Summary of Key Points from the Conference Call Industry Overview - **Industry**: Semiconductor/Specialty Equipment (SPE) sector - **Market Forecast**: The Wafer Fabrication Equipment (WFE) market is expected to experience a 1% year-over-year (YoY) decline in calendar year 2025, followed by a 3% growth in 2026. The market saw a strong growth of 9% YoY in 2024, driven by demand from generative AI and increased investments in China [2][7][10]. Core Insights - **Demand Drivers**: Foundries and DRAM manufacturers are anticipated to benefit from the ongoing growth in generative AI demand, which is expected to be a primary driver for the WFE market [2][7]. - **Temporary Demand Dip**: There are indications of a temporary dip in demand at the start of 2025, influenced by DeepSeek and US-China regulations, particularly restrictions on NVIDIA chip exports to China. However, expectations for the second half of 2025 are optimistic due to strong investment commitments from major data companies and anticipated US government approval for NVIDIA's H20 shipments to China [2][7][18]. - **End Product Demand**: Overall end product demand remains muted outside of generative AI, leading to cautious optimism regarding broader market recovery [2][7]. Semiconductor Shipments - **Global Semiconductor Shipments**: The value of global semiconductor shipments has been increasing YoY for 21 consecutive months, with double-digit growth observed in the last five months. A strong growth of 11% YoY is expected in 2026 [7][10]. - **Potential Risks**: There is a risk of a reactionary decline in non-generative AI applications if end demand does not recover strongly [7][10]. Capital Expenditure (Capex) Trends - **Capex Outlook**: The capex outlook has improved for some foundries and DRAMs, while conditions for North American logic and non-Chinese NAND remain challenging. Concerns about US-China restrictions and tariffs could hinder share price recovery for front-end process companies compared to back-end process companies [7][10]. - **Technology Transition**: As the focus shifts to growth prospects in 2026-27, attention will be on companies positioned to benefit from rising investments driven by technological transitions, particularly in etching and film deposition systems [7][10]. Specific Market Segments - **CoWoS and WMCM**: Supply/demand for CoWoS (chip-on-wafer-on-substrate) is expected to be tight through the second half of 2025 but will balance by 2026. WMCM (wafer-level multichip module) demand is anticipated to rise, particularly for high-end iPhone models [11][15]. - **High Bandwidth Memory (HBM)**: The HBM market is currently tight due to certification delays at Samsung, with expected growth slowing from 219% YoY in 2024 to 121% in 2025, but potentially accelerating again in 2027 [16]. - **DRAM and NAND Memory**: Forecasts indicate DRAM and NAND average selling prices (ASP) will grow 17% and 1% YoY in 2025, respectively, but will decline in 2026. Supply/demand for DRAM is expected to remain balanced in 2025 due to conservative company stances [16]. Smartphone and PC Market - **Smartphone Shipments**: Smartphone shipment forecasts have been lowered to flat YoY in 2025 and a decline of 1% in 2026, influenced by economic downturn concerns and tariff impacts [18]. - **PC and Server Demand**: PC shipment volume is expected to grow 2% YoY in 2025 but decline 4% in 2026. Server demand is projected to grow 2% YoY in 2025, driven by AI server ramp-up and increased cloud service usage [16]. Investment Recommendations - **Top Picks**: The report highlights several top picks within the SPE sector, including AMEC-A, KLA Corporation, Hanmi Semiconductor, ACM Research, Advantest, Tokyo Electron, and BE Semiconductor [10]. - **Focus Areas**: Investors are advised to focus on companies that are well-positioned to benefit from rising investments in technology transitions, particularly in the context of generative AI and related sectors [18]. Conclusion - The semiconductor industry is navigating a complex landscape with varying demand dynamics across different segments. While generative AI continues to drive growth, caution is warranted due to potential regulatory impacts and muted demand in non-AI areas. Investors should remain selective and focus on companies poised for growth amid these transitions [2][7][18].

ab 1 July 2025 Global Research Memory Semis Monthly July '25 Edition: HBM supply / demand remains healthy HBM supply / demand to remain in check Investors often ask us whether the disconnect between our HBM supply forecasts (i.e., shipments from HBM vendors) and demand estimates (based upon end-consumption) should be cause for concern. For now, we do not believe so. HBM typically ships into consignment inventories at TSMC, ahead of the CoWoS process taking place. This then can last up to 2 months. The packa ...