| M | Equity Analyst | Foundation | | --- | --- | --- | | September 15, 2025 05:25 PM GMT | | | | Investor Presentation Asia Pacific | Morgan Stanley Taiwan Limited+ | | | | Daniel Yen, CFA | | | Investor Presentation: Greater China | Daniel.Yen@morganstanley.com | +886 2 2730-2863 | | | Charlie Chan | | | | Equity Analyst | | | Semiconductors Outlook | Charlie.Chan@morganstanley.com | +886 2 2730-1725 | | | Morgan Stanley Asia Limited+ | | | | Daisy Dai, CFA | | | | Equity Analyst Daisy.Dai@morganstanley.c ...

Investment Rating - Industry view is cautious [1] Core Insights - The report highlights a cautious outlook for the semiconductor industry, particularly in the context of AI and memory sectors, with a focus on potential recovery in the second half of 2025 impacted by tariff costs [7] - Long-term demand drivers include the reacceleration of AI semiconductor demand due to generative AI, which is expected to proliferate across various verticals outside the semiconductor industry [7] - The report indicates that the global semiconductor revenue peaked in the third quarter of 2024, with a forecasted decline in semiconductor exports from Korea since February 2025 [12][19] Summary by Sections Semiconductor Market Dynamics - The cyclical downturn is characterized by a shift from euphoria to pessimism, as indicated by the SOX Index performance [8] - Historical data shows that declines in semiconductor inventory days have historically signaled positive stock price appreciation [41] - The report notes that the domestic GPU supply chain may face dilution due to shipments of NVIDIA B30, impacting inferencing AI demand [7] Memory and Logic Cycles - Memory stock prices are seen as leading indicators for logic semiconductors, with the report suggesting that memory share price peaks lead logic semis [42][43] - The report forecasts a significant increase in HBM (High Bandwidth Memory) market size, projecting it to reach US$64 billion by 2027, with a CAGR of 107% from 2023 to 2027 [67] AI and Technology Trends - The report emphasizes the shift in value from hardware to application in the AI investment stack, indicating a growing focus on software and application development [73] - It is projected that local GPU revenue in China could grow to RMB 287 billion by 2027, driven by advancements in local manufacturing capabilities [90]