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2026-07-30 17:15:15 BOCI released a report on the semiconductor foundry industry, stating that Taiwan Semiconductor Manufacturing Company Ltd. (TSM.US) maintained the scale of its mature-node capacity, mainly benefiting from continued strong demand for mature processes in specialty platforms, including power analog and embedded non-volatile memory (eNVM). Price increases for 8-inch and 12-inch wafer foundry services have intensified, prompting customers to explore three- to five-year long-term supply agreements with prepayment and take-or-pay clauses to lock in increasingly tight 8-inch capacity for next year. The report said HUA HONG GRACE (01347.HK) is leading mature-node capacity expansion. Fab 7 and the Wuxi plant are already running at full capacity (98k wpm). Fab 9A is expected to reach full production by the end of 3Q26 (83k wpm/N40-55), while Fab 9B is expected to reach full production by the end of 2027 (55k wpm/N28-40). Together with the consolidation of Huali Micro Fab 5 (38k wpm/N40-65) in 4Q26, annualized revenue run rate by the end of 2026 is projected to climb to USD4 billion, significantly above market expectations. Price hikes began in April and are expected to bring substantial margin flexibility. The broker raised HUA HONG GRACE's target price from HKD152.4 to HKD210 and maintained its Buy rating. Regarding SMIC (00981.HK), the broker believes its pace of capacity expansion and price hikes is relatively moderate. Capacity additions are mainly concentrated in Shenzhen and Lingang/Shanghai. Margin expansion is expected to be more cautious as the company also needs to balance yield improvement progress for advanced nodes (N+3, equivalent to Taiwan Semiconductor Manufacturing Company Ltd. (TSM.US)'s N5/6). The broker downgraded SMIC from Buy to Hold and cut its target price from HKD98.6 to HKD80. BOCI ranked the sector as Taiwan Semiconductor Manufacturing Company Ltd. (TSM.US) > HUA HONG GRACE (01347.HK) > SMIC (00981.HK). HUA HONG GRACE received a higher valuation multiple due to its greater exposure to AI power analog applications, stronger margin expansion trajectory and the potential value from the injection of Huali Micro assets. SMIC was downgraded to Hold due to its relatively milder growth trend and the continued balance-sheet pressure from capacity expansion and mergers and acquisitions. (ad/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |