Core Viewpoint - The global technology hardware industry is facing a severe "profit defense battle" due to skyrocketing storage component prices, leading to significant differentiation within the industry. While storage chip manufacturers are experiencing explosive profit growth, downstream equipment manufacturers are forced to make difficult choices between sacrificing profit margins and raising prices to curb demand [1]. Group 1: Price Surge and Profit Impact - Samsung reported a more than 30% increase in average selling prices for DRAM and approximately 20% for NAND chips, resulting in a profit increase of over two times, with this price trend expected to continue through 2026 [1]. - The price surge is driven by AI demand, described by IDC as an "unprecedented storage chip shortage," posing a crisis for equipment manufacturers [1]. - Apple and HP stocks have reacted negatively, with Apple down 4.4% at the start of 2026, making it one of the weakest stocks in the Nasdaq 100 index, while HP's stock hit its lowest level since November 2020 [1]. Group 2: Divergent Stock Performance - The past year has seen a stark divide in stock performance, with storage companies like SanDisk, Micron Technology, and Western Digital emerging as market winners, with SanDisk leading the S&P 500 index with over 60% gains entering 2026 [2]. - In contrast, hardware giants are struggling, with Apple only rising 8.6% in 2025 and continuing to decline, while HP's market value shrank by nearly one-third in 2025 and fell another 6.8% at the start of 2026 [2]. - Dell's stock has dropped 28% since reaching a historical high in October of the previous year, indicating the tough situation for hardware companies [2]. Group 3: Profit Erosion and Cost Pressures - Storage components account for 10% to 20% of the material costs in consumer hardware products, leading to rapidly downgraded profit expectations for companies [3]. - HP is particularly affected, with estimates indicating that rising storage costs will reduce its adjusted EPS by $0.30 in 2026, and market expectations for HP's net EPS have been downgraded by 7.1% in the past month [3]. - Even Apple, with strong pricing power, is expected to be impacted by the significant rise in storage component costs over the next two years [3]. Group 4: Structural Supply Shortage - The current supply shortage is characterized as a strategic reallocation of global silicon wafer capacity, differing from typical cyclical shortages, indicating that price pressures are unlikely to dissipate quickly [5]. - The extreme scarcity of supply is expected to persist in the short term, affecting semiconductor manufacturers that supply chips for smartphones, leading to downgrades for Qualcomm and Arm by Mizuho Securities and Bank of America [5]. - Among the hardware companies, only Dell is viewed positively due to its server business growth, which can partially offset the headwinds from rising storage costs [5].

Core Viewpoint - Huawei Technologies is making strides in advanced chip technology with a pending patent for a metal integration technique that could enable the production of 2-nanometre class chips without relying on extreme ultraviolet (EUV) lithography tools, which are restricted due to US sanctions [1][2][6]. Group 1: Patent and Technology - The patent, submitted in June 2022 and made public in January 2023, focuses on a method for integrating narrow metal structures using deep ultraviolet (DUV) technology, which is essential for achieving 2nm-class chip specifications [2][3]. - The proposed technique aims to circumvent US sanctions that prevent access to advanced EUV tools from ASML, thereby providing a potential pathway for China to enhance its semiconductor manufacturing capabilities [2][6]. - Huawei's method employs a variation of self-aligned quadruple patterning (SAQP) and utilizes a "spacer-defined patterning" scheme with dual hard-mask materials, allowing for the creation of interwoven metal lines and reducing the need for ultra-tight lithographic overlay [6]. Group 2: Industry Context and Implications - The patent has garnered significant attention as it presents a potential solution to overcome challenges faced by Chinese semiconductor manufacturers in competing with Taiwan Semiconductor Manufacturing Company (TSMC), which currently leads in 2-nm process technology [5]. - A Chinese chip industry veteran has suggested that 14-nm logic chips could potentially match the performance of Nvidia's 4-nm chips through innovative integration with advanced memory and architecture, indicating a shift in competitive dynamics within the semiconductor industry [4]. - Huawei's recent innovations also include advancements aimed at improving AI training efficiency and developing next-generation storage chips with enhanced capacity and performance, further solidifying its position in the tech landscape [5].

