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TSMC reported October revenue of NT$586.89 billion (approx. US$17.88 billion), up 59.7% year-on-year and 14.7% month-on-month, hitting a new all-time monthly high. Its board concurrently approved a capital budget of US$40.927 billion and authorised an investment of up to US$500 million to subscribe for shares in Anthropic, offering dual validation for advanced process and AI demand.
Samsung and SK Hynix are committing 10–20 trillion won each to secure ASML’s EUV capacity for 2027–2028. ASML stated that even with 30% capacity expansion in each of these two years, demand will remain undersupplied. Equipment lead times have doubled, price hikes will take effect in 2027, and order visibility for thermal compression bonders (TC Bonders) for back-end processing now stretches 2–3 years.
SanDisk raised November NAND contract prices by roughly 50%, marking its third increase this year. SK Hynix signed long-term supply agreements (LTAs) with 14 customers covering more than half of its 2027–2028 capacity. Average HBM prices are projected to surge 96% in 2027, extending the memory upcycle into 2028.
Alibaba plans to spin off T-Head for an independent Hong Kong IPO, with institutional valuations ranging from US$20 billion to US$30 billion. Huili Group intends to invest up to US$500 million in optical communications firm O-Net, for a stake capped at 25%.
Risks: Credit default swap (CDS) spreads for major US chip firms have surpassed those of cloud providers for the first time in three months and have doubled since early August, signalling an upward migration of AI credit risk to upstream players. NVIDIA tumbled more than 9% over two trading days, retreating roughly 30% from its 52-week high.
In-depth Analysis
Optical Communications / Optical Chips: Cambridge Technology disclosed that high-speed optical modules, dominated by 800G products, now account for over 50% of its revenue. Its current designed monthly capacity stands at around 1 million units. The company plans to expand annual capacity by at least another 10 million units by the end of 2027. New capacity will be deployed in Jiashan, Malaysia, Mexico and the United States, covering 800G, 1.6T and NPO products. Huili Group intends to invest up to US$500 million in O-Net Technologies to acquire a stake of no more than 25%. Yunnan Germanium stated that existing and under-construction capacity for indium phosphide wafers has been locked by customers through the end of 2027. Yu Haining from CITIC Securities believes optical module pricing is turning rational, and the market focus is shifting toward earnings delivery and growth sustainability.
Advanced Packaging & Testing:TSMC’s US$40.927 billion capital budget explicitly includes capacity expansion for advanced packaging. While Samsung and SK Hynix are scrambling to secure EUV tools, order visibility for back-end equipment such as TC bonders for HBM stretches 2–3 years. Amkor and Hanmi Semiconductor are among the beneficiaries, with front-end and back-end boom cycles increasingly coupled. No new price hikes or capacity expansion announcements for ABF substrates were released today. Earlier news of Ibiden’s ¥151 billion capacity expansion, mounting capacity pressure at Unimicron, and TPCA’s supply tightness warning remain under close watch. No new updates on domestic substitution for CBF, NBF and GBF build-up films.
SiC / Power Semiconductors: No major developments today. Onsemi’s prior termination of its US$2 billion end-to-end SiC expansion project in the Czech Republic continues to draw attention, reflecting a near-term rebalancing of global SiC supply and demand. The trend of AI data centers (AIDC) shifting to 800V high-voltage DC remains intact, sustaining incremental demand for SiC in solid-state transformers (SST), high-voltage direct current (HVDC) and solid-state circuit breakers.
Memory & Compute Chips: SanDisk sharply raised November NAND contract prices by roughly 50%. JPMorgan notes tight supply-demand balance for DRAM and NAND and broader adoption of long-term supply agreements (LTAs), supporting strong fundamentals through 2028. SK Hynix’s LTAs cover more than half of its 2027–2028 capacity, and its 2029 DRAM/HBM capacity is nearly sold out. Average selling price (ASP) of DRAM in Q3 rose 23% quarter-on-quarter. On the domestic computing front, Alibaba is spinning off T-Head, its full-stack data center chip business, for an IPO. Apple Intelligence for mainland China iPhones officially integrates Alibaba’s Tongyi Qianwen. NVIDIA unveiled its GR00T version 2 world-action model, though its stock underperformed. The street price of RTX 5080 in Huaqiangbei has fallen from RMB 18,000 to RMB 14,000, pointing to weak end-market demand for discrete GPUs.
Semiconductor Equipment & Materials:ASML shipped approximately 65 EUV systems this year, versus 44 units last year, representing a nearly 50% increase. Even with 30% capacity expansion in both 2027 and 2028, supply will remain constrained. Memory customers accounted for 46% of its total system sales in Q3. The number of EUV layers adopted for 1c DRAM has risen from 3 to more than 5, lifting equipment demand per production line. Domestically, Rongqi Technology plans to acquire a 60% stake in Deqishun for RMB 562 million, targeting precision polymer and metal components for semiconductor equipment. Yuwei Semiconductor broke ground on its inspection and metrology industrial park in Hefei. According to JCET Analytics, domestically made MOCVD equipment accounts for 78% of new installations.
Wafer Foundry: TSMC’s October revenue jumped 59.7% year-on-year to a record monthly high. Samsung’s Pyeongtaek P5 fab carries investment exceeding 60 trillion won; it is scheduled to start production in 2028 and adopt High-NA EUV within the same year. Samsung’s Taylor fab in Texas may begin trial runs as early as December. No new capacity or pricing announcements from SMIC or Hua Hong today. Their Hong Kong-listed stocks climbed more than 2% and nearly 4% respectively on November 10.
Policy & Macro Environment: The Opinions on Promoting Deep Integration of Scientific and Technological Innovation and Industrial Innovation issued by the General Office of the CPC Central Committee and the General Office of the State Council places integrated circuits at the top of the list of core technologies for breakthroughs. The two-month extension of the suspension of export control measures against 16 U.S. entities by the Ministry of Commerce has taken effect. U.S. October CPI came in above expectations, cementing a 100% market probability of a December rate hike. High interest rates and AI credit risk — CDS spreads for major chip firms have surpassed those of cloud providers for the first time — are the main valuation headwinds.
Daily Investment Tips
1. The "equipment-first" thesis is strengthening: memory fabs are scrambling for EUV tools while OSATs compete for TC bonders. Equipment and component orders enjoy the longest visibility through 2027. Still, watch out for depreciation and cash flow pressure stemming from rising capital expenditure.
2. AI investment is shifting from "story-driven narratives" to "credit and earnings delivery". Widening CDS spreads for chip names and NVIDIA’s 30% pullback from its peak diverge against rising memory prices and record foundry revenue. We recommend using LTA coverage, long-contract pricing and capacity utilization as core stock-selection anchors, and avoid segments reliant solely on fundraising for capacity expansion.
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