信息平权 知识星球

2 January 2025

China Semiconductors
China Semiconductors: 2024 review and 2025 outlook

Farewell 2024, hello 2025. We initiated at the beginning of the year with the thesis
Qingyuan Lin, Ph.D.
+852 2918 5759 on domestic substitution, in this call we provide 2024 review and 2025 outlook for the
qingyuan.lin@bernsteinsg.com sector. We expect China semis will continue to ride on the trend of domestic substitution in
2025 as geopolitical tension intensified. Semicap is still our favorite sector, fundamentals
Zheng Cui continue to be strong; we also like Analog, where Silergy is a quality long-term investment
+852 2123 2694
zheng.cui@bernsteinsg.com target with a good entry point. Top picks AMEC, NAURA and Silergy.

2024 Review:

Our thesis focuses on the impact of domestic substitution, believed Semicap/CPU/AI

will benefit while Foundry/Analog will face some headwind. We were right on NAURA/
AMEC/Hygon/SMIC/Silergy, as the industry thesis reflected in their fundamentals.
However, we got it wrong on the rating changes for Cambricon/Hua Hong, as our calls
were against the investor sentiment and might be too early. Lessons learned: ride on the
trend, with both fundamental and sentiment considered.

2025 Outlook:

Semicap: Geopolitical tension will further boost domestic substitution, the impact
of the entity list has already priced-in, 2025 demand still strong. NAURA got more
attention in 1Q-3Q24 with attractive valuation, but since the A share rally in Sep 2024,
market preference switched to quality names, supporting better performance for AMEC
despite its higher multiple. Being added to the entity list in 4Q brought downside surprise,
offsetting the upside from tighter export control for fabs. However, our channel checks
show that demand in 2025 for domestic players continue to be strong, including those fabs
added to the entity list. We like AMEC>NAURA>Piotech.

Analog: A good entry point for Silergy as a high quality long-term investment target
back to secular growth driven by China Auto. Short term pressure still exist due to weak
China demand, but valuation has all that fairly priced-in with limited downside. Stronger
Auto semis localization tailwind should benefit the top line growth, while GPM & NPM
improvement will bring further upside on EPS growth.

Foundry: Upcycle and share gain should further boost confidence on the sector, but
the profitability remains a pressure. We expect SMIC/HH’s revenue will grow 18%/25%
YoY in 2025, as the ‘China for China’ share gain continues. Yet the global overcapacity issue
in matured logic likely will intensify in 2025, creating pressure on ASP/GPM. We still prefer
SMIC over Hua Hong with the growth on advance logic.

Computing: Export control created a market for local chip vendors, China is shifting
to inferencing and smaller models earlier. Local computing fabless will continue to
benefit from AI/CPU domestic substitution/Xinchuang. Chinese customers are shifting to
inferencing earlier than RoW, and smaller vertically integrated LLMs are getting popularity in
China for faster commercial success. Due to valuation, we prefer Hygon over Cambricon.

See the Disclosure Appendix of this report for required disclosures, analyst certifications and other www.bernsteinresearch.com
important information. Alternatively, visit our Global Research Disclosure Website.
First Published: 02 Jan 2025 08:00 UTC Completion Date: 02 Jan 2025 07:52 UTC
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

BERNSTEIN TICKER TABLE

31 Dec TTM Reported EPS Reported P/E (x)
2024
Closing Price Rel.
Ticker Rating Price Target Perf. 2023A 2024E 2025E 2023A 2024E 2025E
688012.CH (AMEC) O CNY 189.16 300.00 6.7% CNY 2.89 2.43 3.80 65.5 77.7 49.8
688256.CH (Cambricon) M CNY 658.00 470.00 364.9% CNY (2.07) (0.56) 1.95 (317.9) N/M 338.2
1347.HK (Hua Hong-H) O HKD 21.65 30.00 (6.0)% USD 0.19 0.05 0.09 14.7 54.6 32.0
688347.CH (Hua Hong-A) O CNY 46.47 55.00 (12.4)% USD 0.19 0.05 0.09 33.6 124.8 73.1
688041.CH (Hygon) O CNY 149.79 150.00 84.2% CNY 0.54 1.01 1.44 277.4 147.7 104.2
002371.CH (NAURA) O CNY 391.00 520.00 39.9% CNY 7.36 12.11 15.53 53.1 32.3 25.2
688072.CH (Piotech) O CNY 153.67 260.00 (20.4)% CNY 3.54 1.95 2.97 43.4 78.6 51.8
688981.CH (SMIC-A) O CNY 94.62 110.00 55.8% USD 0.11 0.07 0.09 113.9 185.8 141.9
981.HK (SMIC-H) O HKD 31.80 30.00 41.1% USD 0.11 0.07 0.09 36.0 58.7 44.8
6415.TT (Silergy) O TWD 403.50 550.00 (36.5)% TWD 1.96 5.96 12.32 206.3 67.7 32.7
ASIAX 1,353.19
O - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage Suspended
Source: Bloomberg, Bernstein estimates and analysis.

INVESTMENT IMPLICATIONS

NAURA (Outperform, CNY 520): As the domestic WFE leader, NAURA has the broadest product portfolio covering Deposition
(PVD, CVD), Dry Etch (ICP), Thermo Processes, and Cleaning, as well as a more diverse client base covering leading logic, DRAM,
NAND players, benefiting from the WFE domestic substitution in China with acceleration share gain.

AMEC (Outperform, CNY 300): Primarily focus on Dry Etch (CCP, ICP) with rapid expansion in Deposition (ALD, LPCVD, EPI),
commonly perceived as the domestic WFE company with the best technology and widest global recognition, continue to benefit
from the WFE domestic substitution in China with acceleration share gain.

Piotech (Outperform, CNY 260): Rising domestic WFE vendor primarily focus on Deposition (PECVD, HDPCVD, SACVD, ALD)
with expansion in W2W and C2W hybrid bonding equipment for advanced packaging. Piotech has a strong track record of
product innovation, which will allow it to benefit from the WFE domestic substitution in China with acceleration share gain.

Silergy (Outperform, TWD 550): China's largest analog chip supplier and leader in the Power Analog segment. We like the
company’s market positioning, product portfolios, and R&D competence. We think it is a high quality long-term investment
target now that it is back to secular growth driven by Auto Analog, and the current price provides a good entry point.

SMIC (Outperform, HKD 30 / CNY 110): With aggressive investments on capacity expansion, the depreciation for SMIC
continues to stay at a high level and drag down the margin. Despite the margin pressure, we maintain a positive outlook on
SMIC's potential on Advanced Node Logic. We believe that the stock is less traded on earnings and its FinFET capability can act
as a catalyst for the upside.

Hua Hong (Outperform, HKD 30 / CNY 55): We believe Hua Hong could enjoy a re-rating as China’s matured node foundry
enters the demand upcycle, leading to Hua Hong’s UT recover faster/better and expected. Hua Hong will be able to achieve
ASP increase for the next few quarters in this upcycle due to better product mix, leading to a P/B multiple expansion, despite
low Return on equity (ROE).

Hygon (Outperform, CNY 150): Hygon is the leading domestic x86 server CPU provider, benefiting from x86 server CPU
domestic substitution. Hygon's AI accelerator could be another growth engine, although its technology still lags behind leading
players like Huawei and Cambricon, we believe Hygon's AI chipscould receive substantial government orders through CPU
bundling, providing another growth upside.

Cambricon (Market-Perform, CNY 470): Cambricon is the leading AI accelerator ASIC chip provider in China, which is the
best alternative to the leading domestic AI chip player in China, benefiting from the domestic substitution in AI chip. We like the
tech foundation of the company but the valuation is too high.

CHINA SEMICONDUCTORS 2
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

Table Of Contents

2024 Review: What Worked and What Did Not............................................................................................................................................................4

China Semicap 2025 Outlook: Domestic Substitution Continues..........................................................................................................................8
China WFE Industry Overview......................................................................................................................................................................................8
Naura - The Largest Domestic WFE Platform.....................................................................................................................................................11
AMEC - Leader in Dry Etch Expanding into Deposition................................................................................................................................... 12
Piotech - Rising Star in CVD & Hybrid Bonding................................................................................................................................................. 13
China Analog 2025 Outlook: Back to Growth............................................................................................................................................................ 15
China Analog Industry Overview...............................................................................................................................................................................15
Silergy - Quality Target with a Good Entry Point................................................................................................................................................ 17
China Foundry 2025 Outlook: Share Gain with Pressure on Margin..................................................................................................................19
China Foundry Industry Overview............................................................................................................................................................................ 19
SMIC - All Eyes on Advanced Node Logic Progress......................................................................................................................................... 21
Hua Hong - Fully Loaded into 2025.......................................................................................................................................................................22
China Computing 2025 Outlook: Xinchuang & AI are Still the Main Theme.................................................................................................... 24
China Computing Industry Overview...................................................................................................................................................................... 24
Hygon - Leader in China for x86 Server CPU Substitution.............................................................................................................................28
Cambricon- Leading Domestic AI Chip Supplier as the Best Alternative to Huawei............................................................................. 29
Our Most Popular Research of 2024.............................................................................................................................................................................30

DETAILS

Farewell 2024, hello 2025. As the first year of our China Semiconductors sector coverage comes to an end, we are publishing
this call to look-back at our published views during the year, reviewing what worked and what didn't, and hope to learn from the
lessons and apply to our future work. With that, we also summarize our outlook for 2025 by four sub-sectors (Semicap, Analog,
Foundry, Computing), identify our top picks in the sector for the next 12-months: AMEC, NAURA, Silergy.

We appreciate your support throughout 2024, and wish you another wonderful year in 2025.

CHINA SEMICONDUCTORS 3
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

2024 REVIEW: WHAT WORKED AND WHAT DID NOT

I have been bent and broken, but - I hope - into a better shape. When we initiated the China Semiconductors sector back
in Jan 2024, the market sentiment on A/H share was very weak. From the peak in early 2021, the market had been through 3
consecutive years of decline, and the weak macroeconomics in China continuously brought frustration when there was some
expectation on recovery. This was even more depressing when the investors compare A/H share with Nasdaq/SOX that had
a few very good years in the past. Therefore, even as we hold strong belief that the China Semis sector has unique secular
tailwind to outperform the market, we didn’t see much interest coming from investors. I even got a quote from one friend: “At
least you still have hope”. Indeed, the market was still performing poorly before the September China rally, most of the stocks in
my coverage were slightly down or flattish by then. But from the depths of despair, a glimmer of hope emerges. The long-waited
policy support finally comes out, supporting CSI300 to grow 30%+ from the bottom to peak, while most of the China Semis
share price almost double. With that, full year 2024 most stocks in our coverage capture growth bigger than the CSI300 and
SOX (Exhibit 1).

What we got right in 2024: NAURA, AMEC, Hygon, SMIC, Silergy. Our top pick at the initiation was NAURA, where we
saw the valuation was most attractive and called a 64% upside potential, while AMEC was our favorite company with the best
quality, both riding on the trend of WFE domestic substitution, and as leading companies in Deposition/Dry Etch they would
benefit the most from the share shift. NAURA up 63% and AMEC up 30% in 2024 (Exhibit 2), supported by both EPS growth
and multiple expansion. Piotech who should have enjoyed the same trend was disappointing with only 3% growth due to delay
in revenue recognition and GPM decline that we didn’t expect, although we believe those are temporary. Hygon was another
good example benefiting from domestic substitution with stock price up 106% in 2024, but this time in x86 CPU. Driven by
XinChuang (信创), the strong momentum for Hygon to replace Intel/AMD’s mid to low-tier server CPUs was expected to
continue, which supported Hygon’s revenue and profit growth in 2024 driven by domestic data center expansion. We preferred
SMIC over Hua Hong as the demand for advanced node remains high in China, while the self-sufficiency in matured node
foundry has already reached 40%+ with slower growth and more intense competition moving forward. This also has been a
theme that the market bet on since the September rally. SMIC A/H up 68%/80% in 2024, while at the same time Hua Hong A/
H only up 20%/11%. We rated Silergy Market-Perform at initiation, as we believed the recovery story was already priced-in
with limited potential upside beyond that in 2024. Stock was down -9% in 2024, while the full year stock price is very bumpy
ranging from TWD 315-574. We upgraded Silergy in December 2024, believed that the fundamentals was back to secular
growth trajectory driven by Auto Analog share gain in China, while its stock price came down to TWD 412 and provided a good
entry point for long-term investment. We are still confident that the theme will play out in 2025 and beyond.

What we got wrong in 2024: Cambricon & Hua Hong rating changes. Our rating changes on Cambricon and Hua Hong
had not been very successful in 2024. Our initial thesis on Cambricon was right post-initiation, we believed that as China’s
leading AI accelerator vendor, Cambricon is the best alternative to Huawei benefiting from AI chip domestic substitution. After
the stock doubled in 9 months (from CNY 122 to 241), we downgraded it to Market-Perform in September believed that the
upside is already priced-in. The stock was down for a while, but then we perfectly missed the A share rally where Cambricon
almost tripled since our rating change (from CNY 241 to 683.). We initially rated Hua Hong Market-Perform, which missed the
first wave of stock rally in Apr-June driven by the expectation on ASP increase, but the stock came back as the ASP did not grow
as expected. We upgraded the stock to Outperform hoping that the MCU recovery would lead to better product mix thus boost
ASP and GPM, which also did not play out in 2H24 due to weak demand. The upgrade thesis has not played out in 2H24, but we
still hope to see the MCU recovery in 1H25 that will support the stock performance.

Lessons we learned: Ride on the trend. We were largely right on the industry thesis, but the upgrade/downgrade were
against the investor sentiment trend at that time, which we believe could be too early. The long-term direction of stock
performance might be driven by industry/company thesis, but the short-term stock reaction could be impacted mostly by
sentiment, which we admit that is something we didn’t get right. The valuation for Cambricon is expensive while the valuation
for Hua Hong is inexpensive, but that does not necessarily support a rating change if the timing was not right, as the investor
sentiment was trending the other direction. When we look into 2025, as the policy support has been the major driver for A share
recovery, we apply the lessoned we learned from this and believe that all stocks we rated Outperform should be able to rind on
the trend and gain additional upside for the next 12-months.

CHINA SEMICONDUCTORS 4
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 1: Most of our coverage outperformed the index in 2024

Coverages' Stock Performance Throughout 2024

OP→MP
140% 414.2% OP

120% 106.1%
100% OP
OP 80.3%
80% 67.9%
62.6%
60% OP
MP→OP
40% 30.1% MP→OP 26.4%
OP 20.0% 16.5% 19.2%
20% 11.7% Dec 9
3.3%
0%

-20% -9.1%

Stock performance from Jan 2, 2024 to Dec 31, 2024

Source: Bloomberg, Bernstein analysis

EXHIBIT 2: NAURA outperformed peers & index amid similar beta of semicap names due to attractive valuation

Semicap Names Stock Performance in 2024

200

150

100

50
1/1/2024 2/1/2024 3/1/2024 4/1/2024 5/1/2024 6/1/2024 7/1/2024 8/1/2024 9/1/2024 10/1/2024 11/1/2024 12/1/2024

AMEC NAURA Piotech CSI300 STAR50

Stock perfomance data ends up to Dec 31th, 2024

Source: Bloomberg, Bernstein analysis

CHINA SEMICONDUCTORS 5
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 3: Silergy's stock price has been lumpy throughout 2024, supporting our Market-Perform thesis, but we
think now is a good entry point

Analog Names Stock Performance in 2024

150

100

50
1/1/2024 2/1/2024 3/1/2024 4/1/2024 5/1/2024 6/1/2024 7/1/2024 8/1/2024 9/1/2024 10/1/2024 11/1/2024 12/1/2024

Silergy CSI300 STAR50

Stock perfomance data ends up to Dec 31th, 2024

Source: Bloomberg, Bernstein analysis

EXHIBIT 4: SMIC finally outperformed index thanks to China rally in Sep & Oct, while Hua Hong was still lagging the
index

Foundry Names Stock Performance in 2024

200

150

100

50

SMIC-H SMIC-A Hua Hong-H Hua Hong-A CSI300 STAR50

Stock perfomance data ends up to Dec 31th, 2024

Source: Bloomberg, Bernstein analysis

CHINA SEMICONDUCTORS 6
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 5: Computing names outperformed index a lot due to AI hype. For Cambricon specifically, we believe the
expectation on ByteDance computing CapEx is high for 2025

Computing Names Stock Performance in 2024

550
500
450
400
350
300
250
200
150
100
50
1/1/2024 2/1/2024 3/1/2024 4/1/2024 5/1/2024 6/1/2024 7/1/2024 8/1/2024 9/1/2024 10/1/2024 11/1/2024 12/1/2024

Cambricon Hygon CSI300 STAR50

Stock perfomance data ends up to Dec 31th, 2024

Source: Bloomberg, Bernstein analysis

CHINA SEMICONDUCTORS 7
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

CHINA SEMICAP 2025 OUTLOOK: DOMESTIC SUBSTITUTION CONTINUES

CHINA WFE INDUSTRY OVERVIEW

In 2025, we expect China WFE demand to take a pause with -19% YoY decline mainly due to strong pull forward
during 2024, however domestic vendor continue to benefit from share gain with +32% YoY growth. In our previous
global (here) & China WFE (here) updates, given stronger pull forward and potential tighter US restrictions, we revised down
2025 China WFE demand from 38bn to 35bn. Our recent channel check shows that the demand in matured logic is still strong
given the “China for China” push and funding support from local government, but the cadence of spending for memory and
advanced logic could be volatile given the uncertainty in supply constraints. We expect the WFE export restrictions by US would
get tighter by adding more fabs to the entity list, potentially slow down the WFE imports for some fabs in 2025 (although we
don’t believe all fabs impacted would stop purchasing). The expectation on these sanctions is also likely the key reason why we
saw more demand pulled forward from 2025 to 2024. We still project 2026 to be flattish vs 2025 with limited visibility at this
point.

