French-Brazilian first covers Asian wafer foundries: prefer Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) for stability, Semiconductor Manufacturing International Corporation (00981) for consideration.

French bank BNP Paribas released a research report, covering for the first time Asian semiconductor foundry companies - Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), Semiconductor Manufacturing International Corporation (00981), United Microelectronics Corp. Sponsored ADR (UMC.US), HUA HONG SEMI (01347). The bank's Asian technology analyst, Alex Chang, stated that he prefers Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR because the company is technologically advanced, maintaining full production capacity at the N3/N4/N5 nodes, and this trend will continue to extend to full production at the N2 node by 2026. In mainland China's semiconductor foundry factories, the analyst prefers Semiconductor Manufacturing International Corporation due to its high capacity utilization rate of about 80%, mainly benefiting from approximately 40% price discounts and the market share growth strategy of "China manufacturing for China." However, due to restrictions from advanced lithography equipment (below 7nm), its technological capabilities still face bottlenecks. The analyst believes that maintaining full production at advanced process nodes (N3/N2) by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in 2026 is a significant positive for the bank's coverage of AI-related stocks. Apple Inc. (AAPL.US), Qualcomm (QCOM.US), and MediaTek will continue to advance their leading process node layout in smartphones. In addition, the analyst expects that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's CoWoS (Advanced Packaging) capacity in 2026 will reach 95,000 wafers per month, supporting approximately 13 million XPU units. It is worth noting that this is about 30% higher than the bank's shipment forecast for GPU+ASIC in 2026. The analyst predicts that by 2029, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's wafer capacity at 2.0/1.4nm nodes will reach 150,000 per month, roughly equivalent to its capacity at 3/4/5nm nodes, while its capital expenditure will be maintained at $40 billion per year from 2025 to 2027. The analyst believes that this expansion of cutting-edge capacity will strongly support its expectations for mid-single-digit revenue growth for US semiconductor equipment companies such as Applied Materials (AMAT.US), Lam Research (LAM.US), and KLA Corporation (KLAC.US) over the next three years. Furthermore, the analyst points out that in the field of analog chips, Semiconductor Manufacturing International Corporation is implementing significant price discounts of 25%-40% for both Western and Chinese customers through its mature node processes, involving products such as MCU (Microcontroller Unit), power management chips, and Wi-Fi chips. This further highlights the importance of building a local cost structure for analog chip manufacturers when entering the Chinese market.