Summary of the Chinese Internet Data Centre Sector Conference Call Industry Overview - The conference call focused on the **Chinese Internet Data Centre (IDC) Sector** and its relationship with hyperscalers' capital expenditures (capex) [2][8]. Key Points and Arguments 1. **Hyperscalers' Capex to IDC EBITDA Conversion**: - A simplified calculation indicates that incremental IDC EBITDA is at least **3%** of hyperscalers' total capex [2][4]. - For example, if a hyperscaler spends **Rmb100 billion** on capex, it could translate to **Rmb3 billion** in incremental IDC EBITDA [2][4]. 2. **Factors Affecting Calculations**: - Several factors can influence the final results, including: - A higher mix of CPU or domestic GPU servers may increase total MW [3]. - Data centers located in tier 1 cities may have higher IDC capex per MW and EBITDA [3]. - Data centers in remote areas may have lower IDC capex per MW [3]. 3. **Detailed Calculation Breakdown**: - The report provided a detailed breakdown of the calculation: - Total server capex: **Rmb100 billion** - Average selling price per server: **Rmb1 million** - Total number of servers: **100,000** - Average power density: **7.5 kW/unit** - Total server power: **750 MW** - Total IT power: **833 MW** - IDC capex per MW: **Rmb30 million** - IDC EBITDA yield: **12%** - Total incremental IDC EBITDA: **Rmb3 billion** [4]. 4. **Recognition Timeline**: - Incremental IDC EBITDA will be fully recognized in an average of **2 years** due to project delivery and utilization ramp-up time [4]. Risks and Opportunities 1. **Downside Risks**: - Weaker-than-expected demand for AI training. - Potential faults at data centers damaging reputation. - Higher-than-expected interest rates. - Less favorable regulatory environment [9]. 2. **Upside Risks**: - Stronger-than-expected growth in AI and cloud business. - Lower-than-expected electricity costs. - Lower-than-expected interest rates. - Tighter control on license granting and Power Usage Effectiveness (PUE) requirements [9]. Additional Insights - The report emphasizes the complexity of converting hyperscalers' capex into IDC orders and EBITDA due to various assumptions involved [2]. - The analysis is based on estimates from UBS and highlights the potential for growth in the IDC sector driven by AI and cloud computing demands [2][9]. Conclusion - The Chinese IDC sector presents significant investment opportunities, particularly in relation to hyperscalers' capital expenditures, but also carries inherent risks that investors should consider.

J P M O R G A N Asia Pacific Equity Research 24 February 2025 Memory Market Update AI memory expert fireside chat – key takeaways from Korea Conference 2025 We hosted an AI memory fireside chat session on 'HBM industry dynamics' with OMDIA (a third-party research vendor) at our Korea conference and share our key takeaways. OMDIA's overall comments on the HBM demand outlook, pricing and tech cadence were consistent with our findings (SKH ahead of SEC/MU) and we found their observations on tight clean room ca ...

24 February 2025 Asia Quantitative Strategy China Quant Strategy: The rally has more legs Rupal Agarwal +65 6230 2358 rupal.agarwal@bernsteinsg.com In all recent conversations with GEM/Asian fund managers, there have been 2 pertinent questions- When would India market start recovering and does China rally have legs? We re-iterated our near-term cautious view on India recently - India Quant Strategy: Is it time to add more risk?. In this report we address the China question. We turned positive on China in Se ...

Summary of Global Semiconductor Capital Equipment Conference Call Industry Overview - The conference call focused on the Global Semiconductor Capital Equipment industry, particularly the outlook for wafer fabrication equipment (WFE) spending in 2025 and 2026, with specific emphasis on NAND and DRAM segments [2][22]. Key Points and Arguments 1. **WFE Spending Forecasts**: - The WFE forecast for 2025 has been increased to $108 billion, remaining flat year-over-year, while the 2026 forecast is slightly reduced to $115 billion, reflecting an 8% year-over-year growth [2][22]. - The 2024 WFE number is confirmed at $108 billion, indicating a 10% year-over-year growth, driven by strong spending in China [2][22]. 2. **Regional Insights**: - China’s WFE spending is projected to decline by 20% in 2025, while non-China regions are expected to see a 15% increase [2][22]. - The forecast for China’s WFE has been slightly adjusted upwards by $0.9 billion for 2025 due to positive signs of accelerating capital expenditures in logic [36][34]. 3. **NAND and DRAM Segments**: - NAND spending is expected to grow by 43% year-over-year in 2025, driven by increased demand for upgrades and investments from YMTC, although it remains below the peak of $20 billion seen in 2021/22 [2][30]. - DRAM spending is forecasted to increase by 13% year-over-year, reflecting higher capital expenditures from Micron, despite a decline in China [2][30]. 4. **Company-Specific Insights**: - **Lam Research (LRCX)**: Target price raised to $105 due to higher earnings expectations and a favorable outlook on NAND upgrades [3][38]. - **Applied Materials (AMAT)**: Target price maintained at $210, with a positive view on secular WFE growth and capital return strategies [17][38]. - **Tokyo Electron (TEL)**: Rated Outperform with a target price of ¥34,600, expected to gain market share and expand margins despite weaker contributions from China [4][11]. - **Advantest**: Target price set at ¥12,400, benefiting from AI testing demand and expected to increase average selling prices and margins [10][58]. - **DISCO**: Target price set at ¥55,200, dominant in the grinder and dicer market with a significant market share [9][58]. 5. **Market Dynamics**: - The semiconductor capital equipment market is experiencing a shift with local Chinese suppliers gaining market share due to domestic substitution [6][18][19]. - The overall sentiment indicates a cautious optimism regarding the recovery of NAND investments and the potential for growth in 2026 as the market normalizes [4][58]. Other Important Insights - The conference highlighted the importance of monitoring the impact of geopolitical factors on the semiconductor supply chain, particularly concerning China’s role in the global market [36][37]. - The discussion also pointed out the competitive landscape among major players, with companies like ASML and Lam Research positioned favorably due to their technological advancements and market strategies [5][16][38]. This summary encapsulates the critical insights and forecasts discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the semiconductor capital equipment industry.

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the implications of the USTR's proposals for additional fees on port calls for Chinese-built ships, affecting the global shipping and shipbuilding industry [1][2]. Core Insights and Arguments - **USTR Proposals**: The USTR proposed additional fees ranging from USD0.5 million to USD1.5 million per port call for all Chinese carriers and any carrier with a share of Chinese-built ships in their fleet or orderbook [2]. - **Impact on Sub-Sectors**: The dry bulk sector is expected to be the most affected, accounting for 28% of US seaborne trade, with over 40% of port calls by Chinese-built ships. Tankers and containers follow, with 35% and 20% of trade respectively [3]. - **Cost Implications**: The additional costs could represent 25-117% of voyage revenues for Chinese carriers and 14-67% for others, depending on whether fees stack or are capped [4]. - **Negative Outlook for Chinese Carriers**: Higher costs are likely to be passed on to customers, significantly impacting Chinese carriers, which hold 58% of the orderbook. Near-term headwinds for new orders are anticipated until further clarity is provided [5]. - **Stock Implications**: Companies like OOIL and CSH-H/A are expected to face headwinds, while SITC is seen as immune due to its intra-Asia operations. Maersk and HLAG are vulnerable due to their high exposure to Chinese shipyards [6]. Additional Important Content - **Service Fee Structure**: The proposed service fees vary based on the percentage of Chinese-built vessels in a carrier's fleet, with fees up to USD1 million for those with over 50% of their fleet comprised of Chinese-built vessels [11]. - **Timeline of USTR Actions**: A timeline of events leading to the USTR's proposals highlights the ongoing scrutiny of China's dominance in the maritime sector, with significant actions dating back to March 2024 [12]. - **Seaborne Trade Statistics**: The report provides detailed statistics on US seaborne trade by cargo type, indicating that dry bulk and crude tankers are particularly vulnerable to the proposed fees [25]. - **Company-Specific Exposure**: A detailed analysis of various companies reveals their exposure to US port calls and Chinese-built ships, with COSCO Shipping facing the most significant negative impact due to its high reliance on Chinese-built vessels [23]. Conclusion - The USTR's proposals are poised to create significant disruptions in the global shipping and shipbuilding sectors, particularly affecting Chinese carriers and shipbuilders. The financial implications for various companies will vary based on their exposure to Chinese-built vessels and US port calls, necessitating a careful reassessment of investment strategies in this sector.

24 February 2025 | 8:29PM EST Global: GS Economic Indicators Update: Inflation Softens in the Euro Area, Remains Firm in the UK Please find an update of our proprietary global economic indicators below. The data behind these exhibits can be downloaded here. Interactive charts can be found on our living page here. Chart of the Week Exhibit 1: January Sequential Trimmed Core CPI Dipped Below 2% in the Euro Area but Remained Firm in the UK Our trimmed core inflation measure trims the one third most extreme pri ...

Summary of China Semiconductors Conference Call Industry Overview - The conference call focused on the China Wafer Fab Equipment (WFE) industry, providing updates on demand projections and market dynamics for 2024, 2025, and 2026 [2][20][34]. Key Points Demand Projections - **2024 WFE Demand**: Revised up from USD 43 billion to USD 45 billion due to stronger-than-expected imports, particularly in the second half of 2024, which totaled USD 38 billion [3][31]. - **2025 WFE Demand**: Slightly revised up from USD 35 billion to USD 36 billion, with expectations of a -20% year-over-year decline due to tighter export controls affecting DRAM WFE [4][28][32]. - **2026 WFE Demand**: Projected to be flattish, with a slight increase from USD 35 billion to USD 36 billion [4][28]. Import Dynamics - **Import Surge**: December 2024 saw a record high in imports, primarily from non-US vendors, contributing to the overall increase in WFE imports [3][38]. - **2024 Imports**: Total WFE imports to China reached USD 38 billion, with a significant contribution from local vendors estimated at USD 7 billion [31]. Market Share and Self-Sufficiency - **China's Global WFE Share**: Expected to increase to 42% in 2024, but projected to decrease to 33% in 2025 due to a decline in imports and global overcapacity [28][32]. - **Domestic Substitution**: Anticipated to accelerate, with self-sufficiency expected to reach approximately 36% by 2026, driven by government subsidies and local co-development efforts [5][25][29]. Company Insights - **Leading Domestic Suppliers**: Companies such as NAURA, AMEC, and Piotech are rated as outperformers, benefiting from domestic substitution trends [6][9][10][11]. - **Global Suppliers**: Major global vendors like ASML and Applied Materials expect their China revenue share to normalize in 2025, with guidance indicating a decrease in reliance on the Chinese market [17][36]. Export Controls Impact - **DRAM WFE Spending**: Expected to decline in 2025 due to recent updates in US export control rules, which have led to significant changes in equipment sales and engineering support for Chinese fabs [4][32]. Technology and Capacity Expansion - **Capacity Expansion**: Chinese foundries are planning to expand capacity for matured logic, with local fabs pushing for supply chain resiliency through co-development with local WFE suppliers [32][33]. Additional Insights - **Market Dynamics**: The call highlighted the competitive landscape, with local vendors gaining market share at the expense of global suppliers due to lower pricing and improved technology capabilities [4][5][25]. - **Investment Implications**: The report suggests a cautious outlook for global vendors while maintaining a positive view on domestic suppliers due to the ongoing trend of localization and self-sufficiency [9][10][11]. This summary encapsulates the key insights and projections discussed during the conference call, focusing on the dynamics of the China WFE industry and the implications for both domestic and global suppliers.

China Construction Materials Equities View HSBC Global Research at: What if... China's housing market has bottomed? Divergent decline across construction materials: Demand for construction materials, cement, steel and glass is closely linked to real estate, with glass demand most correlated to housing completions, followed by cement and steel, which are tied to housing new starts. Construction materials production trends (a proxy for demand) 2021-24 (exhibit 2) show cement production is down the most, -23%, ...

Summary of J.P. Morgan's China Metals Activity Tracker (24 February 2025) Industry Overview - **Industry**: Metals, specifically focusing on copper, iron ore, aluminium, and zinc in China - **Key Trends**: Recent acceleration in China's metals activity post-Lunar New Year, with significant increases in steel demand and inventory trends indicating tight physical markets Core Insights 1. **Copper and Iron Ore Prices**: Copper and iron ore prices have reached four-month highs, with copper prices at approximately $9,500 per ton, reflecting a 5% increase over the last two weeks [2][4][18] 2. **Steel Demand Surge**: Steel demand in China increased by 20% week-over-week, with rebar demand soaring by 164% week-over-week, indicating a rebound in construction activity [3][17] 3. **Inventory Levels**: - Copper inventories in China are at their lowest in five years, approximately 300,000 tons, equating to just eight days of consumption [18][27] - Aluminium inventories also remain low, around 845,000 tons, the lowest in over eight years [21][33] - Iron ore inventories at Chinese ports decreased by 2 million tons last week, now tracking at 159.31 million tons, which is only 13 million tons higher year-over-year [5][27] 4. **Market Conditions**: The physical markets for metals are tight, with steel inventories at their lowest levels for this time of year in over five years, indicating strong demand against limited supply [3][17] Price Forecasts - **Future Price Expectations**: J.P. Morgan forecasts copper prices to rise to $10,400 per ton by Q4 2025, and aluminium prices to reach approximately $2,763 per ton in 2025 [22][21] - **Impact of NPC Meeting**: The upcoming National People's Congress (NPC) meeting on March 5 is anticipated to trigger new economic policy support, potentially boosting metals demand and prices in the following weeks [4][20] Additional Observations 1. **Iron Ore Supply Disruptions**: Severe cyclone-related disruptions in Western Australia have led to a 39% week-over-week decline in Australian iron ore shipments [5] 2. **Global Shipment Trends**: Global iron ore shipments fell by 28% week-over-week and are down 45% year-over-year, indicating significant supply chain challenges [5][8] 3. **Steel Production Rates**: China's steel production is running at an annualized rate of 989 million tons, the fastest start to a year since 2021, reflecting strong recovery in the sector [5][14] Conclusion - The current trends in China's metals market indicate a robust recovery in demand, particularly in steel and copper, driven by post-Lunar New Year activity and anticipated fiscal stimulus. However, supply chain disruptions and low inventory levels suggest potential volatility in prices moving forward.

25 February 2025 | 11:49PM HKT EHang (EH): Hefei eVTOL factory announced; JAC Motors and Guoxian as partners; Buy EHang announced a strategic cooperation framework agreement with JAC Motors and Guoxian Holdings (Link) with the focus on establishing a JV for the construction of an eVTOL manufacturing base in Hefei. JAC will leverage its car OEM expertise to scale up the eVTOL production as EHang's partner, and Guoxian will help integrate resources and facilitate policy support. We are positive on the company ...