Summary of Key Points from the Conference Call Industry Overview - **Industry**: Semiconductor Production Equipment (SPE) in Japan [1] - **Analyst**: Tetsuya Wadaki from Morgan Stanley MUFG Securities Co., Ltd. [5] Core Insights - **Microsoft's Quantum Computing Chip**: Microsoft announced the development of a quantum computing chip named Majorana 1, which utilizes topological qubits to simplify error correction processes, a significant barrier to the commercialization of quantum computing [4][7] - **Qubit Requirements**: The chip aims to meet six essential conditions for qubits, including initializability, readability, scalability, long coherence time, and accurate conversion between stationary and flying qubits [4] - **Potential Applications**: Quantum machine learning is highlighted as a promising application, potentially leading to more efficient deep learning processes and reducing reliance on GPUs [2][9] - **Prototype Development Timeline**: Microsoft plans to complete a prototype quantum computer using Majorana within a few years, with a target of achieving a one million qubit device for commercial use [8] Implications for the SPE Industry - **Near-Term Impact**: The immediate impact on the SPE industry is expected to be negligible, as the completion of the quantum computer prototype is still several years away [7][9] - **Long-Term Opportunities**: Over the long term, the emergence of quantum computing could lead to increased demand for SPE from manufacturers like Advantest and Disco, as the market expands from GPUs to quantum devices [9] - **Performance Requirements**: The development of quantum computing could raise performance requirements for SPE, potentially increasing the value add and diversity of equipment needed [9] Additional Considerations - **Current Limitations of Quantum Computing**: Presently, quantum computing applications are limited to specialized calculations, such as breaking RSA encryption, but advancements could broaden its use in AI and machine learning [9] - **Investment in AI**: The potential for quantum computing to significantly enhance AI investments, such as the Stargate Project, is noted, indicating a shift in the technological landscape [9] Company Ratings in the SPE Sector - **Advantest (6857.T)**: Overweight [56] - **DISCO (6146.T)**: Overweight [56] - **KOKUSAI ELECTRIC (6525.T)**: Equal-weight [56] - **Lasertec (6920.T)**: Equal-weight [56] - **Nikon (7731.T)**: Underweight [56] - **SCREEN Holdings (7735.T)**: Equal-weight [56] - **Tokyo Electron (8035.T)**: Overweight [56] - **Ulvac (6728.T)**: Equal-weight [56] - **Ushio (6925.T)**: Equal-weight [56]

21 February 2025 | 7:21AM CST Optical Transceivers: BABA's cloud capex guidance a positive for transceiver demand; Buy HG Tech Alibaba (BABA, covered by Ronald Keung, report link) noted its cloud capex in the coming three years will exceed its total cloud capex in the past decade. This is positive for China datacom optical transceiver makers, in our view. Besides BABA, China telecom operators have also seen an increase in cloud and IDC activities following their deployment of Deepseek on their cloud platfor ...

Summary of Key Points from the Conference Call Industry or Company Involved - The discussion primarily revolves around the **U.S. economy** and its fiscal policies, particularly focusing on the potential government shutdown and debt ceiling issues. Core Points and Arguments 1. **Government Shutdown Impact**: A potential government shutdown is expected to lead to a direct drag of approximately **0.1 percentage points (pp)** per week on quarterly annualized real GDP growth, which is anticipated to reverse once the shutdown ends [6][10][12]. 2. **Fiscal Deadlines**: Congress must pass either a continuing resolution or full-year appropriations by **March 14** to avoid a government shutdown. If not passed by **April 30**, a **1% cut** in discretionary spending will be required [3][7][17]. 3. **Debt Ceiling Concerns**: The debt ceiling increase or suspension is projected to be necessary by **July/August**. Current estimates suggest that extraordinary measures will last until then, with a potential technical default looming if not addressed [6][8][18]. 4. **Discretionary Spending**: Discretionary spending constitutes about **25%** of federal outlays and **6%** of GDP. A **1% cut** in discretionary spending would result in an estimated **0.2pp impact** on annualized GDP growth [17]. 5. **Economic Consequences of Shutdowns**: The impact of government shutdowns on real GDP is primarily through government consumption, which is linked to government employment. Essential employees will work without pay, while nonessential employees will be furloughed [9][10]. 6. **Indirect Economic Effects**: Indirect impacts from shutdowns are expected to be smaller than in previous instances, partly due to changes in work patterns, such as remote work, which may reduce "office-related" spending [12]. 7. **Federal Reserve's Position**: The Federal Reserve is adopting a cautious approach to balance sheet runoff due to the debt ceiling dynamics, with expectations that quantitative tightening (QT) may end in **June** [18][24]. Other Important but Possibly Overlooked Content 1. **Consumer Sentiment**: Historical data suggests that consumer sentiment tends to decline during shutdowns, but the current situation may see less impact due to remote work arrangements [12]. 2. **Economic Data Releases**: The potential shutdown could delay important economic data releases, such as the retail sales report scheduled for **March 17** [13]. 3. **Long-term Economic Forecasts**: The report includes forecasts for real GDP growth, personal consumption expenditures, and other economic indicators, indicating a gradual slowdown in growth rates over the next few years [47]. This summary encapsulates the critical insights from the conference call, highlighting the potential economic ramifications of fiscal policy decisions and the broader implications for the U.S. economy.