However, domestic substitution is expected to further accelerate, reaching ~36% self-sufficiency by 2026. Additional
WFE restriction will only impact the global vendor’s sales in China and further support local vendor’s growth, so we previously
revised up our expectation on Chinese vendor’s sales in 2025/26. We saw the co-development dynamics between Chinese
fabs and WFE vendors continue to accelerate the improvement of local WFE vendors’ tech capabilities and quickly increased
their competitiveness. In terms of potential catalyst for 2025, we expect the local equipment order from those advanced
logic fabs added to the U.S. entity list in 2024 will accelerate in 2024, as they had purchased large amount of matured node
equipment that can also be used in advanced node production line (as many equipment types are shared), but need local
vendor’s support to fill in the gap on those equipment types that Chinese fabs no longer have access to (such as Epi, ALD, ALE
etc.). This kind of hybrid production line with higher local equipment share probably is still not ready for mass production yet, but
we do expect the yield ramp up to achieve some milestones in 2025 that will allow these fabs to start placing orders for local
equipment vendors.

Fund flow rather than fundamentals might further drive stock price up in 2025. We understand that the stock price has
already reacted faster than the change in fundamentals, with NAURA up 48%, AMEC up 80%, Piotech up 75% in the last two
months (Sept. 20 to Nov. 21), and the valuations are no longer inexpensive. But at this point, we still see further upside potential
in 2025, given the fund flow to the semicap sector is still expected to be positive. AMEC is our top pick for 2025, given it is
covered in more passive ETFs (for example AMEC is in the STAR 50 index but NAURA/Piotech are not), and the tech capability
of AMEC is also generally perceived to be higher (which could boost better investor sentiment). As the key lessons we learned
in 2025, fundamentals are important, but it is also equally important to ride on the trend, where we believe quality names like
AMEC will continue to get more momentum in a market with positive sentiment.

CHINA SEMICONDUCTORS 8
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 6: Total WFE imports to China grew 18% YoY in 2024 YTD Nov, slow down vs. Oct’s 23%

Total WFE imports to China by year

35,000 80% 32,708 90%
31,530
80%
30,000
70%
23,839 60%
25,000 22,008
56% 43% 50%
20,000 40%
15,257
20% 22% 18% 30%
15,000 12,747 11,918 28% 20%
10,000 7,071 10%
4,810 5,779 -7% -8% 0%
5,000
-10%
0 -20%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD
Nov

WFE imports to China (USDmn) WFE imports to China YoY (RHS)

Global WFE:
Global WFE:demand China’s
China demand demandexpected grew 36%toinbe 2023 despite
weaker RoW
while being
non-China
China WFE remain strong in 2023 despite global downcycle,
down
could -14%,
still expect China to be flat & RoW analysis up 11% CAGR in '23-'26
Source:
expect thego
General Administration of up in
Customs
growth 2025
of the
in People's Republic
the nextof China,
fiveBernstein
years to be in line with global
EXHIBIT 7: Global WFE: China demand expected to be weaker while non-China could still go up in 2025
 China WFE demand in 2023 took 37% share globally as China pushes for foundry self-sufficiency
 China WFE demand in 2023 is expected to grow 22% due to the surge in DUV sales
 IAs
t will remain
China
Global high
pushes infor
& China 2024 at 38%,
foundry
Wafer and expect to normalize
self-sufficiency,
Fab Equipment its WFE
(WFE) to ~30%
share
Demand isby 2026
expected to remain elevated at 37%
USD bn
+8%
Global
Global &
& China
ChinaWafer
WaferFab
FabEquipment
Equipment(WFE)
(WFE)Demand
Demand
-1% Global
USD
USDbnbn 116 TAM
108 107 ’17-’24 ’24-’25 ’25-’26
+11%
+8% CAGR YoY YoY
98 98 +8%-1%
92
122 116 ’17-’22 ’22-’23 ’23-’26
108 115 107 ’17-’24 ’24-’25 ’25-’26
+11% 0% CAGR YoY CAGR
RoW CAGR YoY YoY
98 98 105
64 81 6% 12% 12%
92 98 961
8 72 Demand
+14% 64 92
59 71
51 54 66
RoW RoW
10% -14% 11%
Demand
Demand 6% 12% 12%
64
64
47
59
59
47 40
51 54
54
44
51
43 China 31% -19% -1%
37 35 35
26 26 Demand
12 14 17
7 China
40 32% 36% 1%
2017 2018 2019 2020 226
021 022 236
226 023E 40% 238
38% 2024E 025E 23026E
7 China
Demand 31% -19% -1%
14 17 33% 30%
7
13% 12
2 0% 26% 26% 228%
8% 27% 38%
27% 40% 33% Demand
30% China TAM Share
20% 26% 26%
13%
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
13% 20% 26% 26% 28% 27% 37% 38% 33% 30% China Share
Source: Gartner, SEMI, Bernstein analysis
Source: Gartner, SEMI, Bernstein estimates and analysis China Semiconductors | 12
Source:
Source: Gartner, SEMI, MIR Gartner,
Databank,SEMI, Bernstein
Bernstein estimates
estimates andand analysis
analysis China
CHINA Semiconductors |
SEMICONDUCTORS 10
| 12

CHINA SEMICONDUCTORS 9
 Acceleration
the self-sufficiency of Wafer Fab Equipment
to reach 33% by 2026 (WFE) domestic substitution
will continue, doubling the domestic share to 28% in 2026信息平权 知识星球
China
China WFE:
Qingyuan Lin,WFE:
Acceleration
Ph.D. +852Acceleration
in domestic
in domestic substitution
substitutioncontinues,
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 Local fabs push2918
for 5759 qingyuan.lin@bernsteinsg.com
supply chain resiliency by co-development with local WFE suppliers 2 January 2025
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China WaferFab
China Fab Equipment(WFE)
(WFE) TAMand
and Domestic Share
ChinaWafer
China FabEquipment
Wafer Fab
Wafer (WFE)TAM
Equipment(WFE)
Equipment TAM andDomestic
DomesticShare
Share
USDbn
USD bnTAM and Domestic Share
USDbn
USD bn
-19%
-19%
+1%
+36% 43 ’17-’24 ’24-’25 ’25-’26
43-19% -1% China ’17-’24
CAGR ’24-’25
YoY ’25-’26
YoY
+32% 37 40 -1% CChina
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TAM ’17-’22
CAGR ’22-’23
YoY ’23-’26
YoY
43 38
35 China
TAM
35 TAM
37
+31% 37
36 CAGR YoY CAGR
35 -1% 35 TAM
+31%
37 ’17-’24 ’24-’25 ’25-’26
26 26 G 35
lobal 28%
CAGR 35 -30%
YoY -13%
YoY
+31%26 26
26 36 Global 28% -30% -13%
26 G lobal
supplier 22
32 36 25 supplier 30% 34% -7%
17 26 25 supplier
share
share 22
26 17 32 Global 28% -30% -13%
14 17 share
12 14
24 23 supplier
12 14 23
7 12 1 6
17 24 share
Domestic
7 13 Domestic
7 11 14 1 0 13 Dsupplier
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6 12 16 7 12 supplier 59% 34%
53% 29%
35%
11 13 3 5 7 9 sshare
13 share
upplier
5
00
67
00 1
1
1
1 22 3
5 7 1 0
Domestic
share
59% 34% 29%
0 0 1 1 2 3
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 32026E
6% supplier
2017 2018 2019 2020 2021 2022 2023E 217%
024E 228%
025E 2026E Self-sufficiency
4%2017
4% 3%2018
3% 4%2019
4% 6%2020
6% 7%2021
7% 022 214%
12%
212% 14% 2024E
023E 17% 2025E 36% share
28% 2026E 59% 32% 28%
(Domestic Share)
Self-sufficiency
4% 3% 4% 6% 7% 12022
2% 14% 17% 28% 36% Self-sufficiency
2017
4% 23%
018 24%
019 26%
020 27%
021 12% 214%
023 218%
024E 225%
025E 2026E
33% (Domestic Share)
(Domestic

Source: Gartner, SEMI, Company reports, Bernstein estimates and analysis China Semiconductors | 11
Source: Gartner, SEMI, Company reports, Bernstein estimates and analysis
Source: Gartner, SEMI, Company reports, Bernstein estimates and analysis CHINA SEMICONDUCTORS | 6
Source: SEMI, CEPEA, Company reports, Bernstein analysis and estimates
EXHIBIT 9: Dry Etch, Deposition, Cleaning and Thermo Processes are more crowded with many Chinese/Global
China Semiconductors | 13
Source: SEMI, CEPEA, Company reports, Bernstein analysis and estimates
players competing China Semiconductors | 13

Major Global & Chinese suppliers of Wafer Fab Equipment in China by segment (CY2023)
Material Removal & Cleaning
Photoresist Thermal Mfg.
Segment Lithography Other Mat. Deposition Process Control Doping Others
Dry Etch Cleaning CMP Processing Processes Automation
Removal
Share of
24% 15% 6% 3% 1% 23% 12% 3% 4% 3% 4% 3%
WFE
TAM (USD
8,762 5,640 2,098 1,016 303 8,358 4,320 1,284 1,299 1,115 1,447 1,120
mn)

NAURA SkyverseJingce Kingstone

SMEE Kingsemi
3% NAURA NAURA 2%
ASML 2% CETC
NAURA 0% 5%
8% 11% 4% 4%NAURA
13% ACMR AMAT 16%
14% Piotech
Hwatsing ACMR 4% 9%
AMEC PNC 31% 1%
11% Mattson
4% 8%
LAM
11%
AMAT AMAT
16% 54%
AMAT
ASML TEL Mattson 44% AMAT
Major KLA 33%
83% 18% 66% 54% TEL
Global
80%
and Others Others
Chinese AMAT 100% 100%
Players LAM 43%
in China 30%

LAM TEL
11% 15%
Nova
Screen 3%
45% TEL
10% Others Kokusai
TEL KLA
21% Ebara Kokusai 40% 11%
LAM 1%
Canon 18% 19% ASMI 2% Others Screen Veeco
9% 5% 27% 3% 4%
ASMI
Others Others 4%
Nikon Others Others
Others Others 11% 12%
7% 7% 8%
4% 6%

Source: SEMI, Gartner, Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 10
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

NAURA - THE LARGEST DOMESTIC WFE PLATFORM

Looking into 2025, we hold a positive top line projection of YoY +30%, and expect the GPM to further improve
with higher share from WFE and better mix with advanced node equipment. However, as the revenue upside is already
expected as the new order growth in 2024 will be the revenue in 2025, we expect the catalyst to come from new orders in
2025 from advanced logic fabs.

NAURA is well-positioned to improve its capital return once its new production base is fully utilized. As the company
already covers the majority of WFE market, NAURA is set to benefit from the domestic substitution trend, which will lead to
the increasing revenue mix from WFE and better margin profile. Meanwhile, NAURA is expanding its semicap production base
(Phase IV), which will double its total capacity once it reaches full capacity, fueling its growth in WFE segment.

EXHIBIT 10: We expect Naura’s revenue will enjoy 30% EXHIBIT 11: ...and GPM maintains at 45%
growth in 2025…
Gross profit and GPM
Revenue and YoY growth 25 50%
44% 44% 45% 22.5
60 70% 41% 41% 45%
60% 39%
50.2 20 37% 45% 40%
50 60% 17.7
49% 50% 35%

RMB bn
52% 39.6 50% 15 13.5 30%
40 50%
YoY growth
37% 30.5 25%
40%
38% 30% 9.1
RMB bn

30 10 20%
27%
22.1 30% 6.4
22% 15%
20 14.7 3.8
20% 5 10%
1.6 2.2
9.7 5%
10 6.1 10%
4.1
2.2 3.3 - 0%
0 0%
Gross Profit Gross profit margin

Revenue YoY growth

Source: Company reports, Bernstein analysis and estimates
Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 11
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 12: We expect Naura’s OPM will maintain at 23% EXHIBIT 13: ...thus EPS will grow 28% accordingly
in 2025...
EPS and YoY growth
NAURA operating profit and OPM 25.0 120%
108%
14 30%
96%
11.9 19.86 100%
12 24% 23% 20.0
25%
24% 15.53
10 20% 20% 9.3 65% 64%
80%
15.0 63%
Operating profit (RMB bn)

20%
12.11

RMB
8 7.3 60%

OPM
13% 15% 10.0
7.36
6 10% 11% 31%
28% 40%
4.4
10% 4.46
4 5.0
2.9 2.15 28% 20%
0.67 1.09
2 1.2 5%
0.7 0.0 0%
0.4
0 0%
Basic earnings per share EPS YoY growth

Operating profit Operating profits margin

Source: Company reports, Bernstein analysis and estimates
Source: Company report, Bernstein estimates and analysis

AMEC - LEADER IN DRY ETCH EXPANDING INTO DEPOSITION

Key advanced foundry/memory progress will still be the major driver of 2025 onwards. Advanced foundry/memory was
the major driver for AMEC in 2024, and we expect such momentum will continue into 2025. Still, key customers’ progress may
bring some volatility to quarterly revenue recognition, but the overall localization trend in advanced logic/memory is inevitable.

Profitability likely will still see some pressure in the near term, but is temporary and should get back to normal in
2026. AMEC reported a weak 2Q24 earnings with GPM declined due to higher verification cost for new equipment shipped to
production lines. 3Q24 GPM was back to normal, but we think the issue still could potentially come up in 2025 earnings, but
should be back to normal in 2026 when most of the equipment shipped become repeating orders.

CHINA SEMICONDUCTORS 12
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 14: We expect AMEC’s top line will grow 35% in EXHIBIT 15: ...and gross margin flat at 44%
2024...
Gross profit and gross profit
Revenue and YoY growth margin
18 60%
52% 8 46% 50%
15.7 43% 44% 43% 44% 7.1
16 45%
50% 7
38%
14 35% 45% 40%
12.1 6

RMB bn
37% 5.3 35%
12 35% 40%
RMB bn

32% 43% 5
30% 30%
10 8.5
30% 4 3.6 25%
8
19% 6.3 2.7 20%
3
6 4.7 20% 2.2
15%
17% 2
4 3.1 1.3
2.3 0.9 10%
1.9 10% 0.7
2
1 5%

0 0% - 0%

Revenue YoY growth Gross Profit Gross Profit Margin

Source: Company report, Bernstein estimate and analysis Source: Company report, Bernstein estimate and analysis

EXHIBIT 16: We expect OPM will increase to 20% in EXHIBIT 17: ...EPS will grow at 56% YoY
2025...
EPS and YoY growth
Operating Profit and margin 6 149% 5.62 160%
4.0 36% 40% 140%
3.6 5
120%
3.5 35% 91%
30% 85% 3.80 100%
3.0 27% 30% 4
80%
RMB bn

2.4 23% 2.89 56%

RMB

2.5 23% 25% 48%

3 60%
1.9 18% 52% 2.43
2.0 20% 40%
1.5 2 1.76 1.90
20% 8% 20%
1.5 1.3 15%
10% 1.1
0.92 -16% 0%
1.0 10% 1
0.37 -20%
0.5
0.5 0.2 5% 0 -40%
0.0 0%

Basic earnings per share EPS YoY growth

Operating profit Operating profits margin%

Source: Company report, Bernstein estimate and analysis

Source: Company report, Bernstein estimate and analysis

PIOTECH - RISING STAR IN CVD & HYBRID BONDING

Piotech has a good foundation for future growth, as 2/3 of its RMB 7 bn inventory is shipped products and equipment
in manufacturing, indicating significant top line upside in 2025/26. Piotech’s shipped products up +160% YoY in 3Q24
YTD, an acceleration from 1H24’s +147%, indicating a large chuck of shipped goods pending for revenue recognition. We
expect the unrecognized revenue will be gradually released in 2025/26.

