1、EQUITY:TECHNOLOGYGreater China Semi StrategyGlobal Markets Research15 July 2025Risk-reward turning less favorable Thoughts on AI semi,advanced nodes and packaging;and TSMC previewRisk-reward turning less favorable relative to our April update,but we suggest riding the AI rally a bit longer into 3Q25

2、Back in April,when we updated our semiconductor cycle view,we anticipated a rebound in 2Q25 followed by a correction in 2H25;we also expected AI semi to turn from being a risk factor to a growth driver,based on our assessment that risk-reward had improved meaningfully following six months of signifi

3、cant AI semiconductor share price correction and the confirmation of several negative developments(Semi Strategy).The“rebound”over the last three months has been much stronger than we had expected(with the SOX recovering to nearly record levels;Fig.22),which in our view indicates that the Streets im

4、proved confidence in AI has outweighed tariff concerns(given that AI supply chain stocks have outperformed non-AI stocks in the last three months;Fig.19).In this note,we share our preliminary thoughts on the upcoming earnings season,and provide our latest thoughts/observations on several key topics

5、across the tech upstream space.Our quick conclusion is that risk-reward has deteriorated compared to three months ago when we updated our semiconductor cycle view,particularly given that the strong rebound appears to have ignored(or perhaps digested?)any tariff impact on macro demand.Also,we think t

6、he tech supply chain is still in the wait-and-see mode when it comes to assessing the final tariff impact(which was a core reason behind our expectation for a 2Q25 rebound in our previous strategy view).However,we continue to believe that the current semiconductor cycle is all about AI(May 2024)mean