France and Pakistan cover Asian foundry for the first time: prefer TSM.US and stabilize SMIC (00981)

The Zhitong Finance App learned that for the first time, BNP Paribas released research coverage for the first time on Asian wafer processing companies — TSM.US (TSM.US), SMIC (00981), UMC.US (UMC.US), and Huahong Semiconductor (01347). Alex Chang, an Asian technology analyst at the bank, said that it favors TSMC because the company is technologically advanced and maintains full production at N3/N4/N5 nodes, and this trend will continue to extend to full production at N2 nodes until 2026. Among the wafer foundries in mainland China, the analyst favors SMIC, pointing out that its capacity utilization rate is as high as 80%, mainly benefiting from a 40% price discount and the “Made in China Serves China” market share growth strategy. However, due to the limitations of advanced lithography equipment (below 7nm), there are still bottlenecks in its technical capabilities.

Analysts believe that maintaining full production at TSMC's Advanced Process Node (N3/N2) in 2026 is a big benefit for the AI-related stocks covered by the bank. Apple (AAPL.US), Qualcomm (QCOM.US), and MediaTek will continue to advance their leading process node layout for smartphones. Additionally, analysts expect TSMC's CoWoS (Advanced Packaging) production capacity in 2026 to reach 95,000 wafers per month, which can support approximately 13 million XPU units. Notably, this is about 30% higher than the bank's forecast for 2026 GPU+ASIC shipments.

Analysts expect that by 2029, TSMC's wafer production capacity at the 2.0/1.4nm node will reach 150,000 wafers per month, which is roughly equivalent to its production capacity at the 3/4/5nm node, while its capital expenditure will remain at the level of 40 billion US dollars per year from 2025 to 2027. Analysts believe this expansion of cutting-edge production capacity will strongly support their expectations that US semiconductor equipment companies — such as Applied Materials (AMAT.US), LAM.US (LAM.US), and KLAC.US (KLAC.US) — will achieve mid-single digit (mid-single digit) revenue growth over the next three years.

Furthermore, analysts pointed out that in the field of analog chips, SMIC is implementing large price discounts of 25%-40% for Chinese and Western customers through its mature node process, involving products such as MCU (microcontrol unit), power management chips, and Wi-Fi chips. This further highlights the importance of building a local cost structure for analog chip manufacturers when entering the Chinese market.