CHINA SEMICONDUCTORS 13
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

NPM may still be under pressure in 2025, which we expect to improve in 2026 with operating leverage. 2024 GPM
expected to be low as 3Q24 GPM missed by 773bps due the higher verification cost, and we think it can only recover in 2026
similar to AMEC, when most of the revenue are from repeating orders without that issue.

EXHIBIT 18: We expect Piotech’ top line will grow 37% EXHIBIT 19: … and gross margin to grow as equipment
YoY to RMB 5.3 bn... smoothly being checked & accepted

Revenue and YoY growth Gross profit and gross profit margin
8 7.4 300% 4 60%
51% 3.5
4 49%
7 256%
250% 44% 45% 50%
43%
6 3
5.3 47%
200% 34% 2.4 40%
RMB bn

5 3 32%

RMB bn
3.9 2 30%
4 150% 1.7
125% 1.4
3 2.7 2
100% 20%
74% 1.7 1 0.8
2 73%
59% 50% 0.3 10%
0.8 45% 37% 39% 1
1 0.4 0.1 0.15
0.3
0 0% - 0%

Gross Profit Gross Profit Margin

Revenue % growth

Source: Company report, Bernstein estimate and analysis Source: Company report, Bernstein estimate and analysis

EXHIBIT 20: We expect OPM will decrease to 14% in EXHIBIT 21: ...and EPS will grow 52% in 2025
2025...
Operating Profit and margin EPS and YoY growth
1.0 40% 6 400%
342%
27% 0.8 5.05 350%
21% 20%
14% 15% 5
300%
0.8 7% 0.7
0%
-8% -3%

EPS YoY growth

250%
-20% 4 3.54
EPS (RMB)

0.6 0.5 3.18 200%

Operating profit (RMB bn)

-40% 2.97
3 150%
OPM

0.4 0.4 -60% 70%

1.95 52% 100%
-80% 2 11% 50%
0.2
0.1 -100% 0.72 -45% 0%
1
-120% -50%
0.0 -146%
0.0 0.0 -140% 0 -100%
-0.1 2021 2022 2023 2024E 2025E 2026E
-0.2 -160%
Basic earnings per share YoY growth

Operating profit Operating profits margin Source: Company report, Bernstein estimate and analysis

Source: Company report, Bernstein estimate and analysis

CHINA SEMICONDUCTORS 14
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

CHINA ANALOG 2025 OUTLOOK: BACK TO GROWTH

CHINA ANALOG INDUSTRY OVERVIEW

China analog has relatively high self-sufficiency in consumer, therefore share gain is expected to slow down, and the
competition is still intense. However, for leaders with high quality products such as Silergy, the downside is fully priced-in, and
we expect 26%+ CAGR growth for the next few years for Silergy supported by their heavy R&D investment in Auto and strong
market demand.

From a macro perspective, we expect China analog companies will experience consecutive growth into 2025 with several
tailwinds: (1) Continuable top line growth with inventory depletion for over 2 years, Industrial should be able to recovery in
2025. Additionally, Consumer won’t be able to grow too much next year but still a strong pillar of end demand; (2) Share gains
from global incumbents (though at a more moderate pace) with more and more design-wins in local OEM/ODM, especially
collaboration with local EV players; (3) Better operation leverage could drive higher and better-than-expected EPS growth.

We estimated that China TAM will reach USD 29 bn, YoY+10%. The major growth drivers should come from continuous demand
of Consumer, and recovery from Industrial & Communication (potentially incremental impact from government stimulus
policy). On top of that, China analog vendors’ share will increase to 30% from 29% in 2024. With that, we expect domestic
analog players should outperform overseas giants with higher than average growth rate in China markets. To be specific, we
expect domestic analog players will enjoy 23% YoY growth rate in 2025 while overseas at a more moderate pace of 5% YoY
growth(Exhibit 24), and total market will end up at 10% YoY growth into 2025.

EXHIBIT 22: We expect China analog market will increase 10% YoY, landing at USD 29 bn

Global
Global &
& China
ChinaAnalog
Analog &
& Mixed
MixedSignal
Signal Demand
Demand
USD
USD bnbn
+5%
+5%
+8%
+8% Global
Global '18-'24
'18-'24 '24-'25
'24-'25 '25-'26
'25-'26
104
104 TTAM
AM CAGR
CAGR YYoY
oY YoY
YoY
99
99
+9%
+9% 92 92
92
92
82
82 83
83

RoW
RoW
62
62 Demand
Demand 8%
8% 77%
% 44%
%
56
56 55
55

26 27 29 32 CChina
hina
18
24
24 26
29% 23 27
29% 32
30%
29 (30%)
30% Demand
Demand
11%
11% 1110%
0%
0% 888%
%%
14 15 2 9% 223
8% (30%)
14
26% 217%
5 8% (29%) (29%) (28%) (29%)
218
(26%) (27%) (28%)
2018
2018 22019
019 22020
020 22021
021 22022
022 22023
023 22024E
024E 2025E
2025E 2026E
2026E

Source: Company reports, Gartner, Bernstein analysis

CHINA SEMICONDUCTORS 15
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 23: And we expect China analog self-sufficiency to arrive at 30% in 2025

China Analog & Mixed Signal TAM and Domestic Share

USD bn

+8% '18-'24
'18-'24 ''24-'25
24-'25 '25-'26
'25-'26
+10% CAGR
CAGR YoY
YoY YoY
YoY
32
+11% 29

26 27
24 23
Non-Chinese
Non-Chinese
supplier
supplier 7% 5%
5% 2%
2%
China
China sales
sales
18

14 15

Chinese
Chinese
12 25% 223%
3% 221%
1%
10 37% ssupplier
upplier
7 7 8 33% (37%)
28% 6 28% 29% (33%) China
China sales
sales
4 24% (29%)
2 3 22% (28%) (24%) (28%)
14% 19% (22%)
(14%) (19%)
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E

Source: Company reports, Gartner, Bernstein analysis

EXHIBIT 24: Oversea players will grow at a more moderate EXHIBIT 25: We expect China Analog market to grow 10%
pace than domestic peers in China analog market when in 2025, with Automotive, Compute & Consumer driving
we look into 2025 the growth

2025 Growth Rate China Analog Market 2025 YoY

25% 23% 25%

20%
20% 19%
20%

15% 13%
15%

10% 10%
7%
10%
5%
5%
5%
5%
0%

0%
China Analog Domestic Players Overseas Players
Market Growth Growth Rate Growth Rate in
Rate China

Source: Bloomberg, Company reports, Bernstein analysis and estimates Source: Gartner, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 16
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 26: Silergy seems to be undervalued compared to its A-share peers especially SG Micro

200

150 Silan
Kiwi Yandong
Belling
100 3peak Rockchip
Maxscend
Bright Power Vanchip
Dioo Fudan
50 Injoinic Awinic Goodix
Chipown
ETEK Southchip SG Micro
Guobo
0 Silergy
0 1000 2000 3000 4000 5000 6000 7000 8000
1BF P/E

Zhenhua
-50

-100
Joulwatt

-150 Halo

-200

-250
Market Cap (USD mn)

Bubble size represents the revenue of 1Q24~3Q24 while stock perfomance data ends up to Dec 31, 2024. Note SGMICRO has 33% siganl chain business but we
classify it in Mid-end Power Analog for better comparison. The other players might also have revenues not in the segments that we classfied.
Source: Bloomberg, WIND, Bernstein anlalysis

SILERGY - QUALITY TARGET WITH A GOOD ENTRY POINT

As the largest power analog vendor in China, Silergy has more than 50% revenue coming from Chinese mainland and 20% from
Taiwan, with its overall sales largely follow the cycle dynamics of the China market. We expect Silergy to grow 25% YoY in 2025,
same as the average domestic analog players’ growth and back to its 2022 level, landing on the midpoint of management’s long
term guidance.

As the profitability issue has been hovering over for 9 quarters, we expect with disciplined expense control, such negative
impact will disappear in 2026 with top line back to pre-Covid growth trajectory. As a result, the NPM won’t get back to pre-
COVID level by 2025, but with a much higher EPS recovery pace at 103% in our model.

Overall we believe 2025 should be a good year for Silergy to re-set off. With secular long-term semiconductors content growth
and domestic share gain in Industrial and Automotive, Silergy should be able to deliver solid top line and bottom line growth.

CHINA SEMICONDUCTORS 17
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 27: We expect Silergy will grow 27% in 2025 EXHIBIT 28: ...and gross margin will be higher with new
with stronger momentum in Auto, Consumer & products launch & new platform introduction
Communication...
Gross profit and GP margin
Revenue and YoY growth
25 53% 53% 53% 54% 55% 60%
45 100%
2024-2026 CAGR 27% 47% 48%
40 80% 50%
20 43%
35 55%
60% 16
30 40%

TWD Bn
30 29% 15
28%40% 13
TWD Bn

24 24 12
25 20% 11 30%
14% 22 27%
9% 20% 10
20 19 10
15 7 7 20%
14 0%
15 5
11
-34% -20% 5
10 10%
5 -40%
- 0%
- -60%

Gross profit Grosss Profit Margin

Revenue Growth YoY
Source: Bloomberg, company reporting, Bernstein analysis and estimates
Source: Bloomberg, company reporting, Bernstein analysis and estimates

EXHIBIT 29: With larger revenue scale, we expect Silergy EXHIBIT 30: ...and EPS will grow 107% in 2025 accordingly
will enjoy higher operation leverage...
EPS and YoY growth
Operating Profit and OP margin
TWD
9.0 31% 35% 25 205% 250%
8.0
8.0 20.15 200%
27% 30%
7.0 6.6 25% 20 150%
107%
22% 22% 5.9 25% 72% 15.95
15.38 64% 100%
6.0 15 24% 38%
TWD Bn

21%4.9 4% 50%
20% 12.32
5.0
8.93 0%
4.0 12% 15% 10
3.1 6.46 -88% -50%
5.96
3.0 2.3 10% -100%
5
2.0 2.2
1.96 -150%
5%
1.0 -3% 0 -200%
0.0 0%

-1.0 -0.5 -5%

Basic EPS EPS growth YoY in %

Operating profit Operating Profit Margin
Source: Bloomberg, company reporting, Bernstein analysis and estimates
Source: Bloomberg, company reporting, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 18
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

CHINA FOUNDRY 2025 OUTLOOK: SHARE GAIN WITH PRESSURE ON MARGIN

CHINA FOUNDRY INDUSTRY OVERVIEW

We anticipate additional foundry recovery in 2025. 2023 marks the bottom of the China Semis cycle as in 2024 overall
non-memory chips sales are already back to growth, although the growth rate in 2024 is just moderate. Foundry demand in
2023 was a low base due to weak demand and inventory digestion, therefore 2024 foundry growth was stronger than the end
market, as there is no longer de-stocking. In 2025, we expect the consumer semis could further grow driven by China’s stimulus
on consumption, and some inventory stock up might also help. By application, MCU recovery is not trending as strong as other
sectors in 2024, but we expect that to recovery in 2025; the logic & CIS demand is stable while power discrete should still be
under pressure, and we expect the weakness in discrete might last for longer due to pricing pressure. We model SMIC to grow
18% YoY in Revenue, while Hua Hong a little faster at 25% due to lower base in 2024 and potential recovery of MCU.

Chinese foundries likely to continue to gain share from global peers. Chinese foundries were gaining share from global
peers with higher utilization rates (UT) and lower margins, at the same time driving the ASP recovery in matured logic to be
muted in a foundry upcycle. SMIC management also indicated during the 3Q24 earnings call that 2025 is to be a year with
volume increase but moderate or flat ASP growth. However, as Chinese fabless continue to gain share, and they continue
to allocate higher share to Chinese foundries (due to lower pricing and better supply chain resiliency), we believe Chinese
foundries could gain further share in 2025.

Despite the positive market share gain, margin pressure is expected to continue. We believe the foundry “China for
China” narrative is far from finished (see our previous analysis) and China will continue to build more capacity. This could lead
to overcapacity globally and bring pressure on the ASP recovery, so we are more bearish on the profitability than consensus.
However, market sentiment is currently more focused on the top line rather than the bottom line, and fund flow in the A share
still favors the semis sector, suggesting that stock reactions will continue to be positive.

EXHIBIT 31: China semicondutor shipment: 2023 marking the bottom of the cycle, wiith mediocre recovery in 1H24
but trending better in 2H24, except for MCU and Discrete

Semiconductor Trailing 3 Months Average Sales to China YoY

80%

60%

40%

20%

0%

-20%

-40%
Sep-2015

Sep-2017

Sep-2018

Sep-2019

Sep-2020

Sep-2022

Sep-2024
Sep-2016

Sep-2021

Sep-2023
Mar-2019

Mar-2021

Mar-2024
Mar-2015

Mar-2016

Mar-2017

Mar-2018

Mar-2020

Mar-2022

Mar-2023
Jun-2015

Dec-2017

Dec-2019

Jun-2020

Jun-2022

Dec-2022
Dec-2015

Jun-2016

Dec-2016

Jun-2017

Jun-2018

Dec-2018

Jun-2019

Dec-2020

Jun-2021

Dec-2021

Jun-2023

Dec-2023

Jun-2024

MCU Logic & Image Sensor Analog Discrete NOR Flash Total

Source: WSTS, Bernstein analysis

CHINA SEMICONDUCTORS 19
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 32: Chinese mainland foundries have higher utilization rate than Taiwan peers in the recent quarters,
despite more agreesive capacity expansion

Utilization rate of Foundries in Chinese Mainland and Taiwan

120%

110%

100%

90%

80%

70%

60%

50%

40%
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

SMIC Hua Hong UMC Vanguard International

UMC & VIS are covered by Bernstein Asian Semiconductors Analyst Mark Li.
Source: Company reports, Bernstein analysis

EXHIBIT 33: At the same time the GPM for mainland foundries were also much lower than Taiwaness peers

GPM of foundries in Chinese Mainland and Taiwan

60%

50%

40%

30%

20%

10%

0%
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

SMIC Hua Hong UMC Vanguard International

Source: Company reports, Bernstein analysis

CHINA SEMICONDUCTORS 20
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 34: Due to competition, ASP recovery of matured node foundries were muted in recent quarters. SMIC was
an outlier in 3Q24, potentially due to contribution from their advanced node business.

ASP of foundries in Chinese Mainland and Taiwan

1100

1000

900
US$/8'' eq wf

800

700

600

500

400

300
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

SMIC Hua Hong UMC Vanguard International

Source: Company reports, Bernstein analysis

EXHIBIT 35: Chinese IC suppliers have been gaining EXHIBIT 36: Though the incremental size of localization
global shares and are a growing group of customers for was bigger in mature nodes, that represented only a
foundries, likely thanks to Chinese OEMs sourcing from minor increase in localization rate, up from high 40s%
them previously to low 50s% in the past 3 years

Chinese IC Suppliers as % of Global Mature-Node Wafer Sourcing of Chinese

Mature-Node Wafer Foundry Revenue IC Suppliers
30% 20 60%

Share of Chinese Foundry

Wafer Foundry Revenue (US$B)

26% 50%
24% 15
25% 23% 40%
21% 22%

19% 10 30%
20%
16% 20%
5
10%
15%
0 0%
2017 2018 2019 2020 2021 2022 2023
10%
Non-Chinese
Foundry
5%
Chinese
Foundry
0% Share of Chinese Foundry
2017 2018 2019 2020 2021 2022 2023

Source: Company reports, Bernstein analysis and estimates

Source: Company reports, Bernstein analysis and estimates

SMIC - ALL EYES ON ADVANCED NODE LOGIC PROGRESS

Advanced node progress will be under the spotlight in 2025. Our topline projections are slightly higher than consensus in
2024-25, and more positive for 2026, reflecting our positive outlook on its progress on advanced node. Recent teardown from
TechInsights showed that Huawei Mate 70 Pro Plus phone runs on a processor (Kirin 9020) built with the same 7-nanometer

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technology used in its Mate 60 Pro last year, raising the discussion on the stall of SMIC’s 5 nm technology. The deployment
of advanced node will have significant impact on domestic semicap names. We expect more clarity to come as improvement
process goes on.

EXHIBIT 37: We expect SMIC to have high-teens growth in EXHIBIT 38: We expect SMIC’s GPM to recover to 2019
2025-26 level but not the level during COVID (2020-22)

SMIC Revenue & YoY growth SMIC Gross profit & GPM
3 40%
12 11.2 50% 2.8
38% 35%
2.5 2.3
10 39% 34% 9.5 40%
30%
8.0 31% 2.0
30% 2
8 1.7 25%

Revenue YoY
25% 7.3

USD Bn
Revenue (USD bn)

27% 19%
20% 1.5 24% 1.4 20%
6.3 18% 18%
6 5.4 21% 21% 21%
1.2
10% 0.9 17% 15%
3.9 1
4 3.1 0.6 10%
0%
0.5
2 -7% -13% 5%
-10%
0 0%

2019

2020

2021

2022

2023

2024E

2025E

2026E
0 -20%
2019

2020

2021

2022

2023

2024E

2025E

2026E

Gross profit GPM

Revenue YoY growth

Source: Company reports, Bernstein analysis and estimates

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 39: We expect SMIC’s OPM to recover to HSD EXHIBIT 40: We expect SMIC’s EPS to rebound in 2025

SMIC Operating profit & GPM SMIC EPS & YoY growth
2 30% 25 200%
1.8 22.99
1.8 25% 21.55
26% 25%
1.6 150%
20
1.4
1.4 143% 91%
20% 100%
73%
USD Cents

1.2
USD bn

15
1 0.9 15% 11.27 11.38 31% 50%
0.7 7% 9.93
0.8 10 9.14
10% 6.98 0%
0.6
8% 0.4 0.4 8% 8% -39% 9%
0.3 4.65 -50%
0.4 5
6% 5% -50%
0.2 5%
0.0
2%
0 0% 0 -100%
2024E

2025E

2026E
2019

2020

2021

2022

2023

Operating profit OPM EPS YoY growth

Source: Company reports, Bernstein analysis and estimates Source: Company reports, Bernstein analysis and estimates

HUA HONG - FULLY LOADED INTO 2025

ASP may only increase moderately in 2025, but lower price & “China for China” supply chain localization push from
OEMs will help to support Hua Hong’s volume share gain in mature node Foundry. We are more cautious on margins given

CHINA SEMICONDUCTORS 22
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ASP pressure on matured node as well as continuous D&A pressure with added capacity. However, we continue to believe that
the MCU recovery will benefit Hua Hong to improve ASP and GPM due to better product mix.

EXHIBIT 41: We expect Hua Hong’s revenue to decline in EXHIBIT 42: We expect Hua Hong’s GPM to bottom in
2024 then recover in 2025-26 2024 then recover in 2025-26

Hua Hong Revenue & YoY growth Hua Hong Gross profit & GPM
3.5 70% 80% 0.9 40%
34%
70% 0.8 35%
3.0 30%
52% 3.1 60% 28%
0.7 30%
2.5 50% 24%
0.6
40% 21% 25%
USD bn

USD bn
2.0 25% 0.5 0.6
22% 30% 20%
0.4 0.8 0.5
1.5 20% 0.5
2.5 2.5 11% 0.4 19% 15%
3% 2.3 0.3
1.0 0% 2.0 10% 16%
1.6 0.2 0.3 10%
-8% 0% 0.2
0.5 -12% 0.2
0.9 1.0 0.1 5%
-10%
0.0 -20% 0.0 0%

2019

2020

2021

2022

2023

2024E

2025E

2026E
2024E

2025E

2026E
2019

2020

2021

2022

2023

Rev YoY growth Gross profit GPM

Source: Company reports, Bernstein analysis and estimates Source: Company reports, Bernstein analysis and estimates

EXHIBIT 43: We expect Hua Hong to experience an EXHIBIT 44: We expect Hua Hong’s EPS to bottom in
operating loss in 2024 due to depreciation pressure, 2024 and improve in 2025
then to see a rebound in 2025-26, though still dragged
by heavier depreciation from 12’’ fabs Hua Hong EPS & YoY growth
0.40 200%
Hua Hong opearting profit & OPM 0.35
23% 0.35 162%
0.6 25% 150%
0.30
0.5 20%
15% 100%
0.4
0.25
11% 15% 0.20 72% 71%
USD

0.19
0.3 0.20 50%
USD bn

7% 10% 26%
0.2 5% 0.15 0.13
0.11 0%
1% 5% 0.09
0.1 0.10 -26% 0.08
0.1 0.2 0.6 0.2 0.0 0.2 0%
-45% 0.05 -50%
0.0 0.05 -39% -73%
0.0 -0.1
-0.1 -4% -5% 0.00 -100%
-6%
2019

2020

2021

2022

2023

2024E

2025E

2026E

-0.2 -10%
2019

2020

2021

2022

2023

2024E

2025E

2026E

EPS YoY growth

Operating profit OPM

Source: Company reports, Bernstein analysis and estimates

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 23
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CHINA COMPUTING 2025 OUTLOOK: XINCHUANG & AI ARE STILL THE MAIN THEME

CHINA COMPUTING INDUSTRY OVERVIEW

Xinchuang & domestic AI computing construction will remain the hot topics of China computing in 2025, which we
consider as two main investment thesis for China domestic computing hardware.

In September 2022, China’s SASAC (State-owned Assets Supervision and Administration Commission, 国资委) issued Policy
Document No. 79, formally establishing domestic substitution targets for the Xinchuang sector. Specific targets for each type of
information system infrastructure are to be achieved by the end of 2027, which include:

• “Full replacement”: office automation (OA), portal, email, archives, party affairs, and discipline inspection, and business
management software

• “Replace as needed”: strategic enterprise management, enterprise resource planning (ERP), risk management, and customer
relationship management (CRM) systems

• “Replace if possible”: Production, manufacturing, and research and development systems

Although the SASAC substitution target focuses on software and information system infrastructure, Xinchuang is, in fact, a
general concept that combines existing sectors related to information technology and is collectively named the Xinchuang
sectors, which includes four major sub-sectors: basic hardware (semiconductor chips, servers and PCs, storage devices,
etc.), basic software (databases, operating systems, middleware, etc.), application software (office software, ERP, etc.), and
information security (hardware and software security, and security services) (Exhibit 3).

In particular, SASAC has provided a three-step roadmap for China to achieve the Xinchuang domestic substitution target by
2027, named the "2+8+N" strategy:

• Party and government ("2"): First, the goal is to achieve domestic substitution within the scope of government agencies, while
also polishing products and cultivating core domestic suppliers in Xinchuang sectors.

• The eight key industries ("8"): Second, when domestic products and ecosystems are relatively mature, the goal is to achieve the
substitution target in the eight key industries (predominantly SOEs), which include 1) energy and electricity, 2) transportation, 3)
telecommunications, 4) finance, 5) education, 6) healthcare, 7) petroleum, and 8) aerospace and aviation.

• Other industries ("N"): Finally, the goal is to expand Xinchuang software and hardware products to China’s overall consumer IT
market.

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EXHIBIT 45: Two key policies that fundamentally lay out the framework the vision for Xinchuang

Source: Literature research; Bernstein analysis

EXHIBIT 46: Xinchuang comprises 4 core pillars with different degree of domestic substitution achieved to-date

Source: Literature research; Bernstein analysis

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EXHIBIT 47: In each main sector, typically, there are one or two domestic leaders emerging, driving sector
substitution and expansion

Source: Literature research, company website, Bernstein analysis

EXHIBIT 48: The government’s list of 18 "safe and reliable" CPUs (groups): All are Chinese-made chips and Hygon is
the only credible supplier in the x86 server CPU market
Architecture PC or Server Safety and
CPU Product Name Company
/Instruction set CPU Reliability Level
Hygon x86-Gen3 x86 Server Hygon Information Technology Level I
Hygon x86-Gen2 (3230/3250/3280/5280/7250/7260/7280/7285) Server Hygon Information Technology Level I
Loongson 3C5000L MIPS/LoongArch Server Loongson Technology Level I
Loongson 3A4000/3B4000 PC & Server Loongson Technology Level I
Loongson 3A5000/3B5000 PC & Server Loongson Technology Level I
Phytium Tengrui D2000 ARM PC Phytium Information Technology Level I
Phytium FT-2000 PC Phytium Information Technology Level I
Phytium FT-2000+ Server Phytium Information Technology Level I
Phytium Tengyun S2500 Server Phytium Information Technology Level I
Zhaoxin ZX-E KX-U6780A/KX-6640MA/KX-6640A/ZX-D KX-U5580 x86 PC Shanghai Zhaoxin Integrated Circuit Level I
Zhaoxin KH-37800D Server Shanghai Zhaoxin Integrated Circuit Level I
Kunpeng 920 ARM Server Shenzhen HiSilicon Level I
Kirin 9006C PC/SoC Shenzhen HiSilicon Level I
Kirin 990 PC/SoC Shenzhen HiSilicon Level I
Pangu M900 PC HiSilicon Technologies Level I
Sunway 1621 Alpha Server Chengdu Sunway Technologies Level I
Sunway SW421 PC Chengdu Sunway Technologies Level I
Sunway 3231 Server Chengdu Sunway Technologies Level I

Source: China Information Security Evaluation Center, company websites, Bernstein analysis

2025 Party and government Xinchuang will accelerate the penetration of the county and township level as an
incremental demand especially PCs, driving 4~5bn PC CPU demand every year till 2027. Central Security Bureau
released Document No.13 in Sep 2024, providing RMB 130 bn fiscal support for counties & townships Xinchuang PCs in the

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following 3 years. Per estimate, there are 20~25 bn PCs in the Party & Government system need to be replaced in total, while in
the past round of Party & Government Xinchuang happened between 2019 and 2021 there were 5~6 bn PCs placed in central
& provinces, as a result, there are nearly 15~20 bn PCs left in the counties & townships which need to be replaced in the next
three years as government targets accepting all Xinchuang projects by 2027. Average speaking, the ASP for PC CPU is RMB
800, so incremental RMB 4~5 bn PC CPU market is ready to release every year till 2027.

Industry Xinchuang will proceed in an orderly manner with higher penetration in Education, Medicare & Energy, etc. In
April 2024, State-owned Assets Supervision and Administration Commission of the State Council (SASAC) urged state-owned
enterprises to complete the replacement target this year and complete 100% replacement by 2027. We have seen increasing
Xinchuang bidding from industries like Education, Medicare, Energy and Mobile Service Operator in the second half of 2024,
proved by Hygon’s top line & margin beat in 3Q.

EXHIBIT 49: Progress in Party & Government Xinchuang and Industry Xinchuang

Source: News release, Bernstein analysis

CHINA SEMICONDUCTORS 27
 China x86 server CPU demand grew at 9% CAGR from '17-'22;
China expected to maintain 33% global share by '26, with 8% CAGR
信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025
 In the past 5 years, demand in China has been strong, growing at 1.5x the CAGR for rest of the world
 For
EXHIBIT China
50:the nextx86 serverChina
5 years, CPU demand
demandgrew atis
share 9% CAGR from
expected '17-'22; China
to maintain expected to maintain 33% global
at 33%
share by '26, with 8% CAGR

Global & China x86 Server CPU Demand

USD bn

+8%

+7% ’17-’22 ’23-’26

-12% 27
26 CAGR CAGR
25 25 25 25

22 22 22

17 RoW 6% 8%
TAM

China 9% 8%
30% 31% 31% 32% 33% 33%
29% 29% 33% TAM
27%

Hygon
2017 now2019
2018 holds
202011% share
2021 2022 in2023E
China's
2024Ex86 server
2025E 2026E CPU market as a

key substitute, expect share to reach 23% till ’26

This forecast is based on Mercury’s global market forecast for Intel and AMD in Q3’2023 and combining our forecast for Hygon and ASP assumptions.
Source: Bernstein
Source: Mercury, Gartner, Mercury, Gartner, Bernstein
estimates estimates and analysis
and analysis CHINA SEMICONDUCTORS | 70
 2023 growth slowed down due to the chip supply issue
 We
EXHIBIT Hygon Hygon
51:expect now holds
will 11%
growshare in China's
at 41% CAGR in x86
theserver
next 3CPU market
years asby
driven a key substitute,
domestic expect share to reach
substitution
23% till ’26

China x86 Server CPU TAM and Domestic Share

USD bn
’19-’22 ’22-’23 ’23-’26
+5% +8% China CAGR YoY CAGR
9 TAM
8 -5% 8 8
7 7
7
7
6
Global
supplier 2% -7% 2%
5
(Intel/AMD)

Domestic
19% 23% supplier 131% 12% 41%
9% 11% 14% (Hygon)
1% 2% 4%
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E

Source: Mercury, Gartner, Bernstein analysis and estimates

Source: Mercury, Gartner, Bernstein analysis and estimates CHINA SEMICONDUCTORS | 42

HYGON - LEADER IN CHINA FOR X86 SERVER CPU SUBSTITUTION

Hygon 3Q24 delivered decent results (Link), we expect the momentum to continue in 4Q24&2025. In 3Q24 revenue
grew +78% YoY, GPM reached record high at 69.1% with 1,291 bps YoY increase, and NPM reached second highest in history
at 28.3% with 1,148 bps YoY. The growth is mainly driven by strong demand from Xinchuang datacenter build out, which we
don’t expect that to slow down in 4Q24&2025. Bottom line’s growth mostly comes from the increase in GPM, illustrating that
Hygon is able to sell at higher premium with their new products. With more AI accelerators are in the pipeline that target to

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launch in 4Q24 and 2025, we saw potential upside to their revenue as well.

WE : EXHIBIT 52: ...and GPM will maintain at 65%

Revenue and YoY growth Gross profit and GP margin

170% 2022-2026 CAGR 35% 66% 65% 65%

18 16.8 180% 12 10.9 70%
60%
16 160% 56% 60%
10 51% 52%
14 126% 122% 12.9 140% 8.5
50%
8

RMB Bn
RMB Bn

12 120%
9.3 37%
10 100% 6.2 40%
6
8 80% 30%
6.0 56%
6 5.1 60% 3.6
38% 4
30% 2.7 20%
4 2.3 40%
17%
1.0 2 1.3 10%
2 0.4 20%
0.5
0.1
- 0%
- 0%

Revenue % growth Gross Profit Gross Profit Margin

Source: Company reports, Bernstein analysis and estimates Source: Company report, Bernstein estimate and analysis

EXHIBIT 53: We expect OPM to grow a bit to 36%... EXHIBIT 54: ...and EPS will grow 42% in 2025

Operating Profit and OP margin EPS and YoY growth

35% 36% 36% RMB
7 40% 2022-2026 CAGR 50%
28% 6.1 2.0 1.90 200%
6 22% 30% 135%
19% 150%
4.6 20% 1.44
5 1.5 88%
100%
10% 42% 32%
RMB Bn

4 3.3 42% 1.01

1.0 50%
-8% 0%
3 0%
-10% 0.54
2 1.7 0.5 0.38 -50%
1.1 -20%
0.16
1 -37% 0.4 -100%
-30%
0.0
- -40% -0.05 -0.02 -150%
-0.1 -0.1
(1) -50% -0.5 -200%

Operating profit Operating profits margin Basic earnings per share EPS growth YoY in %

Source: Company report, Bernstein estimate and analysis Source: Company report, Bernstein estimate and analysis

CAMBRICON- LEADING DOMESTIC AI CHIP SUPPLIER AS THE BEST ALTERNATIVE TO HUAWEI

Cambricon 3Q24 results show strong top line growth (link), we believe 4Q24 and 2025 would be even stronger.
Cambricon’s 3Q24 top line growth is impressive (+284% YoY), reaching RMB 120 mn, with GPM dropped to 51.2%. Our
channel check shows that Cambricon’s supply issue has been partially resolved, and its Siyuan 590 has been well recognized
by major Cloud Service Providers and start to capture repeating orders. Together with the order from the local data center
projects, the prepayment and inventory both were record high in 3Q24, indicating strong 4Q24&2025 results, we revised up
our revenue projection to reflect that. Note that Cambricon has the risk to be delisted if it’s still not profitable in the coming
years, with stronger top line growth now we are modeling it to be break even by 2025 (was 2026). However, the valuation is still

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too high, we maintain Market-Perform.

