中国半导体_预计国庆节前将有积极催化因素-China Semiconductors_ Expect positive catalyst ahead of China‘s National Day on Oct 1st

Summary of Conference Call on China Semiconductors Industry Overview - The focus is on the semiconductor industry in China, particularly the developments surrounding SMIC (Semiconductor Manufacturing International Corp) and Hua Hong Semiconductor Ltd [1][3]. Key Points and Arguments 1. Positive Catalysts Ahead of National Day: Anticipation of further positive developments in semiconductor localization in China before the National Day on October 1st, including testing of EUV tools by Sicarrier and DUV machines by SMIC [1]. 2. AI Chip Self-Sufficiency Goal: China aims for 70% self-sufficiency in AI chips by 2027, which is expected to positively impact local foundries, especially SMIC [1]. 3. Technological Advancements: Continuous positive news regarding local equipment and semiconductor supply suggests that SMIC may produce chips at 7nm/5nm using multi-patterning techniques [1]. 4. EUV Machine Development: There are reports of progress in self-supply of EUV machines, with trial production expected to start in the second half of 2025 [1]. 5. Valuation of Hua Hong Semiconductor: Target price set at HK$45, based on 1.6x 2026E BVPS, reflecting an improving demand outlook and stable pricing [3]. 6. Valuation of SMIC: Target price set at HK$53.0, based on 2.4x 2026 P/B, justified by sustainable momentum from US-China decoupling and gradual industry recovery [6]. 7. Upside Risks for Hua Hong: Potential for greater-than-expected demand in the semiconductor market and less capacity expansion by competitors [4]. 8. Downside Risks for Hua Hong: Risks include lower-than-expected demand and stronger capacity expansions by competitors [5]. 9. Upside Risks for SMIC: Better-than-expected margins from efficiency improvements and strong policy support could enhance profitability [7]. 10. Downside Risks for SMIC: Risks include heavy depreciation burdens affecting margins and weaker-than-expected demand impacting earnings [8]. Additional Important Information - The report emphasizes the importance of local developments in the semiconductor industry as a significant factor for investment decisions in SMIC and Hua Hong [1][3]. - The target prices for both companies reflect a bullish outlook based on anticipated market conditions and technological advancements [3][6]. - The report also highlights the potential conflicts of interest due to the firm's business relationships with the companies discussed [2].