][4]. Group 1: Incident Overview - TSMC has filed a lawsuit against three engineers, who are talented young professionals with master's degrees from top universities in Taiwan, for allegedly leaking commercial secrets that may violate national security laws [2][4]. - The investigation began in late June and initially targeted a few internal engineers, but it was later discovered that confidential data had been transmitted to a former employee of Tokyo Electron (TEL), a key supplier for TSMC [4][5]. Group 2: Engineer Background - The accused engineer, who worked at TSMC for nearly eight years, was involved in improving the yield of 5nm and 3nm processes before joining TEL in 2022 as a senior marketing specialist [4][5]. - This engineer's direct supervisor is also a former TSMC employee with a prestigious academic background, highlighting the interconnectedness of talent within the industry [4]. Group 3: Nature of the Leak - The accused engineer admitted to collecting confidential data to enhance equipment performance but claimed it was for internal use only, denying any further sharing of the data [4][5]. - TSMC's legal action is a response to the discovery that the engineer had taken nearly a thousand photos of the 2nm process, an unprecedented quantity, prompting the company to take strict disciplinary and legal measures [5]. Group 4: Industry Implications - The case underscores the immense pressure within the semiconductor industry, where engineers may resort to stealing sensitive data to demonstrate their value [5].

Group 1 - TSMC is expected to produce Apple's A19 processor using 2nm technology in the second half of this year, while competitors Samsung and Intel are facing challenges in yield and progress, respectively [1] - Japan's 2nm technology has reportedly entered trial production and is expected to achieve mass production by next year, positioning Japan to compete directly with TSMC in chip manufacturing [3] - Japan established a chip company, Rapidus, in 2022 with support from major Japanese firms and the government, aiming to revitalize its semiconductor industry, which once held a significant global market share [3] Group 2 - The decline of Japan's semiconductor industry was accelerated by U.S. policies, leading to a loss of market dominance, with companies like Elpida falling behind [5] - The U.S. is seeking to diversify its chip supply sources, as TSMC currently produces 70% of advanced chips for American companies, and TSMC is raising prices for its upcoming 2nm technology by 50% [5] - Japan's Rapidus aims to revitalize its semiconductor sector, aligning with U.S. interests to create competition against TSMC [7] Group 3 - Japan's rapid advancement in 2nm technology is supported by IBM's technological expertise, which has historically played a significant role in chip manufacturing [7] - Japan has acquired advanced 2nm EUV lithography machines from ASML, becoming the third company after Intel and Samsung to do so, enhancing its production capabilities [7] - TSMC aims to maximize the value of its first-generation EUV lithography machines while Japan focuses on quickly achieving mass production of 2nm technology, leveraging its advantages in chip materials [9]

Group 1 - Samsung Electronics' foundry division has secured orders for 7nm and 8nm processes from AI chip design companies, including Nintendo, improving capacity utilization [1] - Samsung's 3nm process is facing challenges, with a yield rate around 50%, while TSMC has achieved over 90% yield, raising concerns about Samsung's competitiveness in advanced processes [1][2] - Major clients like Google are shifting from Samsung's 3nm process to TSMC, indicating a loss of trust in Samsung's foundry capabilities due to yield issues [2] Group 2 - Apple, Qualcomm, NVIDIA, and MediaTek are adopting TSMC's third-generation 3nm process, with plans to transition to 2nm starting in 2026 [2] - The semiconductor industry emphasizes the importance of trust between foundries and clients, and Samsung's yield problems have led to skepticism about its foundry business [2]

Core Viewpoint - TSMC is considering acquiring a stake in a joint venture that would operate Intel's foundry business, with the aim of reviving Intel's struggling operations and supporting U.S. advanced manufacturing efforts [1][5][6] Group 1: TSMC's Proposal and Negotiations - TSMC has approached companies like Nvidia, AMD, and Broadcom regarding a potential investment in a joint venture for Intel's foundry operations, with TSMC not holding more than 50% of the stake [1][2] - The negotiations are in early stages and require approval from the Trump administration, which is concerned about foreign control over Intel [2][5] - TSMC's proposal is part of a broader strategy to enhance its presence in the U.S. semiconductor market, following a commitment to invest $100 billion in new chip factories [5] Group 2: Intel's Current Situation - Intel's stock has dropped over 50% in the past year, and the company reported a net loss of $18.8 billion in 2024, marking its first loss since 1986, primarily due to significant asset impairments [4] - The company’s foundry division has a book value of $108 billion as of December 31 [4] - Intel's board supports negotiations with TSMC, although there is internal opposition from some executives [6] Group 3: Technical and Operational Challenges - Any collaboration between TSMC and Intel will face significant challenges due to differences in manufacturing processes, chemicals, and equipment used by both companies [6][7] - TSMC aims for potential investors to not only be shareholders in the joint venture but also customers of Intel's advanced manufacturing business [7] - The 18A process technology has become a contentious point in negotiations, with Intel claiming it is more advanced than TSMC's 2nm process [7]