EXHIBIT 55: We expect Cambricon’s revenue to double in EXHIBIT 56: …and GPM persistently to grow
2025...
Gross profit and GP margin
Revenue and YoY growth
7 72% 72% 74%
2022-2026 CAGR 78% 71%
8 7.4 250% 72%
6
203% 69% 5.3
7 70%
200% 5 68%

Billion RMB
68%
6 66%
Billion RMB

65%
150% 4 66%
5 3.1
4.3
101%
3 62% 64%
4 71% 100%
57% 62%
3 2 1.5
2.1 50% 60%
2 3% 1% -3% 1 0.4 0.5 0.5
0.3 0.3 58%
0.7 0.7 0%
1 0.4 - 56%
0.5 0.7
0 -50%

Gross Profit Gross Profit Margin

Revenue % growth
Source: Company report, Bernstein estimate and analysis
Source: Company report, Bernstein estimate and analysis

EXHIBIT 57: We expect OPM will turn positive in 2025... EXHIBIT 58: ...and EPS will increase significantly in 2025

Operating Profit and OP margin EPS and YoY growth

RMB
22% 29% 50% 5.0
1.7 4.40 500%
-11%
0% 4.0
1.2 1.0 400%
3.0 447%
-50% 1.95
0.7
Billion RMB

-95% 2.0 300%

-114% -123%
0.2 -100% 1.0
126% 200%
-0.3 -182% -150% 0.0
-0.2 -1.0 100%
-0.8 -0.4 -200% -0.56
-2.0 -1.15
65% 73% 0%
-265% -0.8 -0.9 -2.07
34%
-1.3 -250% -3.0 -2.06
-1.3 -3.14 -100%
-1.8 -1.2 -300% -4.0 -3.27 -79%
-52%
-5.0 -200%

Operating profit Operating profits margin

Basic earnings per share

Source: Company report, Bernstein estimate and analysis Source: Company report, Bernstein estimate and analysis

OUR MOST POPULAR RESEARCH OF 2024

In 2024, we published ~100 calls on our thesis, and co-published another ~50 with my global semis analyst colleges on
industry deep dives. We summarized our most popular research below, and look forward to 2025 with more high-quality
research ahead.

China 2.0

CHINA SEMICONDUCTORS 30
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1. China 2.0: Made In China... Beyond 2025 (Blackbook)

2. "China 2.0": Semiconductors — Journey towards self-sufficiency

Semicap

1. Semiconductor Equipment Investment Primer, 2024 Edition (Blackbook)

2. China Semicap: WFE demand stronger in 2024 & weaker in 2025

3. China Semicap: Record-high WFE demand expected in 2024

4. China Semicap: Competitive dynamics within each WFE segment & Chinese WFE suppliers deep dive

5. Global Semicap: Short primer on segments of Wafer Fab Equipment (WFE)

1. China Semicap: From dependence to independence - the journey to build a 'de-Americanized' component supply chain

1. Global Semiconductor Equipment: Bigger market but also higher valuation

2. Global Semiconductors: China buying WFE - will it ever stop? A quantitative assessment

3. Global Semi Equipment: Quantifying the impact of potential US restrictions on China WFE

4. Global Semiconductors: Impact of the 2024 US Export Controls

Analog

1. China Analog Primer: How fast are Chinese players taking share?

2. Global Analog Semiconductors: The battle for China?

3. Global Semiconductors: Mature node, slow shift ; why isn’t there aggressive domestic substitution in analog in China?

Foundry & AI & CPU

1. Global Semiconductors: Decoupling in foundry? A quantitative assessment

2. China AI Accelerator: A comprehensive scan on the domestic ecosystem and competitive dynamics

3. China AI: Charting its own course - 5 predictions for 2024

4. Server CPU 101: A short primer on the SPEC CPU 2017 computing performance benchmark

5. China x86 Server CPU: How good are those x86 server CPUs designed in China, and how big is the addressable market?

Trackers & industry models (the latest version)

1. China WFE Import Tracker (Oct): YTD +23%, 2024 full year on track to reach >USD 36Bn

2. Global Semicap Tracker (September): Growth continued; an upside risk to TEL

3. Global Semis: October 2024 WSTS Tracker - Sales fell -12.6% MoM, below typical (-8.3% MoM); up +15.2% YoY

4. Auto Semis Cycle Tracker 3Q24: Pumping the brakes as end demand slows

5. China WFE industry model (update each quarter)

6. China WFE Import Tracker (update each month)

CHINA SEMICONDUCTORS 31
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APPENDIX - FINANCIAL FORECASTS

EXHIBIT 59: NAURA (002371.CH) - Income Statement

NAURA (002371.CH) - Income Statement
(in RMB million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Revenue 1,622 2,223 3,324 4,058 6,056 9,683 14,688 22,079 30,473 39,603 50,219
Cost of sales (978) (1,410) (2,048) (2,413) (3,834) (5,867) (8,250) (13,005) (16,989) (21,948) (27,679)
Gross profit 645 813 1,276 1,645 2,222 3,817 6,438 9,075 13,484 17,656 22,539
Total SG&A (1,013) (920) (672) (797) (1,205) (1,705) (2,224) (2,836) (3,287) (4,745) (6,047)
R&D expenses - - (351) (525) (670) (1,297) (1,845) (2,475) (3,523) (4,356) (5,524)
Financial income / (expense) (27) (27) (48) (99) 43 46 83 18 (75) (58) (98)
Net income from investment - - - - 1 1 0 1 2 2 2
Other gain / (loss) (45) 330 130 196 279 375 414 666 702 792 1,004
Operating Profit (441) 196 334 421 669 1,236 2,867 4,448 7,303 9,289 11,876
Non-operating activities 615 10 11 19 15 16 (13) 18 5 - -
Profit before taxation 174 206 345 439 684 1,253 2,854 4,466 7,307 9,289 11,876
Income tax (36) (38) (62) (70) (53) (59) (313) (433) (846) (964) (1,232)
Net Profit 138 167 283 370 631 1,193 2,541 4,033 6,462 8,325 10,643
Profit attributable to:
Equity shareholders of the Company 93 126 234 309 537 1,077 2,353 3,899 6,425 8,242 10,537
Non-controlling interests 45 42 49 61 94 116 188 134 36 83 106
Basic EPS (RMB) 0.22 0.27 0.51 0.67 1.09 2.15 4.46 7.36 12.11 15.53 19.86
Diluted EPS (RMB) 0.22 0.27 0.51 0.67 1.09 2.15 4.45 7.34 12.10 15.52 19.84
W.A. shares outstanding (mn) 458 461 491 502 527 530 531 531 531

Margins
Gross profit 39.7% 36.6% 38.4% 40.5% 36.7% 39.4% 43.8% 41.1% 44.2% 44.6% 44.9%
Operating profit (27.2%) 8.8% 10.1% 10.4% 11.0% 12.8% 19.5% 20.1% 24.0% 23.5% 23.6%
EBIT 12.4% 10.5% 11.8% 13.3% 10.6% 12.5% 18.9% 20.1% 24.2% 23.6% 23.8%
Profit before tax 10.7% 9.3% 10.4% 10.8% 11.3% 12.9% 19.4% 20.2% 24.0% 23.5% 23.6%
Net income (attributable) 5.7% 5.7% 7.0% 7.6% 8.9% 11.1% 16.0% 17.7% 21.1% 20.8% 21.0%

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 60: NAURA (002371.CH) - Balance Sheet

NAURA (002371.CH) - Balance Sheet
(in RMB million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Cash & equivalents 964 1,020 1,038 2,875 2,642 9,068 10,435 12,451 11,162 11,972 15,120
Financial assets held for trading -- -- -- -- -- -- -- -- -- -- --
Accounts & other receivables, prepayments 1,087 1,301 1,462 1,875 2,797 4,187 6,359 7,259 11,003 13,661 16,729
Inventories 1,178 2,033 3,015 3,636 4,933 8,035 13,041 16,992 21,518 27,818 34,175
Other current assets 116 107 89 84 642 1,034 1,283 1,523 1,584 1,980 2,472
Total current assets 3,346 4,461 5,604 8,470 11,014 22,323 31,117 38,226 45,267 55,431 68,495

Total PP&E, intangible assets, ROU and investment property 3,101 3,593 4,288 5,102 6,166 8,064 10,854 14,520 17,610 20,371 23,998
Long-term equity investment -- -- -- 20 34 33 25 34 36 36 36
Other non-current assets 94 91 109 144 304 635 555 845 811 811 811
Total non-current assets 3,195 3,685 4,397 5,265 6,504 8,732 11,434 15,399 18,457 21,218 24,845
Total assets 6,541 8,145 10,001 13,735 17,518 31,054 42,551 53,625 63,723 76,649 93,339

Accounts payables and other payables 1,269 2,463 3,458 3,672 3,371 4,945 7,271 9,486 12,704 15,740 19,251
Short-term borrowings 437 430 552 878 522 -- 227 23 4 4 4
Contract Liabilities -- -- -- -- 3,048 5,046 7,198 8,317 8,721 11,044 14,041
Other current liabilities 1 91 415 241 959 1,277 1,074 1,257 1,761 1,828 2,422
Total Current Liabilities 1,707 2,984 4,425 4,791 7,900 11,268 15,770 19,083 23,191 28,616 35,718

Long-term borrowings 60 436 328 1,113 10 -- 3,740 5,835 5,811 5,811 5,811
Other non-current liabilities 1,410 1,246 1,497 1,731 2,496 2,588 3,057 3,882 3,798 3,798 3,798
Total Non Current Liabilities 1,470 1,681 1,825 2,844 2,506 2,588 6,797 9,717 9,609 9,609 9,609
Total liabilities 3,177 4,665 6,250 7,635 10,406 13,856 22,567 28,800 32,800 38,225 45,327

Capital Reserve & Additional Add-in Capital 2,346 2,346 2,363 4,389 4,964 14,058 14,596 15,501 15,755 15,755 15,755
Less: Treasury Stock -- -- -- -- (154) (152) (90) (45) -- -- --
Retained earnings / (accumulated deficit) 847 962 1,183 1,467 1,973 2,996 5,241 8,904 14,272 21,689 31,171
Other comprehensive income / (loss) & Other equity tools (1) (1) 1 0 (1) (4) (0) 7 8 8 8
Total Shareholders Equity 3,192 3,308 3,548 5,856 6,781 16,898 19,746 24,367 30,035 37,452 46,934
Minority shareholders’ interest 172 173 204 244 331 301 238 458 889 972 1,078
Total Equity 3,364 3,480 3,751 6,100 7,112 17,198 19,984 24,825 30,924 38,424 48,013
Total Liabilities & Equity 6,541 8,145 10,001 13,735 17,518 31,054 42,551 53,625 63,723 76,649 93,339

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 32
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 61: NAURA (002371.CH) - Cash Flow Statement

NAURA (002371.CH) - Cash Flow Statement
(in RMB million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Net income 138 167 283 370 631 1,193 2,541 4,033 6,462 8,325 10,643
Depreciation & Amortization 193 200 265 307 364 460 552 730 1,031 1,199 1,395
Change in working capital (592) 226 193 (989) 690 (994) (3,153) (1,575) (4,204) (3,929) (2,814)
Other operating cashflow 59 (561) (761) (628) (299) (1,437) (668) (822) (1,923) - -
Net cash (used in) / generated from operating activities (201) 32 (20) (941) 1,385 (777) (728) 2,365 1,366 5,595 9,224

Net capex (178) (232) (244) (170) (659) (447) (1,408) (1,980) (2,462) (3,960) (5,022)
Other investing cashflow - - - (20) (14) - (15) (79) (17) - -
Net cash used in investing activities (178) (232) (244) (190) (673) (447) (1,423) (2,058) (2,479) (3,960) (5,022)

Change in debt 99 332 335 1,080 (1,059) (602) 3,453 1,888 (43) - -
Change in equity 917 0 17 2,025 576 9,094 538 905 254 - -
Cash Paid for Distribution of Dividends, Profit and Repayment of Interest (49) (62) (83) (110) (91) (114) (241) (388) (643) (825) (1,055)
Other Cash Paid Related to Financing Activities (0) (6) (19) (44) (379) (697) (405) (758) 226 - -
Net cash used in financing activities 967 264 250 2,951 (953) 7,680 3,345 1,647 (206) (825) (1,055)

Net change in cash during period 588 63 (7) 1,818 (244) 6,452 1,231 1,968 (1,313) 810 3,148

Cash and cash equivalents at period end 964 1,020 1,038 2,875 2,642 9,068 10,435 12,451 11,162 11,972 15,120

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 62: AMEC (688012.CH) - Income Statement

AMEC (688012.CH) - Income Statement
(in RMB million, unless otherwise stated) 2020 2021 2022 2023 2024E 2025E 2026E
Revenue 2,273 3,108 4,740 6,264 8,486 12,137 15,746
Cost of sales (1,417) (1,761) (2,572) (3,519) (4,856) (6,832) (8,668)
Gross profit 856 1,348 2,168 2,744 3,630 5,305 7,078
Total SG&A (390) (499) (645) (786) (938) (1,272) (1,587)
R&D expenses (331) (398) (605) (817) (1,349) (1,746) (2,047)
Financial income / (expense) 7 71 151 87 95 115 122
Net income from investment 284 437 137 583 82 31 31
Other gain / (loss) 87 174 56 91 27 - -
Operating Profit 515 1,133 1,263 1,904 1,548 2,433 3,598
Non-operating activities (2) (0) (4) 30 5 - -
Profit before taxation 513 1,133 1,259 1,934 1,552 2,433 3,598
Income tax (20) (122) (91) (226) (56) (97) (144)
Net Profit 492 1,011 1,168 1,708 1,496 2,336 3,454
Profit attributable to:
Equity shareholders of the Company 492 1,011 1,170 1,710 1,498 2,339 3,457
Non-controlling interests 0 (0) (2) (2) (1) (3) (4)
Basic EPS (RMB) 0.92 1.76 1.90 2.89 2.43 3.80 5.62
Diluted EPS (RMB) 0.92 1.76 1.90 2.88 2.41 3.76 5.55
W.A. shares outstanding (mn) 535 575 616 592 615 615 615

Margins
Gross profit 38% 43% 46% 44% 43% 44% 45%
Operating profit 23% 36% 27% 30% 18% 20% 23%
EBIT 22% 34% 23% 29% 17% 19% 22%
Profit before tax 23% 36% 27% 31% 18% 20% 23%
Net income (attributable) 22% 33% 25% 27% 18% 19% 22%

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 33
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 63: AMEC (688012.CH) - Balance Sheet

AMEC (688012.CH) - Balance Sheet
(in RMB million, unless otherwise stated) 2020 2021 2022 2023 2024E 2025E 2026E
Cash & equivalents 1,132 8,659 7,326 7,090 9,105 8,898 9,566
Financial assets held for trading 1,505 2,511 2,939 1,869 493 493 493
Accounts & other receivables, prepayments 426 643 774 1,336 1,515 2,188 2,850
Inventories 1,064 1,762 3,402 4,260 5,197 7,835 9,956
Other current assets 71 156 214 532 286 433 579
Total current assets 4,198 13,731 14,655 15,088 16,596 19,845 23,445

Total PP&E, intangible assets, ROU and investment property 765 1,473 2,275 4,061 5,004 5,886 6,969
Long-term equity investment 424 555 979 1,020 1,039 1,039 1,039
Other non-current assets 414 975 2,125 1,357 1,436 1,436 1,436
Total non-current assets 1,603 3,002 5,380 6,438 7,480 8,362 9,445
Total assets 5,801 16,733 20,035 21,526 24,075 28,207 32,889