Summary of Key Points from the Conference Call Company and Industry - **Company**: Alibaba Group (BABA) - **Industry**: Technology and Investment in China Core Insights and Arguments - **Earnings Performance**: Alibaba's recent results significantly exceeded expectations, indicating strong operational performance and market confidence [2] - **Capital Expenditure**: The announcement of increased capital expenditures surprised the market positively, suggesting a robust growth strategy [2] - **China's Technology Leadership**: There is a growing belief that China can lead in the AI-driven global technology competition, which should be recognized by global investors [2][3] - **Investor Sentiment**: Increased investor conviction in China's investibility as a technology leader is anticipated, with a shift in valuation expectations for MSCI China from 8-10x to 10-12x forward P/E ratios [3] - **Return on Equity (ROE)**: Expected improvements in MSCI China's ROE due to corporate self-help initiatives, better equity universe composition, and technology endorsements [3] Additional Important Information - **Valuation Shift**: The anticipated valuation shift is expected to compress the discount of MSCI China compared to emerging markets, potentially converging within the next 12 months [3] - **Market Dynamics**: The report emphasizes the importance of diligent corporate strategies and the evolving landscape of technology investments in China [3] - **Research Integrity**: Morgan Stanley acknowledges potential conflicts of interest due to its business relationships with companies covered in its research [4] This summary encapsulates the essential insights from the conference call, highlighting Alibaba's strong performance, the optimistic outlook for China's technology sector, and the anticipated shifts in investor sentiment and valuations.

North America Equity Research 21 February 2025 J P M O R G A N Tariffs & Sector Implications U.S. Equity Thematic Research Since President Trump took office, trade policy announcements have been rapidly evolving, with significant implications across sectors. Key developments include: (1) Potential 25% tariffs on Canada and Mexico; (2) 10% additional tariffs on China; (3) A 25% tariff on all steel and aluminum imports; (4) Intentions to impose further tariffs on specific sectors, including pharmaceuticals, s ...

Asia Pacific Equity Research 21 February 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. Shenzhen Inovance Technology Co. Ltd - A JPM China Opportunities Forum Takeaways: Cycle inflection gaining traction, humanoid robot development underway Shenzhen In ...

21 February 2025 NetEase (NTES US) FINANCIALS AND RATIOS (CNY) | Year to | 12/2024a | 12/2025e | 12/2026e | 12/2027e | | --- | --- | --- | --- | --- | | HSBC EPS | 51.86 | 57.99 | 63.98 | 69.44 | | HSBC EPS (prev) | 49.56 | 56.26 | 62.91 | na | | Change (%) | 4.6 | 3.1 | 1.7 | na | | Consensus EPS | 49.24 | 54.69 | 59.50 | 60.85 | | PE (x) | 14.6 | 13.1 | 11.9 | 10.9 | | Dividend yield (%) | 2.5 | 2.0 | 2.2 | 2.5 | | EV/EBITDA (x) | 14.2 | 12.4 | 10.7 | 9.6 | | ROE (%) | 25.5 | 25.5 | 24.8 | 23.5 | 52-WEEK ...

FICC Research Economics 21 February 2025 US Outlook 3.5 will turn heads at the FOMC Longer-run inflation expectations jumped to 3.5%, their highest level since 1995, and surveys point to some cooling in activity, on tariff fears. This complicates the FOMC's policy. The minutes of the January meeting indicate that participants are in no rush to adjust the policy rate. +1 212 526 8536 colin.johanson@barclays.com BCI, US Please see analyst certifications and important disclosures beginning on page 10. Complete ...

February 21, 2025 01:39 AM GMT China Materials | Asia Pacific Morgan Stanley Asia Limited+ Korea Imposes 28-38% Tariff on Chinese Steel Plates What's new: On Feb 20, Korea's Ministry of Trade, Industry and Energy (MOTIE) announced preliminary anti dumping duties of 27.91%-38.02% on steel plates imported from China. Our view: We think the tariff on steel plate alone is not material, as steel plates exports (~1.47mnt in 2024) to Korea make up only ~1.3% of total China steel exports. Meanwhile, Korea is an imp ...

21 February 2025 | 2:31PM HKT Source: Wind, Goldman Sachs Global Investment Research Andrew Tilton +852-2978-1802 | andrew.tilton@gs.com Goldman Sachs (Asia) L.L.C. Hui Shan +852-2978-6634 | hui.shan@gs.com Goldman Sachs (Asia) L.L.C. Lisheng Wang China Economic Activity and Policy Tracker: February 21 (Song) In this note, we update four sets of high frequency indicators that we track: 1) consumption and mobility; 2) production and investment; 3) other macro activity; and 4) markets and policy. We publish o ...