M UpdateTracking China’s Semi Localization | Asia PacificChina IC deficit decline and SiC investment Morgan Stanley Taiwan Limited+Charlie ChanEquity Analyst Charlie.Chan@morganstanley.com +886 2 2730-1725 Daniel Yen, CFAEquity Analyst Daniel.Yen@morganstanley.com +886 2 2730-2863 Ray Wu, CFAEquity Analyst Ray.Wu@morganstanley.com +886 2 2730-2871 Morgan Stanley Asia Limited+Daisy Dai, CFAEquity Analyst Daisy.Dai@morganstanley.com +852 2848-7310 Morgan Stanley Taiwan Limited+Dylan LiuEquity Analyst Dylan.Liu@morganstanley.com +886 2 2730-1723 Tiffany YehResearch Associate Tiffany.Yeh@morganstanley.com +886 2 7712-3032 Morgan Stanley appreciates your support in the 2024 Institutional Investor All-Asia Research Team Survey. Request your ballot here. Greater China Technology SemiconductorsAsia PacificIndustry ViewAttractiveWe summarize local news and our own industry checks to provide key evidence of China’s progression in semi localization.China self-sufficiency• China's IC imports fell 15.4% in value as semiconductor self-sufficiency accelerated amid US sanctions: According to data from the General Administration of Customs of China, China's IC imports dropped in value by 15.4 percent year-on-year in US dollar terms, while the total import volume saw a decrease of 10.8 percent ( Exhibit 1 & Exhibit 2 ). (Global Times, Jan 13, 2024)Advanced packaging• Chinese Academy of Sciences Designs 256-Core Processor, Plans Expansion to 1,600-Core Big Chip. In pursuit of big chip technology, a team from the Chinese Academy of Sciences has designed an advanced 256-core processor system based on 16 chiplets and aims to expand this design to a 1,600-core big chip. This design is composed of 16 chiplets, each housing 16 CPUs based on the RISC-V architecture. (Trendforce, January 8, 2024)SiC/Power semis• Total investment amount exceeds US$2.8bn for 13 SiC related projects: Recently provinces in China began to disclose 2024 major projects list. There are 13 SiC related projects listed in projects of Jiangsu, Zhejiang Henan provinces. The total investment amount exceeds Rmb20bn (US$2.8bn). (EET China, January 19, 2024).Stock implications: We are positive on equipment players like ACM Research (ACMR.O) and NAURA (002371.SZ), as we think they will benefit from CXMT, YMTC, Hua Hong (1347.HK) and other China fabs' capacity expansion (link). China's continuous investment in SiC will benefit equipment makers like DISCO (6146.T, OW) and Lasertec (6920.T, OW), both covered by Tetsuya Wadaki. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures,...
