Summary of Conference Call on Greater China Technology Semiconductors Industry Overview - **Industry**: Greater China Technology Semiconductors - **Market Sentiment**: Cautious outlook on China's analog market due to pricing pressure and slow localization progress [1][2][3] Key Companies Discussed 1. **SG Micro Corp. (300661.SZ)** - **Rating Change**: Downgraded from Overweight to Equal-weight - **Price Target**: Reduced from Rmb90.00 to Rmb80.00 - **Earnings Outlook**: 2026-27 EPS estimates cut by 9% and 8% respectively due to weaker demand [5][57] 2. **Silergy Corp. (6415.TW)** - **Rating**: Maintained Overweight but price target lowered from NT$378.00 to NT$268.00 - **Revenue Guidance**: Expected to guide down full-year revenue to low-single-digit year-over-year growth for 2025, down from an original assumption of 10% growth [4][30] - **Gross Margin**: Anticipated decline in 3Q25 gross margin due to unfavorable product mix and slower ramp-up of Gen4 products [4] Core Insights - **Demand Uncertainty**: Industrial demand in China has not shown sequential growth, impacting the overall market pull-in [2] - **Pricing Pressure**: Texas Instruments (TI) expects a low-single-digit blended ASP reduction throughout 2025, indicating a lack of an "analog price upcycle" [2] - **Localization Challenges**: Localization efforts for analog products are lagging, particularly outside of AI server applications [3] - **Competitive Landscape**: SG Micro faces intensified competition and pricing pressure from foreign peers, affecting its market position [5][57] Financial Metrics - **Silergy's Financials**: - 2025 revenue forecast cut by 5% and EPS by 19% due to high R&D spending and below-expectation auto business [30] - Expected to maintain high operating expenses to support product launches [45] - **SG Micro's Financials**: - Anticipated high R&D expenses leading to a 1.4 percentage point cut in operating margin for 2026 and 2027 [57] Market Dynamics - **Inventory Levels**: Channel inventory levels have normalized, but broad-based consumer demand remains weak [9][10] - **Seasonality Effects**: Traditional seasonality expected to impact sales negatively in 4Q25 [10] - **Tariff Impacts**: Tariff-related front-loading may have artificially inflated 2Q25 shipments, leading to skepticism about sustainable demand [10] Strategic Outlook - **Silergy's Position**: Despite challenges, Silergy is expected to outperform domestic peers due to its own foundry and strategic focus on automotive and AI server products [4][20] - **SG Micro's Challenges**: The company is experiencing a cyclical downturn, with a need to adapt to changing market conditions and competitive pressures [5][57] Conclusion - The conference call highlighted a cautious outlook for the analog semiconductor market in China, with significant challenges for key players like SG Micro and Silergy. The focus on localization, pricing pressures, and demand uncertainty will be critical factors influencing future performance in this sector.

Investment Rating - The report maintains a BUY rating for Wingtech with a target price (TP) unchanged at RMB52, indicating a potential upside of 54.6% from the current price of RMB33.64 [1][3]. Core Insights - Wingtech's 1Q25 earnings showed a revenue decline of 19.4% YoY to RMB13.1 billion, while net profit surged by 82.3% YoY to RMB261 million. The gross profit margin (GPM) improved to 14.0% [1]. - The company is undergoing a transformation phase following the divestment of its ODM business, focusing solely on the semiconductor segment, which is expected to be the core growth driver due to strong demand in AI servers, recovering consumer and industrial markets, and increasing penetration of electric vehicles (EVs) [1][8]. - The semiconductor segment delivered resilient growth with revenue up 8.4% YoY to RMB3.7 billion in 1Q25, benefiting from a surge in shipment volumes [8]. Financial Summary - Revenue for FY25E is projected at RMB25.643 billion, a significant decline of 65.2% YoY, while net profit is expected to rebound to RMB2.437 billion [2][11]. - The gross margin is forecasted to improve to 26.3% in FY25E, with net profit margin (NPM) expected to be 9.5% [9][11]. - The ODM business recorded a revenue of RMB9.4 billion, down 24% YoY, and incurred a net loss of RMB164 million, which will no longer impact the company's financials post spin-off [8]. Market Position and Performance - Wingtech's market capitalization stands at RMB41.8 billion, with an average turnover of RMB624.1 million over the past three months [3]. - The share performance over the past month shows a slight increase of 0.8%, while the six-month performance reflects a decline of 15.5% [5]. - The company is expected to benefit from the market re-rating on a pure-play semiconductor basis following the divestiture of its low-margin business [8].

Investment Rating - The report maintains a "Buy" rating for AccoTest and a "Hold" rating for SG Micro and Maxscend [4][8][56]. Core Insights - The latest import tariff regulations on US semiconductors are expected to create a supply shortage, price hikes, and import substitution, particularly benefiting domestic analog and RF markets [8][10]. - The localization trend in the semiconductor industry is anticipated to accelerate due to China-US tensions, enhancing the bargaining power of domestic companies [11][22]. - The report highlights that analog (over 20%) and RF (approximately 50%) segments will benefit significantly from higher tariffs on US suppliers, while memory and advanced logic categories are less affected [3][10]. Summary by Sections Company Ratings and Estimates - AccoTest is projected to have a target price of RMB 182.50, reflecting an 18% upside from its current price [5][56]. - SG Micro's target price is adjusted to RMB 100.60, indicating a 10% downside from its current price, maintaining a Hold rating due to tariff tensions [4][34]. - Maxscend's target price is revised to RMB 79.70, also maintaining a Hold rating, with a 4% downside from the current price [41][45]. Market Dynamics - The report indicates that the localization ratio for analog ICs was 24% in 2024, with expectations for further increases due to tariff impacts [11][22]. - Domestic suppliers are expected to gain market share in the RF segment, particularly in mid- to high-tier smartphone models, as tariffs incentivize localization [15][16]. - The report notes that while discrete and power semiconductors have achieved high localization rates, further upside in these areas is limited compared to analog and RF segments [22][24]. Financial Projections - SG Micro's revenue estimates for 2025 are increased by 2% to RMB 4,101 million, with net profit estimates raised by 7% to RMB 706 million [30][31]. - Maxscend's revenue estimates for 2025 are lowered by 2% to RMB 5,340 million, with net profit estimates reduced by 18% to RMB 551 million [41][44]. - AccoTest's revenue is projected to reach RMB 1,186 million in 2025, with a net profit of RMB 471 million [57].