Hong Kong Stock Concept Tracking | TSMC's market value breaks $1 trillion during trading hours, industry prices may enter an upward phase (with concept stocks)

According to the information from the Wise Finance APP, the Hong Kong stock market fluctuated and weakened yesterday, but the semiconductor sector bucked the trend and strengthened. Meanwhile, in the overnight U.S. stock market, the semiconductor sector led by NVIDIA (NVDA.US) and Taiwan Semiconductor (TSM.US) surged across the board. It is reported that Taiwan Semiconductor's U.S. stock price has risen by over 80% since the beginning of this year, currently ranking seventh in market capitalization among U.S. listed companies. On the news front, analysts from multiple Wall Street investment banks predict that Taiwan Semiconductor will raise its full-year sales forecast in the financial report to be released next week. Morgan Stanley, J.P. Morgan, Nomura, and Mizuho Securities are all bullish, expressing optimism about Taiwan Semiconductor's second-quarter performance.

Morgan Stanley analyst Gokul Hariharan expects Taiwan Semiconductor to raise its revenue forecast during the earnings conference call and states, "We expect Taiwan Semiconductor's demand for AI accelerators to be more positive." At the same time, brokerages such as Morgan Stanley, J.P. Morgan, Nomura Holdings, and Mizuho Securities are optimistic about Taiwan Semiconductor's second-quarter performance. Data compiled by Bloomberg shows that as the world's most advanced chip manufacturer, Taiwan Semiconductor is expected to achieve a 36% year-on-year revenue growth, the fastest growth since the fourth quarter of 2022.

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

Furthermore, driven by strong demand for AI servers and computing chips, the semiconductor industry's outlook continues to improve, with recent industry price hikes becoming more frequent. According to the supply chain survey, most of Taiwan Semiconductor's customers have agreed to the price increase for contract manufacturing in exchange for reliable supply. In addition, manufacturers such as Qualcomm, SMIC, and Samsung have also adjusted prices, covering IC design, chip manufacturing, and memory chip sectors.

Media reports indicate that Taiwan Semiconductor plans to raise prices. The price increase for 3nm contract manufacturing may be above 5%, and advanced packaging annual pricing is also expected to increase by about 10%-20% next year. Taiwan Semiconductor's 3nm production capacity is fully booked by seven major customers including Apple and NVIDIA, with demand outstripping supply, expected to be fully booked until 2026. Morgan Stanley recently raised Taiwan Semiconductor's target price by 9.3% in a report, citing expectations for the sustainability of AI semiconductor demand and the trend of rising wafer prices. The institution also predicts a 5% increase in wafer prices in 2025, compared to the previous assumption of 2%.

Some semiconductor industry insiders have stated that chip foundries such as SMIC and SMIC have been operating at full capacity for several months, with no willingness to negotiate price reductions in the near future. Another industry source mentioned that while terminal demand has shown some recovery this year, there hasn't been significant fluctuations overall. However, since March, driven by AI computing power and urgent orders from several major factories, there has been a surge in demand for large-volume and wide-ranging products, leading to tight capacity at leading wafer foundries According to SIA data, the global semiconductor industry's sales in May 2024 reached $49.1 billion, 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 the highest increase since April 2022. Previously, many semiconductor companies at home and abroad reported impressive performance data, with many seeing a significant increase in net profit in the first half of the year/second quarter. Weir shares are expected to achieve a net profit attributable to the parent company of 1.308-1.408 billion yuan in the first half of the year, a year-on-year increase of 754.11% to 819.42%; Samsung Electronics' performance report for the second quarter showed a year-on-year surge in operating profit of 1452% to 104 trillion Korean won, far exceeding market expectations.

WanLian Security research report pointed out that Taiwan Semiconductor previously planned to raise product prices in the situation of insufficient supply, and the advanced packaging track maintained high prosperity. In the era of high computing power, the trend of advanced packaging industry continues to advance. It is recommended to pay attention to the investment opportunities brought by the technological upgrades of traditional packaging manufacturers and the leading manufacturers with mass production capabilities in the Chiplet technology field.

Bank of China Securities previously stated in a research report that Taiwan Semiconductor, an advanced process wafer factory, has returned to a positive growth track in operating income year-on-year, with high-performance computing as the main support for operating income. The recovery trend in the integrated circuit manufacturing industry is showing differentiation, with the sales volume and utilization rate of mature process wafer factories in mainland China showing a more certain upward trend. With the recovery of the utilization rate in the front-end field, the demand in the back-end testing and packaging industry is also expected to rise.

Related concept stocks:

Hua Hong Semiconductor (01347): Morgan Stanley stated that Hua Hong Semiconductor's wafer fab utilization rate has exceeded 100%, so it 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.

SMIC (00981): The company's gross margin declined more than the growth in customer orders. Sales in the first quarter of 2024 increased by 4.3% quarter-on-quarter, exceeding the expected "flat to 2% growth per quarter." The first-quarter gross margin was 13.7%, exceeding the expected 9%-11%. The company's capital expenditure in 2023 was approximately RMB 52.84 billion, with capital expenditure in 2024Q1 of $2.235 billion, and an expected full-year capital expenditure of about $7.5 billion in 2024, with about 80% used for equipment expenditure. The high investment will bring pressure on the profit end. In 2024, the company is expected to emerge from the downturn along with the semiconductor industry chain, achieving stable and moderate growth under the combined effects of gradual improvement in customer inventory and continued recovery in mobile and internet demand, with sales revenue growth expected to be no less than the average of comparable peers, with a year-on-year growth rate in the mid-single digits.

Shanghai Fudan (01385): The company has four series of products including tens of millions of gate-level FPGAs, hundreds of millions of gate-level FPGAs, billions of gate-level FPGAs, and PSoC, with full-process independent intellectual property FPGA supporting EDA tools ProciseTM. As one of the few domestic FPGA suppliers in the industry, the company will fully benefit from the demand brought by downstream market localization, with broad development prospects