According to the Intelligent Finance and Economics APP, the Hong Kong stock market was volatile and weak yesterday, but the semiconductor sector went against the trend and rose. Meanwhile, in the overnight US stock market, the semiconductor sector represented by Nvidia (NVDA. US) and Taiwan Semiconductor (TSM. US) surged across the board. It is reported that since the beginning of this year, TSMC's stock price on the US stock market has risen by more than 80%, and its total market value currently ranks seventh among US-listed companies. In terms of news, according to analysts from multiple investment banks on Wall Street, TSMC will raise its full-year sales expectations in next week's financial report. Morgan Stanley, JPMorgan, Nomura, and Mizuho Securities are all optimistic about TSMC's second-quarter performance.

Morgan Stanley analyst Gokul Hariharan predicts that TSMC will raise its revenue expectations during the financial report conference call and said in the report: "We expect TSMC's demand for AI accelerators to be more proactive." At the same time, securities firms such as Morgan Stanley, JPMorgan, Nomura, and Mizuho Securities are optimistic about TSMC's second-quarter performance. Data compiled by Bloomberg shows that as the world's most advanced chip manufacturer, TSMC is expected to increase its revenue by 36% year-on-year, the fastest growth rate since the fourth quarter of 2022.

Wall Street investment bank Bernstein has raised TSMC's target from $150 to $200. Analysts led by Mark Li pointed out that high-end smartphones and advanced nodes are driving TSMC to exceed its 2024 performance guidance target. Analysts predict that TSMC's third-quarter revenue guidance will exceed expectations, and full-year revenue (in US dollars) will increase by 25%, while earnings per share will increase by 28%.

In addition, driven by the strong demand for AI servers and computing chips, the prosperity of the semiconductor industry continues to improve, and recent industry price increases have become more frequent. According to supply chain surveys, most of TSMC's customers have agreed to its price increase for contract manufacturing in exchange for reliable supply. In addition, manufacturers such as Qualcomm, SMIC, and Samsung have also announced price adjustments, covering IC design, chip manufacturing, storage chips and other links.

According to media reports, TSMC plans to raise prices. The price increase for 3nm contract manufacturing may be over 5%, and advanced packaging quotes for the next year are also expected to increase by about 10%-20%. TSMC's 3nm has received full orders from seven major customers including Apple and Nvidia, and the supply cannot meet demand. It is expected that its orders will be full until 2026. Morgan Stanley recently raised TSMC's target price by 9.3%, citing expectations of the sustainability of demand for AI semiconductors and the trend of rising wafer prices. The institution also predicts that wafer prices will increase by 5% in 2025, up from the previous assumption of 2%.

According to semiconductor industry practitioners, wafer production at major fabs such as SMIC and Hua Hong has been fully loaded for several months, and there is no longer any willingness to negotiate price cuts. Some insiders also say that although terminal demand has recovered this year, there hasn't been any significant fluctuations. However, since March, there has been a surge in demand for products that are large in volume and have wide coverage, driven by AI computing power and urgent orders from several major manufacturers, which has led to capacity constraints at head wafer fabs.

According to data from SIA, global semiconductor industry sales reached US$49.1 billion in May 2024, a year-on-year increase of 19.3% and a month-on-month increase of 4.1%. The year-on-year growth rate of sales in May set a record since April 2022. Prior to this, many domestic and foreign semiconductor companies have reported impressive company business data, and many have seen a surge in net income in the first half/second quarter. Will Semiconductor expects its net profit attributable to shareholders to be between 1.308 billion and 1.408 billion yuan in the first half of the year, an increase of 754.11% to 819.42% year-on-year. Samsung Electronics' performance report shows that its operating profit in the second quarter surged by 1452% year-on-year to 10.4 trillion won, far exceeding market expectations.

Wanlian Securities' research report pointed out that TSMC plans to raise product prices when capacity is in short supply and advanced packaging remains highly prosperous. Under the era of large-scale computing power, the trend of advanced packaging industry continues to advance. It is recommended to pay attention to investment opportunities brought by the technological upgrading of traditional packaging manufacturers and leading manufacturers with mass production capabilities in the chiplet technology field.

BOC International previously stated in its research report that TSMC, an advanced process wafer manufacturer, has returned to a positive growth track in revenue, with high-performance computing contributing significantly. The integrated circuit manufacturing industry has a differentiated recovery trend, and the sales volume and utilization rate of mature process wafer manufacturers in mainland China are more certain. As the utilization rate of the upstream field rebounds, the demand for the downstream packaging and testing industry is expected to increase.

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Morgan Stanley stated that the utilization rate of Hua Hong Semiconductor's wafer fabs has exceeded 100%, and therefore may raise wafer prices by 10% in the second half of the year. The bank raised its rating on Hua Hong Semiconductor to Overweight and raised its target price by about 65% to HK$28.

The gross margin of Semiconductor Manufacturing International Corporation (00981) declined more than the growth of customer orders. Sales in Q1 2024 increased by 4.3% QoQ, surpassing expectations of "flat to 2% growth". The gross margin in the first quarter was 13.7%, exceeding the expected range of 9%-11%. The company's capital expenditure in 2023 is approximately RMB 52.84 billion, and capital expenditures in Q1 2024 were US$2.235 billion. It is expected that the total capital expenditures in 2024 will be about US$7.5 billion, of which about 80% will be used for equipment expenditures. The high investment will result in pressure on profits. In 2024, the company is expected to emerge from the low tide together with the semiconductor industry chain. Under the joint effect of the gradual improvement of customer inventory and the continued rebound of mobile phone and Internet demand, it will achieve stable and moderate growth, and the increase in sales revenue is expected to be no lower than the industry average for comparable peers, with a mid-single-digit YoY growth.

Shanghai Fudan University (01385): The company has tens of types of products in four major series, including millions of gate-level FPGAs, billions of gate-level FPGAs, and PSoCs. It has the independent intellectual property rights FPGA matching EDA tool ProciseTM for the entire process and is a leading domestic supplier of programmable device chips. As one of the few domestic FPGA suppliers in the industry, the company will fully benefit from the demand brought by downstream market localization and has broad development prospects.