Morgan Stanley-Tracking China’s Semi Localization China IC deficit decline...-106176650

MJanuary26,202407:21PMGMTUpdateTrackingChina’sSemiLocalizationAsiaPacificMorganStanleyTaiwanLimited++88622730-1725+88622730-2863ChinaICdeficitdeclineandSiCCharlieChan+88622730-2871investmentEquityAnalyst+8522848-7310KeyTakeawaysCharlie.Chan@morganstanley.comWethinkthedeclineinChina'ssemideficitisbecauseofweakdemand,impactofDanielYen,CFAUSexportcontrolsandincreasingself-sufficiency.WebelievechiplettechnologywillbeimportantforChina'sHPCindustry.EquityAnalystChina'scontinuousinvestmentinSiCbodeswellforJapanequipmentvendorslikeDaniel.Yen@morganstanley.comDISCOandLasertec.RayWu,CFAChinaself-sufficiencyEquityAnalyst•China'sICimportsfell15.4%invalueassemiconductorself-sufficiencyRay.Wu@morganstanley.comacceleratedamidUSsanctions:AccordingtodatafromtheGeneralAdministrationofCustomsofChina,China'sICimportsdroppedinvaluebyMorganStanleyAsiaLimited+15.4percentyear-on-yearinUSdollarterms,whilethetotalimportvolumesawadecreaseof10.8percent(Exhibit1&Exhibit2).(GlobalTimes,Jan13,DaisyDai,CFA2024)EquityAnalystAdvancedpackagingDaisy.Dai@morganstanley.com•ChineseAcademyofSciencesDesigns256-CoreProcessor,PlansMorganStanleyTaiwanLimited++88622730-1723Expansionto1,600-CoreBigChip.Inpursuitofbigchiptechnology,ateam+88627712-3032fromtheChineseAcademyofScienceshasdesignedanadvanced256-coreDylanLiuprocessorsystembasedon16chipletsand...