Accounts payables and other payables 578 1,135 1,659 2,259 2,677 3,901 4,869
Short-term borrowings -- -- -- -- -- -- --
Contract Liabilities 592 1,372 2,195 772 1,769 2,430 2,806
Other current liabilities 63 64 65 593 214 325 515
Total Current Liabilities 1,233 2,571 3,919 3,624 4,660 6,655 8,190

Long-term borrowings -- -- 500 -- 250 250 250

Other non-current liabilities 199 222 133 79 60 60 60
Total Non Current Liabilities 199 222 633 79 310 310 310
Total liabilities 1,432 2,793 4,552 3,702 4,970 6,966 8,500

Capital Reserve & Additional Add-in Capital 4,354 12,904 13,263 13,937 14,254 14,254 14,254
Less: Treasury Stock -- -- -- -- (301) (301) (301)
Retained earnings / (accumulated deficit) 37 1,048 2,218 3,880 5,147 7,286 10,437
Other comprehensive income / (loss) & Other equity tools (22) (12) 3 9 9 9 9
Total Shareholders Equity 4,369 13,940 15,484 17,826 19,110 21,249 24,400
Minority shareholders’ interest 0 0 (1) (3) (4) (7) (11)
Total Equity 4,369 13,940 15,483 17,823 19,105 21,242 24,389
Total Liabilities & Equity 5,801 16,733 20,035 21,526 24,075 28,207 32,889

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 64: AMEC (688012.CH) - Cash Flow Statement

AMEC (688012.CH) - Cash Flow Statement
(in RMB million, unless otherwise stated) 2020 2021 2022 2023 2024E 2025E 2026E
Net income 492 1,011 1,168 1,708 1,496 2,336 3,454
Depreciation & Amortization 84 105 142 176 293 453 492
Change in working capital 382 361 (569) (2,088) 148 (1,462) (1,396)
Other operating cashflow (112) (461) (123) (772) 550 - -
Net cash (used in) / generated from operating activities 846 1,016 618 (977) 2,488 1,327 2,550

Net capex (252) (496) (1,504) (867) (1,024) (1,335) (1,575)

Other investing cashflow (297) (5,648) (1,234) 3,066 2,620 - -
Net cash used in investing activities (549) (6,144) (2,738) 2,199 1,596 (1,335) (1,575)

Change in debt 2 - 497 - 250 - -

Change in equity 130 8,550 359 673 317 - -
Cash Paid for Distribution of Dividends, Profit and Repayment of Interest (0) - - (138) (45) (199) (307)
Other Cash Paid Related to Financing Activities (132) (264) (374) (313) (966) - -
Net cash used in financing activities 1 8,286 482 223 (445) (199) (307)

Net change in cash during period 273 3,144 (1,569) 1,457 3,645 (207) 669

Cash and cash equivalents at period end 1,132 8,659 7,326 7,090 9,105 8,898 9,566

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 34
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 65: Piotech (688072.CH) - Income Statement

Piotech (688072.CH) - Income Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Revenue 71 251 436 758 1,706 2,705 3,913 5,348 7,419
Cost of sales (48) (171) (287) (424) (865) (1,325) (2,230) (2,937) (3,928)
Gross profit 22 80 148 334 840 1,380 1,683 2,411 3,491
Total SG&A (63) (68) (94) (142) (273) (470) (650) (855) (1,165)
R&D expenses (108) (74) (123) (288) (379) (576) (751) (1,096) (1,460)
Financial income / (expense) 3 3 10 19 18 12 (33) (23) (1)
Net income from investment - - - - 14 3 (3) - -
Other gain / (loss) 42 40 45 133 136 381 288 390 542
Operating Profit (103) (19) (14) 56 357 729 535 827 1,407
Non-operating activities 0 0 2 11 8 (0) (0) - -
Profit before taxation (103) (19) (12) 67 364 729 535 827 1,407
Income tax - - - (0) - (65) (11) (29) (49)
Net Profit (103) (19) (12) 67 364 664 523 798 1,358
Profit attributable to:
Equity shareholders of the Company (103) (19) (11) 68 368 663 544 826 1,405
Non-controlling interests - - (0) (2) (4) 1 (21) (28) (48)
Basic EPS (RMB) - - - 0.72 3.18 3.54 1.95 2.97 5.05
Diluted EPS (RMB) - - - 0.72 3.17 3.52 1.95 2.96 5.03
W.A. shares outstanding (mn) - - - 95 116 187 278 278 278

Margins
Gross profit 32% 32% 34% 44% 49% 51% 43% 45% 47%
Operating profit (146%) (8%) (3%) 7% 21% 27% 14% 15% 19%
EBIT (151%) (9%) (5%) 6% 20% 27% 15% 16% 19%
Profit before tax (146%) (8%) (3%) 9% 21% 27% 14% 15% 19%
Net income (attributable) (146%) (8%) (3%) 9% 22% 24% 14% 15% 19%

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 66: Piotech (688072.CH) - Balance Sheet

Piotech (688072.CH) - Balance Sheet
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Cash & equivalents 275 362 1,004 965 3,827 2,676 1,206 1,622 2,583
Financial assets held for trading -- -- -- -- 46 29 81 81 81
Accounts & other receivables, prepayments 80 137 79 158 385 730 627 983 1,347
Inventories 322 350 512 953 2,297 4,556 7,626 8,506 9,696
Other current assets 16 7 14 98 266 466 212 351 538
Total current assets 694 857 1,609 2,175 6,820 8,457 9,751 11,543 14,244

Total PP&E, intangible assets, ROU and investment property 232 218 203 333 439 827 1,536 1,917 2,101
Long-term equity investment -- -- -- -- -- 228 224 224 224
Other non-current assets 0 -- 2 10 54 457 415 415 415
Total non-current assets 232 218 205 343 493 1,512 2,176 2,556 2,740
Total assets 926 1,074 1,814 2,518 7,313 9,969 11,927 14,099 16,985

Accounts payables and other payables 146 201 242 464 967 1,284 1,807 2,610 3,341
Short-term borrowings 30 -- -- -- 400 70 159 159 159
Contract Liabilities -- -- 134 488 1,397 1,382 1,203 1,684 2,385
Other current liabilities -- -- 17 64 183 247 137 226 322
Total Current Liabilities 176 201 394 1,016 2,947 2,982 3,305 4,679 6,207

Long-term borrowings -- -- -- -- 270 1,871 2,856 2,856 2,856

Other non-current liabilities 56 59 298 309 389 525 418 418 418
Total Non Current Liabilities 56 59 298 309 659 2,396 3,274 3,274 3,274
Total liabilities 232 260 692 1,324 3,605 5,378 6,579 7,953 9,481

Capital Reserve & Additional Add-in Capital 917 1,056 1,376 1,098 3,248 3,501 3,602 3,602 3,602
Less: Treasury Stock -- -- -- -- -- -- 197 197 197
Retained earnings / (accumulated deficit) (223) (242) (253) 95 464 1,093 1,572 2,398 3,803
Other comprehensive income / (loss) & Other equity tools -- -- -- -- -- (0) (1) (1) (1)
Total Shareholders Equity 694 814 1,122 1,193 3,712 4,594 5,370 6,197 7,602
Minority shareholders’ interest -- -- 0 1 (4) (2) (23) (51) (98)
Total Equity 694 814 1,122 1,193 3,708 4,592 5,347 6,146 7,504
Total Liabilities & Equity 926 1,074 1,814 2,518 7,313 9,969 11,927 14,099 16,985

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 35
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 67: Piotech (688072.CH) - Cash Flow Statement

Piotech (688072.CH) - Cash Flow Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Net income (103) (19) (12) 67 364 664 523 798 1,358
Depreciation & Amortization 17 18 17 18 29 52 100 154 187
Change in working capital (217) (18) 321 28 (126) (2,303) (2,585) (1) (214)
Other operating cashflow 175 (2) (18) 25 (19) (70) (207) - -
Net cash (used in) / generated from operating activities (128) (22) 309 137 248 (1,657) (2,169) 951 1,331

Net capex (6) (14) (6) (150) (111) (481) (681) (535) (371)
Other investing cashflow 3 - - - (40) (355) (115) - -
Net cash used in investing activities (3) (14) (6) (150) (151) (836) (796) (535) (371)

Change in debt (43) (30) - - 670 1,333 1,074 - -

Change in equity 917 139 319 (278) 2,150 253 102 - -
Cash Paid for Distribution of Dividends, Profit and Repayment of Interest
(2) (1) - - (1) (63) - - -
Other Cash Paid Related to Financing Activities (917) 11 (17) 275 (29) (184) (71) - -
Net cash used in financing activities (45) 119 302 (3) 2,790 1,339 1,104 - -

Net change in cash during period (176) 83 604 (15) 2,890 (1,157) (1,864) 417 960

Cash and cash equivalents at period end 275 362 1,004 965 3,827 2,676 1,206 1,622 2,583

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 36
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 68: SMIC Financial Statements

2024 2025 2026
US$ in Millions Q1 Q2 Q3 Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E 2022 2023 2024E 2025E 2026E
Income Statement
Net Sales 1,750 1,901 2,171 2,217 2,209 2,307 2,403 2,589 2,713 2,781 2,841 2,871 7,273 6,322 8,039 9,508 11,205
Gross Profit 240 265 444 445 454 469 499 541 567 603 598 581 2,762 1,218 1,394 1,962 2,349
SG&A Expense+Govt Grants 49 (3) 95 100 106 104 109 120 124 123 128 127 193 153 242 439 503
R&D Expense 188 181 179 188 188 196 204 220 231 236 241 244 733 707 737 808 952
EBIT 2 87 170 156 160 169 185 202 212 243 228 210 1,836 358 416 715 894
EBITDA 748 884 1,001 978 1,039 1,123 1,206 1,279 1,347 1,409 1,443 1,468 4,107 3,025 3,611 4,646 5,667
Non-operating Income 72 100 73 86 86 80 62 63 63 62 51 0 378 830 316 284 219
Pretax Income 74 187 243 228 246 248 247 257 275 306 279 253 2,214 1,187 732 999 1,113
Tax 11 15 20 2 2 2 2 3 3 3 3 3 16 63 48 10 11
Net Income 72 165 149 169 183 185 184 191 204 227 207 188 1,818 903 554 742 827
Earnings Per Share (US$ in Cents) 0.90 2.07 1.88 2.12 2.27 2.28 2.25 2.33 2.48 2.73 2.48 2.24 22.99 11.38 6.98 9.14 9.93

Margin Analysis
Gross Profit 13.7% 13.9% 20.5% 20.1% 20.5% 20.3% 20.8% 20.9% 20.9% 21.7% 21.0% 20.2% 38.0% 19.3% 17.3% 20.6% 21.0%
EBIT 0.1% 4.6% 7.8% 7.0% 7.2% 7.3% 7.7% 7.8% 7.8% 8.8% 8.0% 7.3% 25.2% 5.7% 5.2% 7.5% 8.0%
EBITDA 42.7% 46.5% 46.1% 44.1% 47.0% 48.7% 50.2% 49.4% 49.6% 50.7% 50.8% 51.1% 56.5% 47.9% 44.9% 48.9% 50.6%
Pretax Income 4.3% 9.8% 11.2% 10.3% 11.1% 10.8% 10.3% 9.9% 10.1% 11.0% 9.8% 8.8% 30.4% 18.8% 9.1% 10.5% 9.9%
Net Income 4.1% 8.7% 6.9% 7.6% 8.3% 8.0% 7.6% 7.4% 7.5% 8.2% 7.3% 6.5% 25.0% 14.3% 6.9% 7.8% 7.4%

Sequential Growth
Net Sales 4.3% 8.6% 14.2% 2.1% -0.4% 4.5% 4.1% 7.7% 4.8% 2.5% 2.2% 1.1% 33.6% -13.1% 27.2% 18.3% 17.9%
Gross Profit -12.8% 10.6% 67.5% 0.2% 2.0% 3.3% 6.4% 8.5% 4.8% 6.3% -0.8% -2.8% 64.8% -55.9% 14.5% 40.8% 19.7%
EBIT -97.8% 3521.8% 95.0% -8.1% 2.4% 5.5% 9.6% 8.8% 5.4% 14.5% -6.3% -7.7% 31.8% -80.5% 16.2% 72.1% 25.0%
EBITDA -7.4% 18.2% 13.2% -2.3% 6.2% 8.1% 7.4% 6.0% 5.3% 4.6% 2.4% 1.8% 25.9% -26.3% 19.4% 28.7% 22.0%
Pretax -70.0% 151.3% 29.9% -6.2% 8.1% 1.0% -0.5% 4.0% 6.9% 11.1% -8.6% -9.3% 20.3% -46.4% -38.3% 36.5% 11.4%
Net Income -58.9% 129.2% -10% 13.7% 8.1% 1.0% -0.5% 4.0% 6.9% 11.1% -8.6% -9.3% 6.8% -50.4% -38.6% 33.9% 11.4%
Earnings Per Share -58.9% 129.0% -9% 12.8% 6.9% 0.3% -1.1% 3.4% 6.3% 10.4% -9.1% -9.9% 6.7% -50.5% -38.7% 30.9% 8.7%

Balance Sheet
Cash and Cash Equivalents 6,933 6,215 4,339 3,238 3,270
Accounts Receivable 1,303 1,170 1,252 1,408 1,564
Inventory 1,911 2,736 3,203 3,588 3,897
Net Fixed Assets 18,856 23,945 27,805 30,874 31,389
Total Assets 43,808 47,787 49,324 51,925 53,142
Accounts Payable 3,022 3,728 4,781 5,482 5,922
Total Debt 8,585 10,150 10,191 10,958 11,047
Shareholders' Equity 19,150 20,116 20,787 21,530 21,734
Minority Interests & PSCS 9,811 10,730 10,865 11,112 11,180

Cash Flow
Cash Flow From Operations 5,348 3,358 3,935 5,131 5,956
Cash Flow From Investments (10,392) (6,208) (5,663) (7,000) (6,600)
Cash Flow From Financing 3,614 2,466 (176) 769 470

Depreciation & Amortization 2,271 2,667 3,195 3,931 4,772

Capex (6,172) (7,630) (7,500) (7,000) (6,600)

Key Financial Metrics

Return on Common Equity 10.0% 4.6% 2.7% 3.5% 3.8%
Return on Assets 5.5% 2.5% 1.4% 2.0% 2.1%

Capex Intensity 85% 121% 93% 74% 59%

Asset Turnover 0.2x 0.1x 0.2x 0.2x 0.2x

Debt / Equity 30% 33% 32% 34% 34%

Net Debt / Equity 6% 13% 18% 24% 24%
Debt / Capital 23% 25% 24% 25% 25%

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 37
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 69: Hua Hong Financial Statements

2024 2025 2026
US$ in Millions Q1 Q2 Q3 Q4E Q1E Q2E Q3E Q4E Q1E Q2E Q3E Q4E 2022 2023 2024E 2025E 2026E
Income Statement
Net Sales 460 479 526 538 573 607 653 681 730 764 776 802 2,475 2,286 2,003 2,514 3,071
Gross Profit 30 50 64 70 85 92 108 117 129 140 144 160 844 487 214 402 573
SG&A Expense 32 37 37 36 39 34 37 39 40 42 43 44 118 138 142 149 168
R&D Expense 46 53 53 48 57 50 54 56 58 61 62 64 161 195 200 217 244
EBIT (49) (40) (26) (14) (12) 8 17 22 32 38 40 52 565 154 (129) 36 161
EBITDA 84 97 118 131 136 170 192 211 279 298 309 331 1,021 654 429 709 1,217
Non-operating Income 4 7 52 6 2 0 (2) (3) (4) (5) (7) (6) (68) 20 69 (2) (22)
Pretax Income (45) (33) 26 (7) (9) 9 15 20 27 32 33 46 496 174 (60) 34 139
Tax (20) 8 11 7 3 15 15 17 11 16 13 15 89 47 7 50 55
Net Income 32 7 36 13 29 30 42 48 47 38 47 57 450 280 88 150 189
Earnings Per Share (USD) 0.02 0.00 0.02 0.01 0.02 0.02 0.02 0.03 0.03 0.02 0.03 0.03 0.35 0.19 0.05 0.09 0.11