Core Insights - The global semiconductor market is projected to grow significantly, with revenues expected to reach $772 billion in 2025, representing a year-on-year increase of 22.5%, and further growth to $975 billion in 2026, an increase of 26.3% [1][2] Group 1: Revenue Growth Projections - The growth in semiconductor revenue is primarily driven by strong demand for artificial intelligence applications and data center infrastructure, leading to increased demand for logic and memory chips [1] - Logic chip revenue is expected to grow by 37.1% in 2025, making it the fastest-growing product category, followed by memory chips with a 27.8% increase [1] - The revenue for sensors is projected to grow by 10.4%, microprocessors by 7.9%, analog chips by 7.5%, and optoelectronic components by 3.7%, while discrete components are expected to decline by 0.4% due to weak demand in the automotive sector [1] Group 2: Regional Performance - In 2025, only Japan is expected to see a revenue decline of 4.1%, while the Americas will experience the highest growth at 29.1%, followed by the Asia-Pacific region at 24.9% and Europe with a modest increase of 5.6% [1] - For 2026, all regions are anticipated to show growth, with the U.S. projected to grow by 34.4% and Asia-Pacific by 24.9%, while Europe and Japan are expected to have growth rates around 1% [1] Group 3: Market Trends and Adjustments - The latest revenue forecasts have been revised upward compared to earlier predictions made in June, which estimated 2025 revenues at $700.9 billion with an 11.2% year-on-year growth [2] - The third quarter of 2025 saw global semiconductor sales reach $208.4 billion, marking a 15.8% increase from the previous quarter, driven by rising demand for various semiconductor products, particularly in the Asia-Pacific and Americas regions [2]

Group 1 - The article highlights significant announcements in the stock market, including "suspension and resumption of trading, shareholding changes, investment wins, acquisitions, performance reports, unlocks, and high transfers" [1] - Important announcements are marked in red to assist investors in identifying investment hotspots and preventing various black swan events [1] - The article emphasizes the importance of timely information for investors to discern and find suitable listed companies [1] Group 2 - A company is noted for its technological reserves in the 6G field, possessing self-developed aerospace-grade chips that have been successfully applied [1] - Another company is recognized for its products related to storage chips and PCB, with a self-developed liquid cooling solution already supplied to Alibaba [1] - A company associated with Huawei has achieved mass supply of its electronic skin products [1]

Core Insights - AMD has shown significant performance, increasing approximately 84.5% over the past year, outperforming the SMH Semiconductor ETF by nearly 34.5% and the S&P 500 by 64.5% [1][2] Performance Comparison - In comparison to other chip makers, AMD is positioned in the middle, with Micron leading the storage segment, while Nvidia has lagged behind [2] Technical Analysis - AMD's stock has experienced notable highs around 267 and lows near 203, with a recent breakout above the 240 level indicating bullish momentum [3][4] - A symmetrical triangle pattern has formed, suggesting consolidation before upcoming earnings, which is a common market behavior [4] - The volume profile indicates support levels around 240 and 235, with the 21-day exponential moving average also providing support [5] Momentum and Resistance - There is a noted decline in momentum, indicating a bearish divergence, yet overall momentum remains high as the stock approaches overbought territory [6][7] - The standard deviation channels suggest potential resistance near 260, with a higher resistance level at approximately 299 [7] Options Strategy - An options strategy is proposed to capitalize on the higher implied volatility leading up to earnings, suggesting a neutral to bullish outlook [8][9] - A specific trade involves selling an out-of-the-money 240 strike put while buying a 230 strike put, creating a short $10 wide neutral to bullish put vertical [10][11] - This strategy offers a probability of success with a 70% chance of the short 240 strike finishing out of the money, allowing for profit if the stock remains above the break-even point of 237.70 [12][13]