<div id="readability-page-1"><div>M Stanley said in a report that Taiwan Semiconductor Manufacturing Company Ltd. (TSM.US) and Samsung Electronics (005930.KS) are gradually consolidating and rationalizing their mature-node capacity to prioritize resources for advanced nodes and packaging to meet AI-related demand. The broker believes that, over the medium to long term, this could create spillover demand opportunities for second-tier foundries and specialty process players, as customers seek alternative manufacturing partners to ensure stable supply and cost-effective production.The report stated that an upcycle in mature-node processes is approaching. As AI infrastructure buildout may continue for another two years, some smartphone and personal computer customers have begun to worry about shortages in mature-node capacity. SMIC (00981.HK) -2.500 (-3.639%) Short selling $937.60M; Ratio 11.291% and Lian Dian (2303.TW) also highlighted similar trends in their recent earnings calls. Therefore, the broker believes there will be no inventory correction or order cuts for mature-node foundries in the near term.With rising global demand for AI GPUs, the broker estimates that the total addressable market (TAM) for AI server power ICs will reach USD15 billion in 2026, with a CAGR of 50% over the next two years. AI power ICs should be sufficient to offset weak demand in consumer and smartphone semiconductors. A major US PMIC customer of HUA HONG SEMI (01347.HK) -4.200 (-3.627%) Short selling $363.89M; Ratio 12.807% has seen wafer demand on its 55nm BCD platform triple. M Stanley said AI power ICs are central to future AI infrastructure, with growth at least as fast as AI GPUs. As such, the broker expects a shortage in mature-node capacity to emerge in 2H27.M Stanley raised its TP for SMIC H-shares to HKD85 from HKD70, maintaining an Overweight rating. It lifted its EPS forecasts for 2026 to 2028 by 11%, 14% and 10%, respectively, to reflect strong 2Q revenue and gross margin guidance, which it believes is driven by robust expansion in advanced-node capacity and improvements in blended ASP due to a better product mix and price hikes on the BCD platform. The broker also raised its revenue forecasts for 2026 to 2028 by 9%, 15% and 15%, respectively, and increased its gross margin forecasts for 2026 and 2027 by 1.4 ppts and 0.1 ppts, respectively.M Stanley also raised its TP for HUA HONG SEMI to HKD118 from HKD88, maintaining an Equalweight rating. It lowered its EPS forecast for this year by 7%, but raised its EPS forecasts for the following two years by 15% and 20%, respectively, to reflect strong demand for AI-related power management semiconductors and potential price increases on the BCD platform, where HUA HONG SEMI has technical expertise. Although consumer products may face headwinds due to memory price hikes, the broker believes demand for AI-related products can offset the negative impact. It noted encouraging momentum in HUA HONG SEMIs capacity and shipment growth, with expansion underway at Fab 9. (da/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-18 16:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)</div></div>

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M Stanley reports an approaching upcycle in mature-node processes, driven by AI demand. They raised price targets for SMIC to HKD85 and HUA HONG SEMI to HKD118, while adjusting EPS forecasts for 2026-2028. The firm anticipates strong growth in AI power ICs, with a total addressable market of USD15 billion by 2026. Despite challenges in consumer products, demand for AI-related semiconductors is expected to offset negative impacts.

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M Stanley: Upcycle in Mature-node Process Approaching; Raises TP on SMIC  and HUA HONG SEMI, Adjusts EPS Forecasts