j.p. 摩根-亚太地区-半导体行业-半导体与spe：来自五个全球分析师的观点 27页

'Completed18Jan201805:36PMJSTDisseminated18Jan201805:38PMJSTAsiaPacificEquityResearch18January2018Semiconductor/SPESectorsViewsofFiveJ.P.MorganGlobalAnalystsThefollowingpagespresenttheinitial2018opinionsoffiveJ.P.MorgananalystsJapanEquityResearchcoveringsemiconductorandrelatedstocks.Overall,whiletheyexpectElectronics/Precision&Industrialsemiconductormarketgrowthtoslowin2018,theirlong-termview(5-10yearsACHisashiMoriyamaout)isforthemarkettoexpandviathecreationofnewmarketssuchasAI/deep(81-3)6736-8601learningandautonomousdriving.Theyseegrowthexpectationsconvergingonhisashi.moriyama@jpmorgan.comcompaniesbiasedtostructuralmarketgrowthfactors.BloombergJPMAMORIYAMAJPMorganSecuritiesJapanCo.,Ltd.Globalsemiconductormarketvalueforecastsfor2018:Ourscenarioanalysisyieldsabear-caseforecastof4.0%growthfor2018,markedlyslowerHarlanSur(1-415)315-6700than2017’sestimated+20.7%(Figure2).ItisbasedonaforecastforMOSharlan.sur@jpmorgan.commemorygrowthof0.9%,comparedwith+65.3%inthepreviousyear.OurJ.P.MorganSecuritiesLLCbase-caseforecastforlogicisfirm7.0%growthin2018,comparedwithJJParkestimated9.3%growthin2017.ReflectingourforecastofgrowthforpowerICs(82-2)758-5717andsensors,weexpect4.4%growthforothersemiconductorproducts,trendingjj.park@jpmorgan.comsimilarto2017’sestimated6.8%growth.J.P.MorganSecurities(FarEast)Limited,SeoulBranchBottom-upcapitalinvestmentforecasts:AggregatingindividualGokulHariharansemiconductorcompanies’capitalinvestment(Figure4)showsforecasttotal(852)2800-8564growthforCY2018almostflatat0.7%YoY.WeforecastNANDandrelatedgokul.hariharan@jpmorgan.comcapitalspending,mainlyatSamsungElectronics,todip16.5%YoYafterJ.P.MorganSecurities(AsiaPacific)Limitedpeakingin2017.Weestimatecapitalspendinggrowthat11.1%forfoundriesSandeepDeshpandeand14.1%forDRAM,andseefoundryandrelatedinvestmentlikelyexpanding(44-20)7134-5276toward2H2018onpotentialbenefitsfromgrowingdemandforprocessorsforsandeep.s.deshpande@jpmorgan.comAI/deeplearning.J.P.MorganSecuritiesplcMasashiItayaTheinitial2018opinionsoffiveJ.P.Morgananalystscovering(81-3)67368633semiconductorandrelatedstocksaregivenonthefollowingpages.Theirmasashi.itaya@jpmorgan.comtopsectorrecommendationsare:JPMorganSecuritiesJapanCo.,Ltd.HarlanSur-KLA-Tencor(KLAC)NarciChangJJPark-SamsungElectronics(005930KS)(886-2)2725-9899GokulHariharan-Mediatek(2454TT),TSMC(2330.TT)narci.h.chang@jpmorgan.comSandeepDeshpande-ASML(ASMLNA),STMicroelectronics(STMFP)J.P.MorganSecurities(Taiwan)Limited/J.P.MasashiItaya:Rohm(6963JT),RenesasElectronics(6723JT)MorganSecurities(AsiaPacific)LimitedHisashiMoriyama:HitachiHigh-Technologies(8036JT),Ulvac(6728JT),JayKwonAdvantest(6857JT).(82-2)758-5725jay.h.kwon@jpmorgan.comJ.P.MorganSecurities(FarEast)Limited,SeoulBranchSeepage24foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.www.jpmorganmarkets.com JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comJJPark-MemoryAsiaAfterextendedgains,consecutivepricehikesandanoverallrobustperformanceinthelastyear,weexpectamoderatememorymarketgrowthin2018.WhiletheDRAMmarketisexpectedtoregisteraflattishgrowth,strong-demanddriversandrisingSSDadoptionwouldhelpfuelamoderategrowthinNANDwhilerecentNANDpricetrendcouldprovideadownsiderisktoourcurrentassumptions.Fortheset-makers,inearly2018memoryBOMcontinuestoballoonoutofproportion(20+%formid-lowendsmartphones).Eventhoughunitshipmentsarepredictedtogrowbysingle-digit%,majorOEM’sarelikelytoadoptamuchslowerpaceofspec/contentupgradation,unlessrequisitepricecorrectionsoccur.Thishasalsobeenvisibleintermsofadwindlingenterprisedemandfromdata-centersascomponentpricepressureshamperedservercontentgrowthcoupledwithaslowermigrationPurley.Inordertocontainthenegativeimpactonset-makers,regulatoryagenciesfromChina(NDRC)arecomingtotheforetoencouragememorymakersforarelaxedpriceoutlook.WeforecastastagnatingCEdemandforDRAMapplicationsinthe1Q18andalow-singledigit%ASPappreciationgivenstilltightsupplyforserverDRAM.Werecognizebroad-basedend-marketdemanddriverswouldsupportalow-20%demandgrowthin2018.HoweverastheDRAMcapexgetsrealizedintermsofmid-singledigit%wafergrowthin2018,weexpectsupplygrowth(mid-20%)willover-compensatedemandlargelyimpacting2H18supply/demanddynamics.Hence,wewilllikelystartseeingagradualdouble-digit%correctioninASP’sformthe2H18onwards,aspricecorrectionscatalyzeinventoryde-stockinginthedownturncycle.Thisispredictedtotranslatetoasingledigit%correctionforDRAMASP’sin2018from~50%Y/YASPincreasein2017.ForNAND,improvingyieldsfor3DNANDtechnologyandanintensive-capexledcapacitygrowthwouldhelpmitigatethelong-prevailingimpactsonsupply-disciplineasweforecastastaggering40%+/-growthinbit-shipmentsfor2018.Astheaffordabilitygetsrestored,wefeelthatSSD’swouldbecomeapreferredstoragesolutionwithadoptionlevelrisingto50%+inenterpriseand20%+forclient.Howeversincemajorsmartphone-makersalreadyupgradedNANDcontentin2017,weseeanymajorcontentgrowthinthissegmentonlyfrom2019onwards.GokulHariharan–TechnologySemiconductorHK,TaiwanLogicSemisWeexpecttwokeythemeswhicharequiterelevantin2018.FirstistheriseofAI/HeterogeneouscomputingdemandtrendanditsemergenceasakeydriverforFoundrygrowthin7nmnode.WiththeriseofAIandthetrendtowardsheterogeneouscomputing–especiallyfromthelargeinternetcompanies,thedatacentersiliconmarketisundergoingradicalchange.Whatwasanx86dominatedmonolithicmarketisnowbecomingalotmorevaried,withGPUs,FPGAs,ASICsolutionsandARMserversallseeingmoretraction,whichisafavorabletrendforFoundriessuchasTSMC.InvestmentsinAItrainingandInferencearealsostillattheveryearlystageandshouldcontinuetoriserapidlyinthenext5years.Afterthesaturationofsmartphonegrowth,thesedatacenterrelateddemandisfastemergingasthekeydriverforgrowthatleadingedgesemiconductors.Weanticipatethat7nmnodeinFoundrieswouldbe20-25%biggerthan28nmandcouldexceedmarketexpectations.2 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comSecondkeytrendtowatchisMobileSiliconConsolidationMobileSilicontodayrepresentsthesemiverticalwiththelowestmargins–13%vs25-50%ofmostotherareasinsemis.Thisisevenwhengrowthprospectsarequitelowandnumberofplayershasshrunktojust3playersinmerchantsilicon.WithM&Aalreadyonthehorizonforthissector,weexpectmuchbetterpricedisciplineinthisarea–leadingtomeaningfulmarginuptick.MediatekisalreadypursuingthiscoursewithOPEXcutsandcostdownstrategiesinitssmartphonebusiness.Lastly,thecyclicalfactorsinlogicsemisarealsoturningaround.Afteralong5quarterinventorydestockingcycle,logicsemisareslowlystartingtoseesomerestockingmomentuminlate1Q18,whichshouldpickupmeaningfullyin2Q18.ThisfavorsFoundriesandOSATplayers.SandeepDeshpande–SemiconductorEuropeThereisastructuralthemeunderlyingsemiconductorgrowth.Automotive,Industrial,CloudandIoTmarketshave5-yearorlongerstructuralgrowthwhichweexpectwillcontinuein2018.Afterbumper’16&‘17whensemistockreturnstopped35%eachyear,returnin2018islikelytobelessstrongthanseeninthepast2years,butinnon-commodityexposedmarkets,weexpecttoseepositivereturns.Thus,themoreacompanyisexposedtothestructurallygrowingautomotive,industrial,cloudorIoTmarkets,thestrongeritshouldperform.AttheFY17resultsinJan-18,companieswillguidebasedontherealitytheyseeatthatpointandweexpectstrongindicationsfromcompaniesacrosstheboardcombinedwithstrongcapexguidance.Thatsaid,withthememoryupturnenteringthethirdcalendaryear,thereisindeedsomeriskofpricemoderation.However,thismoderationismorelikelytobe2H18loadedthan1H18.Semisexmemoryexmicroprocessor(MPU)inventorygrew2%QoQindollarterms,however,daysofinventory(DOI)declinedfrom90daysexiting2Qto86daysexiting3Q.SemisexmemoryexMPUDOIstood3%above3-yrsa,moderatingfrom7%above3-yrsawitnessedexiting2Q17.Thus,inventoryremainsanon-issueforthesectormainlyduetostrongdemand.Thecycleisindeeddecliningbutthedeclineisduetomathematicalreasonsi.e.difficultcompsratherthanbecauseofarealdecline.Ifmemorypricesdonotdeclinewewouldexpectsemistogrowbyatleastmid-singledigit%in‘18duetogrowthinstructuralgrowthendmarkets.SemiconductorcompaniesinEuropedonotlookcheap(assomewereinpreviousyears),andthuswebelievecriticaltostockpriceperformanceistoinvestinthosecompanieswhichhavecontinuingearningsupgrades.Asin2017,webelievestockswheretheexpectationofupgradesisleast,butwheretheupgradesareseen,willseethebestpriceperformance.STMicroisourtoplargecapsemispickin‘18,amsourmidcapsemispick.ASML&Infineonremainmid-termpicks.Webelievethatdespitestockpriceperformance,marketstillremainsskepticalthatSTMicrohastrulyturnedaround.Webelievethatthenon-smartphonebusinessesofSTMicrowillgrowduetotheseculartrendsintheautomotiveandindustrialmarketswhilesmartphonewillgrowduetonewwinsatApple.TheinvestorbaseisworriedaboutAppleexposureduetotheriskofSTMicrolosingApple’sbusiness.GiventhatSTMicrohasjustwontheexposuremeansthattheriskoflosingitis2020relatedratherthanneartermbecauseSTMicrohasinvestedsubstantiallyincapacityforApplemeaningtherewouldbesomevolumeguarantees.STMicrowithgreatestpotentialforearningsupgradesin2018isourtoppickinthespace.Infineonwillalsolikelyout-performin2018duetoitshighautomotiveexposureandhighshareinautoelectrification.ASMLisakeylongtermpick,butitsperformancein20183 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comdependsonmemorypriceperformance.Webelievememorypricingrisksincreaseinto2H18and2018capexwillbeupsignificantly.Thus,weexpectASMLperformancein1H18willbestrong,butperformancelaterintheyearismoredifficulttopredictbecauseitdependsonmemorypricing.Inthemidcapspaceourtoppickisams,whichinthespaceisthebiggestbeneficiaryof3DsensinginitiallyatAppleandthenin2019potentiallyintheAndroidcampaswell.HarlanSur–USSemiconductors,SemiconductorCapEquipment&TechHardwareLookinginto2018,weseeindustrygrowthreturningtomoretypicalGDPpluslevelsandcurrentlyestimateY/Yrevenuegrowthof3-5%in2018.Wecontinuetobelievethesemiconductorindustryhasenteredamorestableandlesscyclicalgrowthphasecharacterizedbymid-single-digitannualrevenuegrowthrates.Inamorestable,lower-growthenvironment,webelievethemarketwillrewardcompaniesthatdemonstrateleadershipintheirtargetmarkets,drivingcontinuedoperating/freecashmarginexpansionandincreasingpayoutratios.CES2018TechForumHighlights:AutomotivesuppliersexpectfurthergrowthinCY18drivenbyautonomousdrivingandADASapplications.Similartolastyear,semiconductorcompanieswithsignificantautomotiveexposure(NVDA,MXIM,CY,ON,andMU)anticipatefavorablegrowthtrendsdrivenbycontentgrowthinvehicles.Inparticular,autonomousdrivingandADAS(includingcomputingplatforms,sensors,andinstrumentclusters)isanareaofstronggrowth.NVIDIAandIntelcontinueformingkeypartnershipswithcarmanufacturersandsubsystemsuppliers.Datacenterfundamentalsappearsolidin2018asAI/deeplearningremainsaclearfocus.AlthoughnottypicallydirectlyassociatedwithCES/consumerelectronics,thedatacenterendmarketwasflaggedasasolidgrowthdriverforseveralcompanies(NVDA,MXIM,MRVL,andMU),drivenbycontinuedstrengthincloud/hyperscalespendingandcontentgrowth.NVIDIAhasbeenanearlyleaderinAI(traininginparticular)thoughweexpectothercompaniessuchasINTCandMUtobenefitfromthisrapidlygrowingmarketaswell.Semicapfundamentalssolidinto2018andlikelybeyondandAppliedMaterialsontracktodrivedouble-digitrevenuegrowthineachofitsmainsegmentsin2018.AppliedMaterialswasincrementallymorepositiveonitsindustrygrowthoutlookforsemiconductorequipmentspendingin2018.Inaddition,displaymarketfundamentalsarelikelytoremainstrongin2018andinbothsemianddisplayequipment,AppliedMaterialsexpectsinvestmentstoremainathighlevelsoverthenextfewyears.Similartoourviewonmemory,Appliedisn’tseeinganysignsofoverinvestmentbymemorymakers.ForAppliedMaterialsspecifically,thecompanyexpectstodeliversoliddoubledigitrevenuegrowthineachofitsthreemainsegments(semiconductor,displayandservice)in2018.HisashiMoriyama–SemiconductorSPEJapanCollatingourfiveglobalsemiconductoranalysts’opinionssuggeststhatwhilemarketgrowthwilllikelyslowin2018,themarketlookssettoexpandinthelongterm(5-10yearsout)asnewmarketsarecreated.Intheautomarket,weexpectrequirementsforimprovedautonomousdrivingperformancetosupportsteadygrowthnotonlyforpowerchipsbutalsoforMCUs(memorycontrolunits)forADAS(advanceddriverassistancesystems)andECUs(electroniccontrolunits).As4 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comaresult,ourlong-termviewthrough2030seesauto-useproducts’value-basedshareofthesemiconductormarketexpandingfrom12%in2016toroughly30%,broadlyonaparwiththecomputermarket.Inthenearterm,weneedtocontinuemonitoringbusinesstrendsatAppleandChinesesmartphonecompaniesbecausechipsforPCsandcommunicationsequipment(e.g.,smartphones)currentlyaccountforroughly60%ofsemiconductormarketvalue.Atthesametime,ourforecastofcontinued33.9%(Figure15)capitalinvestmentgrowthforsevencloudserviceprovidersin2018easilytopsourbottom-upbase-caseforecastof0.7%growth(Figure4)forSPEcapitalspending,indicatingclearlythatnewtypesofuserandsemiconductorhavestartedtoexertagreaterimpactthantodateasdriversofsemiconductordemand.Weforecastacceleratingdemandgrowthforhigh-speed,low-powersemiconductorssuchasNvidia’s(coveringanalyst:HarlanSur)deeplearningchip,andestimatedemandforthefoundriesthatproducethemtopickupevenfurtherin2H.Inthenearfuture,weforecastthatproductionofadvancedsmartphoneapplicationprocessorsusingEUVL(extremeultravioletlithography)ontopof7nmtechnology,togetherwithproductionofAI/deeplearningprocessorsusingdouble/tripleexposureaswellasexpandingdemand,willlikelygiverisetoprocessdivergence,andweseethisinturnlikelybringingstructuralchangewherebyfoundries’capitalspendingnolongerdependssolelyonsmartphones.Ourbottom-upbase-caseforecastof0.7%growthforSPEcapitalspendingbreaksdownintologic+1.2%YoY,foundries+11.1%YoY,DRAM+14.1%YoY,andNAND-16.5%YoY.AsweexpectSamsungElectronics(coveringanalyst:JJPark)tolimit3DNANDandrelatedspendingfollowingthreeyearsofgrowth,forecastsbasedonlyonwherecapitalspendingisheadedindicatethatSPEcapitalspendingwilllikelybeledlessbyNANDandrelatedthanbyDRAM,particularlyfoundry-related.Analysts"toppicksinthissector:HarlanSur-KLA-Tencor(KLAC)JJPark-SamsungElectronics(005930KS)GokulHariharan-Mediatek(2454TT),TSMC(2330.TT)SandeepDeshpande-ASML(ASMLNA),STMicroelectronics(STMFP)MasashiItaya:Rohm(6963JT),RenesasElectronics(6723JT)HisashiMoriyama:HitachiHigh-Technologies(8036JT),Ulvac(6728JT),Advantest(6857JT)5 