Greater China Technology Semiconductors_ Data NOW_ GigaDevice MCU Spot Price vs. MCU Companies' Share Prices

Summary of Key Points from the Conference Call Industry Overview - Industry: Greater China Technology Semiconductors - Company Focus: GigaDevice Semiconductor Beijing Inc (603986.SS) Core Insights - Spot Price Movement: GigaDevice MCU's spot price in the channel market has decreased by 2% month-over-month (M/M) as of March 2025 [1][5][9] - Market Impact: The spot market price serves as a sentiment indicator for Greater China MCU companies' share prices, despite accounting for less than 10% of the total MCU market [4][5] Financial Metrics - Price Target: The price target for GigaDevice is set at Rmb130, based on a residual income model [9] - Key Assumptions: - Cost of equity: 8.9% - Beta: 1.1 - Risk-free rate: 2% - Risk premium: 6% - Payout ratio: 40% - Medium-term growth rate: 18% - Terminal growth rate: 5% [9] Risks Identified - Upside Risks: - NOR up-cycle driven by stronger demand - Superior chip design leading to increased exposure to low-density NOR - Faster-than-expected DRAM development [11] - Downside Risks: - NOR down-cycle driven by weaker demand - Inferior chip design leading to increased exposure to mid/high-density NOR - Slower-than-expected DRAM development [11] Additional Insights - Share Price Performance: The performance of MCU companies' share prices is closely linked to GigaDevice's spot price, indicating a strong correlation within the semiconductor market [3][4] - Analyst Ratings: The industry view is currently rated as "In-Line," suggesting that the performance of the semiconductor sector is expected to align with broader market trends [5][63] Important Disclosures - Investment Banking Relationships: Morgan Stanley has investment banking relationships with several companies in the semiconductor sector, which may influence research objectivity [7][20][21] This summary encapsulates the essential points from the conference call, focusing on the semiconductor industry, particularly GigaDevice, and highlights the financial metrics, risks, and market dynamics that could impact investment decisions.