Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.

On June 18th, according to Jiemian News, in response to market rumors, Taiwan Semiconductor stated that the U.S. Department of Commerce recently issued a Validated End-User (VEU) license to TSMC (Nanjing) Co., Ltd., certifying that TSMC Nanjing is an approved end user. TSMC believes that this VEU license has maintained the current situation of semiconductors production in TSMC Nanjing. In terms of product structure, the revenue of 10-30 billion yuan products is RMB 401 million, RMB 1.288 billion, and RMB 60 million respectively.$Taiwan Semiconductor (TSM.US)$On June 18th, according to Jiemian News, Taiwan Semiconductor has officially responded that its Nanjing factory has obtained an “unlimited exemption authorization” from the U.S. Department of Commerce, replacing its temporary written authorization since October 2022. The recent VEU license authorized by the U.S. Department of Commerce is granted to TSMC (Nanjing) Co., Ltd., certifying that it is a Validated End-User.

Analysts pointed out that TSMC's Nanjing factory getting an indefinite exemption from the US Commerce Department may have a positive impact on the semiconductor industry, not only allowing TSMC to conduct business steadily, but also providing certain guarantees for the stability of the semiconductor supply chain.

From a market perspective, on June 18th, Hong Kong's chip stocks rose against the trend, with both the stock prices of SMIC and China Hua Hong Semiconductor H-shares rising more than 3%. The current trend of rising semiconductor prices is spreading throughout the entire industry chain. Sources in the industry chain said that from May to June this year, CR Micro, Yangzhou Yangjie and other major power plants have successively raised and negotiated prices for some medium and low-voltage products.

TSMC obtains an unlimited exemption authorization.

On June 18th, according to Jiemian News, Taiwan Semiconductor has officially responded that its Nanjing factory has obtained an “unlimited exemption authorization” from the U.S. Department of Commerce, replacing its temporary written authorization since October 2022. The recent VEU license authorized by the U.S. Department of Commerce is granted to TSMC (Nanjing) Co., Ltd., certifying that it is a Validated End-User.

It is reported that this VEU authorization has not added new permissions but confirmed that the items and services involved in U.S. export control regulations can be provided to TSMC (Nanjing) Co., Ltd. continuously, and suppliers do not need to obtain individual licenses.

TSMC believes that this VEU license has maintained the current situation of semiconductors production in TSMC Nanjing.

Under the unlimited exemption authorization, the U.S. Department of Commerce's Bureau of Industry and Security will add chip makers to its Validated End-User (VEU) list, which shows which entities can receive various U.S. technology exports. Once listed, chip makers will no longer need new licenses for individual export cases.

Previously, on October 7th, 2022, the United States announced a new policy of semiconductor export control to China, restricting the ability of Chinese wafer manufacturers to obtain advanced semiconductor manufacturing equipment unless approved by the U.S. Department of Commerce.

In October last year, the Office of the South Korean President announced that the U.S. Department of Commerce had agreed to provide 'unlimited exemption' to Samsung Electronics and SK hynix's wafer plants in China, which means that U.S. suppliers can supply semiconductor equipment to Samsung and SK hynix's wafer plants in China without any license requirement.

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In 2015, TSMC decided to invest in and build a factory in Nanjing, and in 2016, TSMC (Nanjing) Co., Ltd. was registered and established as a wholly-owned subsidiary of TSMC. This is TSMC's first advanced process wafer foundry in mainland China.

TSMC's Nanjing factory was put into operation formally in October 2018, six months earlier than planned, becoming TSMC's first advanced process wafer foundry in mainland China. The construction of the Nanjing factory relied on strong support from the local government and the advantages of its superior geographical location. The plant broke several records and was completed in only 14 months, making it the fastest and most beautiful factory area in TSMC's history.

The factory uses advanced process technology and equipment, with an annual capacity of about 100,000 12-inch wafers. Its production line includes advanced physics, chemistry and optical technologies, enabling product quality and performance to reach a world-leading level.

