CITIC Securities: We recommend tracking two main lines in the semiconductor sector for the next 6-12 months.

On May 15, the latest research report from CITIC Securities pointed out that due to the impact of tariffs, the Philadelphia Semiconductor Index has recently experienced large fluctuations, with related companies showing differentiation in their performance guidance for the first quarter of 2025 and the second quarter of 2025. Companies in the consumer electronics and semiconductor equipment sectors have been affected by tariffs, but sectors such as semiconductor software, AI chips, and network equipment have been relatively less affected by tariffs. Currently, the tariff drama initiated by Trump has not yet ended, and trade negotiations between countries have not been finalized. CITIC Securities believes that key indicators to focus on for future US semiconductor and hardware sectors include: tariffs and trade policies, macroeconomic and inflation data, and the development of generative AI technology. Considering the downward revision of profit forecasts for companies after the first quarter report, the valuations of most companies are currently at reasonable levels. It is recommended to focus on two main themes in the semiconductor sector in the next 6-12 months: 1) if there is a reversal in tariff policies in the future, focus on companies with cheap valuations and expected corrections in profit forecasts. 2) In the medium to short term, focus on defensive targets in the AI and semiconductor software sectors that are relatively less affected by tariff policies.