Wolfspeed (WOLF) shares remained in focus on Friday as the semiconductor company announced plans of shifting its incorporation from North Carolina to Delaware by Sept. 29. The announcement, part of a broader restructuring effort, arrives as the silicon carbide and gallium nitride specialist continues to operate under Chapter 11 bankruptcy protection. More News from Barchart WOLF stock has been losing ground in recent weeks. At the time of writing, its down roughly 60% versus its 1-month high set on Sept ...

Equity Research European Technology Hardware 17 September 2025 European Technology Hardware Feedback on AI power semi call We hosted the former SVP of R&D at Infineon, Bob Carroll. We highlight key takeaways below, including upcoming AI data centre architecture changes, challenges and their impacts to power semi content for Infineon (OW) and STMicro (UW). How datacentre power architectures are changing Datacentre power architectures are undergoing a significant transformation. Traditionally, power was suppl ...

Investment Rating - The industry investment rating is In-Line [7] Core Insights - Robust spending in China is expected to lift WFE (Wafer Fabrication Equipment) estimates, with government subsidies being a primary driver rather than immediate market demand [3][10] - AI-driven demand is strong but faces bottlenecks in back-end test capacity, while the current annual capex of TSMC is around $40 billion, which may sustain AI growth without significant increases in demand from smartphones and PCs [4] - The EDA (Electronic Design Automation) market remains resilient despite proposed export restrictions to China, with potential for EDA companies to resume some licensing deals [5][10] Summary by Sections WFE Equipment - China is aggressively expanding its semiconductor capacity, suggesting upside to FY25 revenue views for ASML and ASM, with China representing a mid-20s percentage of revenue [3] - WFE growth may moderate in the medium term due to bottlenecks in back-end test capacity, while litho intensity is expected to hit an asymptote in the next decade [4][10] EDA & IP - The EDA market is resilient despite export restrictions, with a wide range of potential outcomes regarding China and AI [5][10] - Local Chinese EDA solutions are perceived as limited in competitive threat due to incomplete tool-chains for advanced nodes [11] Power Segment - Power semiconductors are a clear growth area, but adoption of new technologies may remain niche due to cost and infrastructure readiness [12] - Infineon is recognized for its leadership and cautious market strategies, while Chinese firms are aggressively developing high-voltage solutions [12] Notable Highlights - Intel's transformation remains uncertain with significant execution risks under new leadership, while the PC and smartphone markets are subdued [13] - Memory markets are expected to strengthen in the second half of 2025, driven by AI and edge applications [13]

Investment Rating - The report assigns a "Buy" rating to Mitsubishi Electric (MELCO) [2][14][17]. Core Insights - Mitsubishi Electric is undergoing significant management changes aimed at shifting from a Japan-centric approach to a more global and innovative strategy. The management is committed to qualitative changes and enhancing corporate value over the medium to long term [2][14]. - The company has a strong financial position, highlighted by a net cash position and a recent ¥100 billion share buyback to reduce its cost of capital. However, it recognizes the need for a robust growth strategy, including a ¥1 trillion M&A budget to encourage business divisions to leverage their strengths [2][3][14]. - MELCO aims to achieve a market capitalization of ¥10 trillion, which it believes cannot be accomplished with its current approach. The company is focused on becoming more innovative and willing to take risks [8][14]. Summary by Sections M&A Strategy - MELCO has set a ¥1 trillion M&A budget to pursue opportunities in the digital transformation field, acknowledging the high valuations in this sector. The company is also looking to consolidate its software business around ICONICS, which it acquired in 2019 [3][14]. Business Restructuring - The company plans to significantly reduce headcount in its factory automation (FA) business and is reviewing businesses with combined annual sales of ¥1.3 trillion, including exiting low-margin businesses and downsizing overseas production facilities [1][6][14]. - MELCO is considering restructuring its automotive business, which generates around ¥700 billion in annual sales, and is also reviewing its core FA business [9][14]. Digital Strategy - The FA solutions division has developed a cloud-based system for data updates, allowing customers to monitor equipment status via smartphones. Each business division has been tasked with finding ways to leverage the Serendie digital platform [7][14]. Financial Performance - The report projects revenue growth for MELCO, with expected revenues of ¥5,521.7 billion for FY3/25, increasing to ¥6,161.0 billion by FY3/28. Operating profit is also expected to rise from ¥391.9 billion in FY3/25 to ¥590.6 billion in FY3/28 [17].

Investment Rating - The report maintains a Neutral rating for China Resources Microelectronics (CR Micro) with a price target of Rmb40.00 for December 2026, based on a 26x one-year forward P/E ratio [1][12][28]. Core Insights - CR Micro reported 1Q25 sales of Rmb2.4 billion, reflecting an 11% year-over-year increase, while net profit surged by 151% year-over-year to Rmb83 million. However, gross margin declined due to increased depreciation from capacity release [1][12]. - The company is expected to experience a sales compound annual growth rate (CAGR) of 14% and an earnings CAGR of 39% from 2025 to 2027, despite near-term profit pressures from joint venture (JV) losses in Shenzhen and Chongqing [1][12][27]. - The product segment is anticipated to outpace the service segment in long-term growth, with a projected 18% sales CAGR for products and 10% for services during 2025-2027 [7][12]. Financial Summary - For FY25, revenue is estimated at Rmb11,331 million, with a projected increase to Rmb12,983 million in FY26 and Rmb14,936 million in FY27 [11][20]. - The adjusted net income for FY25 is forecasted at Rmb858 million, increasing to Rmb1,421 million in FY26 and Rmb2,035 million in FY27 [11][20]. - The report indicates a decline in gross profit margin (GPM) from 27.2% in FY24 to 26.5% in FY25, with expectations of recovery to 28.4% by FY26 [20][31]. Market Position and Performance - CR Micro has underperformed the A-share Semiconductor Index by 5% year-to-date and is currently trading at a P/E ratio of 45x for FY26, which is 30% higher than its peers [7][12]. - The company is recognized as a leading power semiconductor supplier in China, with growth driven by an expanding product portfolio and market share gains [12][27]. Key Changes in Estimates - Revenue estimates for FY25 have been slightly revised down from Rmb11,382 million to Rmb11,331 million, while FY26 estimates have been adjusted from Rmb13,019 million to Rmb12,983 million [2][20]. - Adjusted earnings estimates for FY25 have been reduced by 40% to Rmb858 million, reflecting higher-than-expected investment losses from JV fabs [7][12]. Quarterly Forecasts - The quarterly revenue forecast for 1Q25 is Rmb2,355 million, with expectations of Rmb2,803 million in 2Q25, Rmb3,053 million in 3Q25, and Rmb3,120 million in 4Q25 [3][31]. Valuation - The price target of Rmb40.00 reflects a cautious outlook, considering sector-wide headwinds and is positioned at the trough level of historical valuation [12][28].