Guotai Junan: The number of convertible bonds in the semiconductor industry chain is large, and short-term performance is expected to bottom out and rebound.

Guotai Junan Securities released a research report, stating that there are numerous convertible bonds in the semiconductor industry chain, focusing on convertible bonds in the semiconductor design, manufacturing, packaging and testing sectors benefiting from the industry cycle recovery, as well as in the sectors with low domestic production rates of semiconductor materials and equipment in China. In the short term, benefiting from the recovery of consumer electronics demand, the performance of convertible bonds in the semiconductor design, manufacturing, and testing sectors is expected to bottom out and recover; in the medium to long term, the domestic production rates of photoresist, electronic specialty gases, advanced packaging materials, semiconductor equipment, and semiconductor equipment components are expected to break through, and related convertible bonds are worth paying attention to, including Feikai, Huat, and Guoli convertible bonds. In recent years, the country has vigorously supported the technology industry, and China's domestication of the semiconductor industry chain has ushered in opportunities. Since 2018, the domestication rate of core front-end equipment such as PVD, CVD, etching equipment, cleaning equipment, CMP, etc. has further increased from single digits to over 10%. The domestication of materials has also accelerated significantly, with core materials such as polishing pads, polishing liquids, silicon wafers, sputtering targets, etc. steadily improving. On May 24, 2024, the National Large Fund Phase III was established with a registered capital of up to 344 billion yuan, exceeding the total of the first two phases. In September 2024, the China Securities Regulatory Commission issued the "Opinions on Deepening Market Reform for Mergers and Acquisitions of Listed Companies", proposing to support listed companies in transforming and upgrading to new productive forces, with strong support from the country for the technology industry to help the semiconductor industry achieve independent controllability. The semiconductor industry's prosperity is recovering, and the growth momentum is expected to continue. After experiencing a cyclical downturn in 2022-2023, global semiconductor sales surged in 2024. According to data from the Semiconductor Industry Association (SIA) of the United States, global semiconductor sales reached $166 billion in 2024 Q3, a year-on-year increase of 23.2% and a quarter-on-quarter increase of 10.7%, marking the largest quarterly sales growth since 2016. Customs data shows that in the first 10 months of 2024, China's integrated circuit exports reached 931.17 billion yuan, an increase of 21.4% year-on-year. Looking ahead, the increasing penetration of AI and automotive intelligence is expected to further drive the recovery of semiconductor demand. Risk warning: Policy measures fall short of expectations; significant fluctuations in underlying stocks; redemption risks for wealth management products or secondary bond funds.