Margin Analysis
Gross Profit 6.4% 10.5% 12.2% 13.0% 14.8% 15.2% 16.5% 17.2% 17.7% 18.3% 18.6% 19.9% 34.1% 21.3% 10.7% 16.0% 18.7%
EBIT -10.6% -8.4% -4.9% -2.5% -2.1% 1.4% 2.6% 3.3% 4.3% 4.9% 5.2% 6.5% 22.8% 6.7% -6.4% 1.4% 5.2%
EBITDA 18.3% 20.2% 22.4% 24.3% 23.8% 28.0% 29.4% 31.0% 38.2% 39.0% 39.9% 41.3% 41.3% 28.6% 21.4% 28.2% 39.6%
Pretax Income -9.8% -7.0% 4.9% -1.3% -1.6% 1.4% 2.3% 2.9% 3.8% 4.2% 4.3% 5.7% 20.0% 7.6% -3.0% 1.4% 4.5%
Net Income 6.9% 1.4% 6.9% 2.4% 5.0% 5.0% 6.4% 7.1% 6.5% 5.0% 6.0% 7.1% 18.2% 12.2% 4.4% 6.0% 6.2%

Sequential Growth
Net Sales 1.0% 4.0% 10.0% 2.3% 6.5% 5.8% 7.7% 4.2% 7.2% 4.6% 1.7% 3.3% 51.8% -7.7% -12.4% 25.5% 22.2%
Gross Profit 62.6% 68.9% 27.9% 9.4% 20.8% 9.0% 16.7% 8.8% 10.4% 8.3% 3.1% 10.7% 86.8% -42.3% -56.1% 88.0% 42.7%
EBIT -17.8% N.M. N.M. N.M. 10.1% N.M. 103.2% 31.4% 3.3% 19.4% 6.4% 29.2% 133% -73% N.M. N.M. 349%
EBITDA -17.2% 14.7% 21.9% 10.9% 19.1% 24.7% 13.0% 10.0% 3.0% 6.9% 3.9% 7.0% 82.4% -35.9% -34.4% 65.3% 71.6%
Pretax N.M. N.M. N.M. N.M. N.M. N.M. 74.8% 30.5% 41.3% 18.1% 3.6% 37.4% 67.4% -65.0% N.M. N.M. 305.5%
Net Income 61.0% -79.0% 446.4% -65.3% 4.4% 5.5% 38.2% 14.7% 32.0% -19.5% 22.2% 22.0% 72.1% -37.8% -68.7% 70.8% 26.2%
Earnings Per Share -95.7% -79.0% 446.2% -65.3% -61.5% 5.5% 38.2% 14.7% N.M. -19.5% 22.2% 22.0% 71.6% -45.1% -73.1% 70.8% 26.2%

Balance Sheet
Cash and Cash Equivalents 2,009 5,585 4,868 3,106 2,786
Accounts Receivable 292 279 254 351 409
Inventory 575 450 581 704 710
Net Fixed Assets 3,368 3,519 5,680 7,314 7,487
Total Assets 7,053 10,943 12,390 12,556 12,505
Accounts Payable 234 235 263 320 325
Total Debt 1,928 2,122 2,270 2,270 2,270
Shareholders' Equity 3,030 6,301 6,427 6,551 6,598
Minority Interests 1,105 1,714 2,774 2,608 2,577

Cash Flow
Cash Flow From Operations 751 642 (163) 572 1,123
Cash Flow From Investments (930) (833) (1,812) (2,307) (1,680)
Cash Flow From Financing 672 3,782 1,201 (26) (45)

Depreciation & Amortization 457 500 558 673 1,056

Capex (996) (907) (1,858) (2,307) (1,680)

Key Financial Metrics

Return on Common Equity 15.2% 6.0% 1.4% 2.3% 2.9%
Return on Assets 6.1% 1.4% -0.6% -0.1% 0.7%

Capex Intensity 40% 40% 93% 92% 55%

Asset Turnover 0.4x 0.2x 0.2x 0.2x 0.2x

Debt / Equity 64% 34% 35% 35% 34%

Net Debt / Equity -3% -55% -40% -13% -8%
Debt / Capital 39% 25% 26% 26% 26%

Dividend Per Share (US$) 0.00 0.00 1.00 0.02 0.03

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 38
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 70: Silergy's income statement

Silergy Corp. (6415.TT) - Income Statement
(TWD million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Revenue 7,139 8,599 9,414 10,778 13,876 21,506 23,511 15,427 18,575 23,569 30,104 37,581 43,807
Gross profit 3,401 4,105 4,398 5,115 6,672 11,456 12,359 6,579 9,920 12,705 16,407 20,595 24,006
Sales & marketing expenses 953 1,083 1,105 1,189 1,452 1,633 1,968 2,209 2,594 2,583 2,980 3,721 4,337
Admin expenses 492 445 479 555 713 665 828 895 918 943 1,204 1,503 1,752
R&D expenses 1,010 1,168 1,398 1,610 2,161 3,203 4,460 4,894 5,112 5,257 5,419 5,637 5,914
Expected credit loss 0 0 (1) 0 1 0 1 (4) (0) (1) (2) (1) (1)
Other operating (income) / expenses (3) (17) (17) (17) (51) (17) (17) (33) (14) (14) (20) (16) (17)
Operating profit 1,441 1,871 1,913 2,333 3,109 6,636 5,945 (486) 2,228 4,881 8,030 11,254 13,774
Total non-operating income (Expenses) 57 (9) 17 78 216 (223) 729 1,109 353 184 198 117 21
Profit before tax 1,498 1,862 1,931 2,412 3,325 6,413 6,674 622 2,582 5,065 8,228 11,371 13,794
Income tax expense 29 54 101 86 83 615 529 (15) 405 506 823 1,137 1,379
Net income 1,470 1,808 1,830 2,326 3,242 5,797 6,145 637 2,177 4,558 7,405 10,234 12,415
Net profit attributable to SHs 1,470 1,808 1,830 2,326 3,278 5,734 6,039 746 2,274 4,701 7,687 10,589 12,867
Basic EPS (TWD) - retrospective adjusted 4.68 5.30 5.19 6.46 8.93 15.38 15.95 1.96 5.96 12.32 20.15 27.76 33.73
Diluted EPS (TWD) - retrospective adjusted 4.37 4.93 4.95 6.27 8.50 14.43 15.21 1.89 5.77 11.92 19.49 26.86 32.63
W.A. shares outstanding (mn) - retrospective adjusted 314 341 352 360 367 373 379 381 381 381 381 381 381
Margins
Gross profit 47.6% 47.7% 46.7% 47.5% 48.1% 53.3% 52.6% 42.6% 53.4% 53.9% 54.5% 54.8% 54.8%
Operating profit 20.2% 21.8% 20.3% 21.6% 22.4% 30.9% 25.3% -3.2% 12.0% 20.7% 26.7% 29.9% 31.4%
EBIT 21.9% 21.9% 20.6% 22.4% 24.0% 29.8% 28.4% 4.0% 14.0% 21.6% 27.4% 30.3% 31.5%
Profit before tax 21.0% 21.7% 20.5% 22.4% 24.0% 29.8% 28.4% 4.0% 13.9% 21.5% 27.3% 30.3% 31.5%
Net income (attributable) 20.6% 21.0% 19.4% 21.6% 23.6% 26.7% 25.7% 4.8% 12.2% 19.9% 25.5% 28.2% 29.4%

Growth YoY
Revenue 51.9% 20.5% 9.5% 14.5% 28.8% 55.0% 9.3% -34.4% 20.4% 26.9% 27.7% 24.8% 16.6%
Gross profit 55.9% 20.7% 7.1% 16.3% 30.4% 71.7% 7.9% -46.8% 50.8% 28.1% 29.1% 25.5% 16.6%
Operating profit 22.6% 29.9% 2.3% 21.9% 33.2% 113.5% -10.4% -108.2% 558.1% 119.0% 64.5% 40.2% 22.4%
Profit before tax 18.8% 24.3% 3.7% 24.9% 37.9% 92.9% 4.1% -90.7% 314.9% 96.2% 62.4% 38.2% 21.3%
Net income (attributable) 22.3% 23.0% 1.2% 27.1% 41.0% 74.9% 5.3% -87.6% 204.9% 106.7% 63.5% 37.8% 21.5%
Basic EPS - retrospective adjusted 19.5% 13.2% -2.0% 24.3% 38.3% 72.2% 3.7% -87.7% 204.9% 106.7% 63.5% 37.8% 21.5%

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 71: Silergy's balance sheet

Silergy Corp. (6415.TT) - Balance Sheet
(TWD million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Cash and Cash Equivalents 2,680 2,914 2,618 4,508 9,248 11,614 14,944 12,694 14,431 14,403 9,408 9,406 2,124
Notes & Accounts Receivables 672 712 769 1,365 1,244 2,421 2,059 2,613 1,961 2,471 4,933 3,597 6,028
Inventories 1,312 1,644 1,691 1,923 2,314 2,784 5,111 1,817 3,048 4,184 4,822 5,862 6,988
Financial Assets 668 1,235 2,023 1,811 230 1,247 2,425 5,729 7,906 7,906 7,906 7,906 7,906
Total current assets 5,331 6,505 7,102 9,607 13,036 18,066 24,539 22,853 27,346 28,964 27,069 26,771 23,046
Long-term investments 793 903 1,885 2,118 2,168 3,859 4,671 5,064 4,855 4,713 4,563 4,419 4,284
Property, plant & equipment, net 387 698 1,177 1,123 1,191 1,471 1,863 2,350 3,932 5,574 7,237 9,365 11,815
Intangible assets (Incl. Goodwill) 4,144 3,699 3,589 3,161 2,658 2,108 2,169 1,948 1,918 1,809 1,829 1,843 1,861
Refundable Deposits 28 92 40 43 54 332 426 326 384 534 1,151 1,536 1,665
Other non-current assets 143 194 85 620 761 807 1,606 1,881 1,825 1,815 1,815 1,815 1,815
Total non-current assets 5,497 5,586 6,776 7,065 6,832 8,577 10,735 11,569 12,914 14,446 16,595 18,978 21,441
Total assets 10,828 12,091 13,877 16,672 19,867 26,643 35,274 34,422 40,259 43,410 43,664 45,749 44,487
Short-term borrowings - 670 - 100 - - - 160 595 595 595 595 595
Accounts and Other Payables 778 772 867 1,160 1,291 1,759 1,950 1,548 2,886 3,620 3,265 5,881 4,914
Other Current Liabilities 15 29 34 74 131 584 465 241 276 417 617 530 842
Total current liabilities 793 1,471 901 1,334 1,422 2,343 2,415 1,950 3,757 4,632 4,478 7,007 6,351
Bond 1,759 - - - - - - - 1,054 1,054 1,054 1,054 1,054
Guarantee Deposits 9 1 7 7 10 53 1,293 655 102 99 806 742 616
Other Non-Current Liabilities 73 49 32 127 85 69 74 277 219 219 219 219 219
Total non-current liabilities 1,840 50 39 133 95 122 1,367 931 1,375 1,372 2,079 2,014 1,888
Total liabilities 2,633 1,521 940 1,467 1,517 2,465 3,782 2,881 5,132 6,003 6,557 9,021 8,240
Shareholders' Equity Attributable to Holders 8,195 10,570 12,937 14,848 18,031 23,733 30,763 30,928 34,569 36,991 36,974 36,950 36,921
Minority Interests - - - 357 320 445 729 613 559 416 134 (222) (674)
Total Equity 8,195 10,570 12,937 15,205 18,350 24,178 31,492 31,541 35,128 37,407 37,107 36,728 36,247
Total Liabilities & Equity 10,828 12,091 13,877 16,672 19,867 26,643 35,274 34,422 40,259 43,410 43,664 45,749 44,487

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 72: Silergy's cash flow statement

Silergy Corp. (6415.TT) - Cash Flow Statement
(TWD million, unless otherwise stated) 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Income before income tax 1,498 1,862 1,931 2,412 3,325 6,413 6,674 622 2,582 5,065 8,228 11,371 13,794
Depreciation & Amortization 226 237 231 298 380 465 593 724 756 1,057 1,536 1,911 2,224
Change in working capital (486) (364) (4) (495) (82) (726) (1,892) 2,115 793 (771) (3,254) 2,825 (4,212)
Other operating cashflow (incl. income tax paid) 424 379 321 588 361 280 1,625 413 183 (506) (823) (1,137) (1,379)
Net cash (used in) / generated from operating activities 1,662 2,115 2,478 2,803 3,984 6,431 7,000 3,873 4,314 4,845 5,687 14,970 10,426
Net capex (287) (350) (445) (531) (308) (530) (551) (965) (1,904) (2,545) (3,168) (4,007) (4,641)
Other investing cashflow (3,843) (940) (1,822) (19) 1,665 (2,814) (2,692) (3,608) (2,084) (45) (517) (287) (45)
Net cash used in investing activities (4,130) (1,290) (2,267) (550) 1,357 (3,344) (3,244) (4,573) (3,988) (2,590) (3,685) (4,294) (4,686)
Change in debt 7,305 - (172) - - - - - 1,054 - - - -
Change in equity 12 106 107 217 461 516 364 321 132 - - - -
Cash Paid for Distribution of Dividends (154) (431) (526) (585) (683) (971) (1,692) (1,722) (753) (2,280) (7,704) (10,613) (12,896)
Other Cash Paid Related to Financing Activities (3,370) (8) 6 269 (136) (10) (95) 142 364 (3) 708 (65) (126)
Net cash used in financing activities 3,793 (334) (586) (100) (358) (464) (1,423) (1,259) 797 (2,283) (6,997) (10,678) (13,022)
Net change in cash during period 1,259 235 (296) 1,889 4,740 2,366 3,329 (2,249) 1,737 (28) (4,995) (2) (7,281)
Cash and cash equivalents at period end 2,680 2,914 2,618 4,508 9,248 11,614 14,944 12,694 14,431 14,403 9,408 9,406 2,124
FCF 765 1,098 1,384 1,257 2,761 4,601 3,540 1,862 1,411 1,747 2,053 10,363 5,066
FCF margin 10.7% 12.8% 14.7% 11.7% 19.9% 21.4% 15.1% 12.1% 7.6% 7.4% 6.8% 27.6% 11.6%

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 39
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 73: Hygon (688041.CH) - Income Statement

Hygon (688041.CH) - Income Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Revenue 48 379 1,022 2,310 5,125 6,012 9,349 12,933 16,824
Cost of sales (8) (238) (506) (1,018) (2,439) (2,425) (3,164) (4,462) (5,891)
Gross profit 40 141 516 1,293 2,686 3,587 6,185 8,471 10,933
Total SG&A (41) (79) (91) (142) (216) (245) (331) (487) (618)
R&D expenses (156) (175) (546) (745) (1,414) (1,992) (2,751) (3,640) (4,529)
Financial income / (expense) (66) (27) 3 12 89 267 169 192 228
Net income from investment 6 - 7 11 (7) - 2 0 0
Other gain / (loss) 34 1 29 7 (4) 64 42 83 97
Operating Profit (182) (139) (82) 436 1,136 1,680 3,316 4,619 6,112
Non-operating activities (0) 0 (0) 1 1 1 0 - -
Profit before taxation (182) (139) (82) 437 1,137 1,680 3,316 4,619 6,112
Income tax 3 1 (1) 1 (12) 21 (79) (139) (183)
Net Profit (180) (137) (83) 438 1,125 1,701 3,237 4,480 5,928
Profit attributable to:
Equity shareholders of the Company (124) (83) (39) 327 804 1,263 2,340 3,315 4,387
Non-controlling interests (55) (54) (44) 111 321 438 897 1,165 1,541
Basic EPS (RMB) - (0.05) (0.02) 0.16 0.38 0.54 1.01 1.44 1.90
Diluted EPS (RMB) - (0.05) (0.02) 0.16 0.38 0.54 1.01 1.44 1.90
W.A. shares outstanding (mn) - 1,783 1,900 2,024 2,115 2,339 2,306 2,306 2,306
Margins
Gross profit 84% 37% 51% 56% 52% 60% 66% 65% 65%
Operating profit (377%) (37%) (8%) 19% 22% 28% 35% 36% 36%
EBIT (241%) (29%) (8%) 18% 20% 24% 34% 34% 35%
Profit before tax (378%) (37%) (8%) 19% 22% 28% 35% 36% 36%
Net income (attributable) (257%) (22%) (4%) 14% 16% 21% 25% 26% 26%