According to TSMC's financial report for 2019, TSMC's Nanjing plant is running smoothly, reversing its losses and turning a profit, with a profit of over 2.77 billion yuan in 2020. It is understood that TSMC currently has 12-inch wafer plants and 8-inch wafer plants located in Nanjing and Shanghai Songjiang, respectively, mainly serving domestic IC design companies, with the most advanced process being 16nm.

According to TSMC's financial report data, in 2019, TSMC's Nanjing plant operated smoothly, reversing losses and recording a profit of more than 2.77 billion yuan for the full year of 2020.

It is understood that TSMC currently has 12-inch and 8-inch wafer plants in Nanjing and Shanghai Songjiang, mainly serving domestic IC design companies, with the most advanced process being 16 nanometers.

Last July, Liu Deyin, then chairman of TSMC, said at a financial report conference that it was expanding the 28nm process capacity in Nanjing as planned. TSMC has approved a capital budget of $2.887 billion and is expected to build a monthly 40,000-unit 28nm capacity in its Nanjing plant.

Analysts pointed out that TSMC's Nanjing factory getting an indefinite exemption from the US Commerce Department may have a positive impact on the semiconductor industry, not only allowing TSMC to conduct business steadily, but also providing certain guarantees for the stability of the semiconductor supply chain.

Chip price increases are spreading.

On June 18th, the stock prices of chip stocks on the Hong Kong stock market rose against the trend, among which,$SMIC (00981.HK)$, $HUA HONG SEMI (01347.HK)$, $HG SEMI (06908.HK)$All rose more than 3%,$MEGAIN (06939.HK)$Increased by 1.59%.

On the news front, the current wave of rising chip prices is spreading throughout the entire industry chain. There are reports that TSMC may launch a new round of price negotiations, mainly targeting advanced processes such as 5/3/2nm, and the decision on price hikes is expected to take effect as early as 2025.

According to data released by the Bank of Korea on June 14th, chip export prices in South Korea hit a record high in May, with the US dollar-denominated South Korean semiconductor export price index soaring 42.1% YoY. Among them, the cyclical storage industry led by South Korea's Samsung Electronics and SK Hynix is ​​rapidly rebounding from the trough.

On June 18th, SK Hynix's stock price rose by about 4%, reaching a new high in 24 years. There is news that the company may also raise its future profit forecast.

In addition, with inventory clearing and demand recovery, insiders predict that the prosperity of the power semiconductor industry will continue to rise in the second half of the year.

Since the beginning of this year, various power semiconductor companies have successively adjusted prices: Sanan Optoelectronics system products increased by 10%-20%, blue color electronics system products increased by 10%-18%, High Great Micro all products increased by 10%-20%, Jiejie Micro (300623) TrenchMOS increased by 5%-10%, etc.

Industry chain sources said that from May to June this year, for some medium and low-voltage products, China Resources Micro, Yangzhou Yangjie and other large power plants have successively raised prices and negotiated prices.

Guotai Junan stated in a recent report that the bottom of the semiconductor cycle has already appeared, and inventory has returned to a reasonable level. Prices of various products have increased to varying degrees, and the types of products that have increased prices have gradually spread from electronic components to wafer foundries. Taiwan Semiconductor Manufacturing Company, Huahong and other major foundries, prices are tending to stabilize, and the utilization rate is above 80%.

In addition, Zhongyuan Securities analyst Zou Chen also stated that global monthly semiconductor sales are continuing to grow YoY, and the demand for consumer products is gradually recovering. The demand for generative AI in the semiconductor industry is strong, and the semiconductor industry has opened a new round of upswing cycle.

SEMI's latest report pointed out that in order to keep up with the continuous growth of chip demand, global semiconductor manufacturing capacity is expected to increase by 6% in 2024 and achieve a 7% increase in 2025, reaching a new historical high of 33.7 million wafers per month (calculated on the basis of 8-inch equivalents). Among them, the capacity of 5nm and below nodes is expected to increase by 13% in 2024, mainly driven by the training and inference of generative AI for data centers and cutting-edge equipment. In order to improve processing efficiency, chip makers including Intel, Samsung and TSMC are preparing to produce 2nm GAA chips, which will increase the overall advanced capacity growth rate to 17% in 2025.

Editor/tolk