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 74: Hygon (688041.CH) - Balance Sheet

Hygon (688041.CH) - Balance Sheet
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Cash & equivalents 415 40 1,511 1,960 11,208 10,321 10,748 12,046 16,141
Financial assets held for trading -- -- 658 -- -- -- -- -- --
Accounts & other receivables, prepayments 17 23 586 588 2,191 3,929 3,488 5,288 6,422
Inventories 106 141 182 1,124 1,095 1,074 1,216 1,310 1,475
Other current assets 39 93 137 198 454 107 299 380 450
Total current assets 577 297 3,073 3,871 14,949 15,432 15,752 19,025 24,488
Total PP&E, intangible assets, ROU and investment property
4,373 4,624 4,622 4,943 5,116 5,313 5,845 6,779 7,290
Long-term equity investment -- -- -- -- -- 20 20 20 20
Other non-current assets 37 774 1,327 1,643 1,870 2,138 4,387 4,387 4,387
Total non-current assets 4,410 5,398 5,949 6,586 6,986 7,470 10,252 11,186 11,697
Total assets 4,987 5,695 9,022 10,457 21,934 22,903 26,004 30,211 36,184
Accounts payables and other payables 317 477 469 634 783 997 1,031 1,357 1,936
Short-term borrowings -- -- 140 150 200 350 400 400 400
Contract Liabilities -- -- 5 172 -- 3 14 11 17
Other current liabilities 2 7 493 605 387 45 246 170 304
Total Current Liabilities 319 485 1,106 1,562 1,370 1,395 1,691 1,938 2,657
Long-term borrowings 597 591 240 541 480 859 948 848 748
Other non-current liabilities 1,108 1,768 2,099 2,093 1,854 329 317 317 317
Total Non Current Liabilities 1,705 2,360 2,339 2,634 2,334 1,188 1,265 1,165 1,065
Total liabilities 2,024 2,844 3,445 4,196 3,704 2,582 2,956 3,103 3,722
Total Shareholders Equity 2,118 2,060 4,831 5,406 17,053 18,705 20,536 23,431 27,243
Minority shareholders’ interest 845 790 746 856 1,177 1,615 2,512 3,677 5,219
Total Equity 2,963 2,851 5,577 6,261 18,230 20,320 23,048 27,109 32,462
Total Liabilities & Equity 4,987 5,695 9,022 10,457 21,934 22,903 26,004 30,211 36,184

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 75: Hygon (688041.CH) - Cash Flow Statement

Hygon (688041.CH) - Cash Flow Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Net income (180) (137) (83) 438 1,125 1,701 3,237 4,480 5,928
Depreciation & Amortization 81 170 341 409 699 755 959 1,006 1,171
Change in working capital 1,265 730 165 (566) (2,311) (3,021) 341 (1,729) (648)
Other operating cashflow (1,171) (187) (800) 317 444 1,378 (13) - -
Net cash (used in) / generated from operating activities (5) 576 (377) 598 (43) 814 4,524 3,758 6,452
Net capex (572) (926) (244) (752) (1,381) (918) (1,616) (1,940) (1,682)
Other investing cashflow 1 0 (839) 669 (148) (882) (2,048) - -
Net cash used in investing activities (571) (926) (1,083) (83) (1,530) (1,800) (3,665) (1,940) (1,682)
Change in debt 594 (1) 271 (145) 307 185 139 (100) (100)
Change in equity 2,272 25 2,773 250 10,844 512 110 - -
Cash Paid for Distribution of Dividends, Profit and Repayment
(20)
of Interest (29) (38) (18) (23) (119) (164) (420) (575)
Other Cash Paid Related to Financing Activities (1,979) (25) (75) (153) (302) (578) (619) - -
Net cash used in financing activities 866 (31) 2,931 (65) 10,826 0 (533) (520) (675)
Net change in cash during period 290 (380) 1,471 450 9,252 (986) 327 1,298 4,095
Cash and cash equivalents at period end 415 40 1,511 1,960 11,208 10,321 10,748 12,046 16,141

FCF 658 (138) 176 (484) (1,945) (1,770) 2,831 1,321 4,137
FCF margin 1,363% (36%) 17% (21%) (38%) (29%) 30% 10% 25%

Source: Company reports, Bernstein analysis and estimates

CHINA SEMICONDUCTORS 40
 信息平权 知识星球
Qingyuan Lin, Ph.D. +852 2918 5759 qingyuan.lin@bernsteinsg.com 2 January 2025

EXHIBIT 76: Cambricon (688256.CH) - Income Statement

Cambricon (688256.CH) - Income Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Revenue 117 444 459 721 729 709 2,147 4,312 7,367 12,678 20,494
Cost of sales (0) (141) (159) (271) (250) (219) (618) (1,198) (2,063) (3,792) (6,130)
Gross profit 117 303 300 450 479 491 1,529 3,114 5,304 8,886 14,364
Total SG&A (50) (1,075) (210) (467) (379) (236) (468) (752) (1,246) (1,686) (2,219)
R&D expenses (240) (543) (768) (1,136) (1,523) (1,118) (1,176) (1,472) (1,989) (2,069) (2,177)
Financial income / (expense) 3 4 22 53 52 45 37 63 73 101 180
Net income from investment 62 104 118 90 91 74 69 - - - -
Other gain / (loss) 67 29 103 186 (45) (132) (228) - - - -
Operating Profit (41) (1,178) (434) (824) (1,324) (876) (237) 953 2,142 5,232 10,149
Non-operating activities 0 (1) (0) 0 2 1 (0) - - - -
Profit before taxation (41) (1,179) (435) (824) (1,323) (875) (237) 953 2,142 5,232 10,149
Income tax - - - (6) (2) (3) (0) (95) (214) (562) (1,191)
Net Profit (41) (1,179) (435) (830) (1,325) (878) (238) 858 1,927 4,670 8,958
Profit attributable to:
Equity shareholders of the Company (41) (1,179) (435) (825) (1,257) (848) (234) 812 1,836 4,446 8,513
Non-controlling interests - (0) - (5) (68) (30) (3) 46 92 224 444
Basic EPS (RMB) NA (3.27) (1.15) (2.06) (3.14) (2.07) (0.56) 1.95 4.40 10.65 20.40
Diluted EPS (RMB) NA (3.27) (1.15) (2.06) (3.14) (2.07) (0.56) 1.95 4.40 10.65 20.40
Margins
Gross profit 100% 68% 65% 62% 66% 69% 71% 72% 72% 70% 70%
Operating profit (35%) (265%) (95%) (114%) (182%) (123%) (11%) 22% 29% 41% 50%
EBIT (37%) (267%) (100%) (122%) (189%) (130%) (13%) 21% 28% 40% 49%
Profit before tax (35%) (266%) (95%) (114%) (181%) (123%) (11%) 22% 29% 41% 50%
Net income (attributable) (35%) (266%) (95%) (114%) (172%) (120%) (11%) 19% 25% 35% 42%

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 77: Cambricon (688256.CH) - Balance Sheet

Cambricon (688256.CH) - Balance Sheet
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Cash & equivalents 1,354 383 3,625 2,921 2,467 3,954 2,224 1,987 2,780 5,265 8,732
Financial assets held for trading -- -- -- -- -- 700 700 700 700 700 700
Accounts & other receivables, prepayments 74 88 235 593 804 818 2,179 3,280 4,845 7,074 11,424
Inventories 5 51 91 287 287 99 316 225 82 151 244
Other current assets 1,520 3,929 2,927 2,370 697 76 35 194 174 303 494
Total current assets 2,954 4,451 6,877 6,171 4,255 5,648 5,454 6,386 8,581 13,493 21,594
Total PP&E, intangible assets, ROU and investment property
76 205 397 639 656 442 713 812 809 817 1,051
Long-term equity investment -- 1 1 130 222 230 247 247 247 247 247
Other non-current assets 11 11 34 49 637 99 85 85 85 85 85
Total non-current assets 88 217 432 818 1,515 771 1,046 1,144 1,141 1,149 1,383
Total assets 3,041 4,668 7,310 6,989 5,770 6,418 6,500 7,530 9,723 14,642 22,977
Accounts payables and other payables 2,448 238 398 449 479 428 832 1,170 1,616 2,223 2,372
Short-term borrowings -- -- -- -- -- -- -- -- -- -- --
Contract Liabilities -- -- 2 0 0 0 0 1 2 3 5
Other current liabilities -- -- 0 53 63 35 16 75 156 262 438
Total Current Liabilities 2,448 238 401 503 542 463 847 1,246 1,774 2,488 2,816
Long-term borrowings -- -- -- -- -- -- -- -- -- -- --
Other non-current liabilities 83 74 477 506 288 225 225 225 225 225 225
Total Non Current Liabilities 83 74 477 506 288 225 225 225 225 225 225
Total liabilities 2,531 312 878 1,009 831 689 1,073 1,472 1,999 2,714 3,041
Total Shareholders Equity 511 4,356 6,432 5,891 4,855 5,650 5,351 5,936 7,510 11,491 19,055
Minority shareholders’ interest -- -- -- 89 85 80 76 122 214 437 881
Total Equity 511 4,356 6,432 5,980 4,940 5,730 5,427 6,058 7,724 11,929 19,937
Total Liabilities & Equity 3,041 4,668 7,310 6,989 5,770 6,418 6,500 7,530 9,723 14,642 22,977

Source: Company reports, Bernstein analysis and estimates

EXHIBIT 78: Cambricon (688256.CH) - Cash Flow Statement

Cambricon (688256.CH) - Cash Flow Statement
(in RMB million, unless otherwise stated) 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Net income (41) (1,179) (435) (830) (1,325) (878) (238) 858 1,927 4,670 8,958
Depreciation & Amortization 17 53 127 263 367 330 205 333 371 372 381
Change in working capital 660 (4,687) 1,382 133 1,284 652 (1,153) (769) (875) (1,712) (4,307)
Other operating cashflow (692) 5,611 (1,207) (439) (1,655) (700) 99 - - - -
Net cash (used in) / generated from operating activities(55) (202) (132) (873) (1,330) (596) (1,087) 421 1,423 3,331 5,032
Net capex (75) (156) (260) (505) (284) (100) (533) (431) (368) (380) (615)
Other investing cashflow (1,147) (2,312) 1,132 584 1,061 525 84 - - - -
Net cash used in investing activities (1,221) (2,468) 872 79 777 425 (449) (431) (368) (380) (615)
Change in debt - - - - - - - - - - -
Change in equity 519 4,278 2,510 286 268 1,719 (65) (158) (68) (13) -
Cash Paid for Distribution of - - - - - - - (69) (194) (452) (950)
Other Cash Paid Related to Financing Activities 1,886 (2,578) (17) (187) (170) (62) (137) - - - -
Net cash used in financing activities 2,405 1,700 2,493 99 99 1,657 (202) (227) (262) (465) (950)
Net change in cash during period 1,127 (971) 3,233 (695) (454) 1,487 (1,737) (237) 793 2,485 3,467
Cash and cash equivalents at period end 1,354 383 3,625 2,921 2,467 3,954 2,224 1,987 2,780 5,265 8,732

Source: Company reports, Bernstein analysis and estimates

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DISCLOSURE APPENDIX

I. REQUIRED DISCLOSURES

References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC
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On April 1, 2024, Société Générale (SG) and AllianceBernstein, L.P. (AB) completed a transaction that created a new joint venture
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This research publication covers six or more companies. For valuation methodology and other company disclosures:
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Or, you can also write to the Director of Compliance, Bernstein Institutional Services LLC, 245 Park Avenue, New York, NY 10167.

RISKS

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The Bernstein brand rates stocks based on forecasts of relative performance for the next 6-12 months versus the S&P 500 for
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and versus the Bloomberg Asia ex-Japan Large and Mid Cap Price Return Index (ASIAX) for stocks listed on the Asian (ex-Japan)
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The Bernstein brand has three categories of ratings:

• Outperform: Stock will outpace the market index by more than 15 pp

• Market-Perform: Stock will perform in line with the market index to within +/-15 pp

• Underperform: Stock will trail the performance of the market index by more than 15 pp

Coverage Suspended: Coverage of a company under the Bernstein research brand has been suspended. Ratings and price targets
are suspended temporarily, are no longer current, and should therefore not be relied upon.

Not Rated: A rating assigned when the stock cannot be accurately valued, or the performance of the company accurately
predicted, at the present time. The covering analyst may continue to publish research reports on the company to update investors
on events and developments.

Autonomous brand

The Autonomous brand rates stocks as indicated below. As our benchmarks we use the Bloomberg Europe 500 Banks And
Financial Services Index (BEBANKS) and Bloomberg Europe Dev Mkt Financials Large and Mid Cap Price Ret Index EUR (EDMFI)
index for developed European banks and Payments, the Bloomberg Europe 500 Insurance Index (BEINSUR) for European
insurers, the S&P 500 and S&P Financials for US banks and Payments coverage, S5LIFE for US Insurance, the S&P Insurance
Select Industry (SPSIINS) for US Non-Life Insurers coverage, and the Bloomberg Emerging Markets Financials Large, Mid and
Small Cap Price Return Index (EMLSF) for emerging market banks and insurers and Payments. Ratings are stated relative to the

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sector (not the market).

The Autonomous brand has three categories of ratings:

• Outperform (OP): Stock will outpace the relevant index by more than 10 pp

• Neutral (N): Stock will perform in line with the market index to within +/-10 pp

• Underperform (UP): Stock will trail the performance of the relevant index by more than 10 pp

Coverage Suspended: Coverage of a company under the Bernstein research brand has been suspended. Ratings and price targets
are suspended temporarily, are no longer current, and should therefore not be relied upon.
Not Rated: A rating assigned when the stock cannot be accurately valued, or the performance of the company accurately
predicted, at the present time. The covering analyst may continue to publish research reports on the company to update investors
on events and developments.
Those denoted as ‘Feature’ (e.g., Feature Outperform FOP, Feature Under Outperform FUP) are our core ideas. Not Rated (NR) is
applied to companies that are not under formal coverage.

Horizon and classification

For both brands, recommendations are based on a 12-month time horizon.

DISTRIBUTION OF RATINGS/INVESTMENT BANKING SERVICES

Rating Market Abuse Regulation (MAR) and Count Percent Count* Percent*
FINRA Rule 2241 classification
Outperform BUY 555 53.01% 1 0.18%

Market-Perform (Bernstein Brand)

HOLD 363 34.67% 1 0.28%
Neutral (Autonomous Brand)

Underperform SELL 129 12.32% 0 0.00%

* These figures represent the number and percentage of companies in each category to whom Bernstein and Autonomous
provided investment banking services.
As of Jan 02 2025. All figures are updated quarterly and represent the cumulative ratings over the previous 12 months.

PRICE CHARTS/ RATINGS AND PRICE TARGET HISTORY

This research publication covers six or more companies. For price chart and other company disclosures, please visit https://
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Institutional Services LLC, 245 Park Avenue, New York, NY 10167.

OTHER MATTERS

The legal entity(ies) employing the analyst(s) listed in this report, and their location, can be determined by the country code of their
phone number, as follows:

+1 Bernstein Institutional Services LLC; New York, New York, USA

+44 Bernstein Autonomous LLP; London UK

+33 BSG France S.A.; Paris, France

+41 Bernstein Autonomous LLP; Geneva, Switzerland

+49 BSG France S.A.; Frankfurt, Germany

+91 Sanford C. Bernstein (India) Private Limited; Mumbai, India

+852 Sanford C. Bernstein (Hong Kong) Limited 盛博香港有限公司; Hong Kong, China

+65 Sanford C. Bernstein (Singapore) Private Limited; Singapore

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+81 Sanford C. Bernstein Japan KK; Tokyo, Japan

Where this report has been prepared by research analyst(s) employed by a non-US affiliate, such analyst(s), is/are (unless
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II. ADDITIONAL GLOBAL CONFLICT DISCLOSURES

It is at the sole discretion of the Firm as to when to initiate, update and cease research coverage. The Firm has established,
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III. OTHER IMPORTANT INFORMATION AND DISCLOSURES

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This report has been produced by an independent analyst as defined in Article 3 (1)(34)(i) of EU 596/2014 Market Abuse
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