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure1:MonthlySemiconductorShipmentForecastbyScenario(Monthly)$billionJanFebMarAprMayJunJulAugSepOctNovDec201626.025.127.425.225.528.427.428.832.130.430.632.0(YoY)-4.7%-3.8%-8.1%-6.4%-7.9%-3.3%3.6%3.7%3.5%8.0%11.2%17.8%Scenario1Bear2017Enew29.329.833.430.631.935.333.635.938.337.137.727.5(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%23.4%-14.2%Scenario2Base2017Enew29.329.833.430.631.935.333.635.938.337.137.736.2(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%23.4%13.0%Scenario3Bull2017Enew29.329.833.430.631.935.333.635.938.337.137.740.0(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%23.4%24.9%Scenario1Bear2017Eold29.329.833.430.631.935.333.635.938.337.132.233.0(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%5.3%3.0%Scenario2Base2017Eold29.329.833.430.631.935.333.635.938.337.137.038.0(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%21.0%18.6%Scenario3Bull2017Eold29.329.833.430.631.935.333.635.938.337.137.037.0(YoY)12.8%18.9%21.9%21.7%25.0%24.2%22.7%24.7%19.4%21.9%21.0%15.5%Source:WSTS,J.P.MorganestimatesFigure2:SemiconductorDeviceShipmentForecastbyScenario(Yearly)$billion2017E(new)2018E(new)2017E(old)2018E(old)BearBaseBullBearBaseBullBearBaseBullBearBaseBull(DRAMgrowthratio)(-1.2%yoy)(-1.2%yoy)(+4.1%yoy)(-1.2%yoy)(-1.2%yoy)(+4.1%yoy)Logic100.0100.0100.0101.0107.0108.0100.0100.0100.0101.0107.0108.0YoY9.3%9.3%9.3%1.0%7.0%8.0%9.3%9.3%9.3%1.0%7.0%8.0%MOSMemory120.0126.9127.0123.8128.1136.0120.0126.9127.0123.8128.1136.0YoY56.3%65.3%65.4%3.2%0.9%7.1%56.3%65.3%65.4%3.2%0.9%7.1%Others180.5182.3186.0181.5190.4200.0180.5183.3186.0181.5192.0200.0YoY5.8%6.8%9.0%0.6%4.4%7.5%5.8%7.4%9.0%0.6%4.7%7.5%Total400.5409.2413.0406.3425.5444.0400.5410.2413.0406.3427.1444.0YoY18.2%20.7%21.9%1.5%4.0%7.5%18.2%21.0%21.9%1.5%4.1%7.5%20092010201120122013201420152016Logic65.277.478.881.785.991.290.791.5YoY-11.3%18.7%1.8%3.7%5.2%6.1%-0.5%0.9%MOSMemory44.869.660.757.067.079.277.276.8YoY-3.3%55.4%-12.7%-6.2%17.6%18.2%-2.6%-0.6%Others123.8159.9167.0158.9152.6165.0167.4170.7YoY-10.8%29.1%4.4%-4.8%-3.9%8.1%1.5%2.0%Total226.3298.2299.5292.1305.6335.4335.3338.9YoY-9.0%31.8%0.4%-2.5%4.6%9.7%0.0%1.1%Source:WSTS,J.P.MorganestimatesFigure3:SemiEquipment:WFEMarketTrend$millionShareRanking200620072008200920102011201220132014201520161AppliedMaterials19.5%18.4%16.5%18.7%18.4%15.5%17.9%19.3%18.7%19.1%20.7%2LamResearch5.7%6.1%6.1%6.6%7.9%6.3%9.2%10.5%11.4%14.3%13.9%3ASML12.0%12.5%14.3%12.3%16.1%18.4%16.2%19.0%16.6%14.1%13.6%4TokyoElectron12.6%13.9%13.5%12.3%12.9%13.2%13.2%10.4%13.8%12.9%13.0%5KLA-Tencor6.2%6.3%6.9%6.9%5.6%6.5%7.9%7.7%6.3%6.1%6.4%6ScreenSemiconductorSolutions3.0%3.3%3.4%4.8%4.5%4.9%4.9%4.3%3.3%2.9%3.7%7HitachiHigh-Technologies2.6%2.6%2.9%2.5%1.9%2.4%3.4%2.9%2.8%2.3%2.6%8Nikon4.6%4.9%5.4%6.0%3.6%3.7%3.3%2.3%2.4%2.2%2.0%9HitachiKokusaiElectric1.6%1.7%1.5%1.2%1.6%2.0%1.6%1.8%1.8%1.9%1.4%10ASMInternational1.1%1.4%1.3%1.1%0.9%1.3%1.1%1.6%1.6%1.7%1.3%Others31.1%28.9%28.4%27.7%26.6%25.8%21.1%20.2%21.4%22.6%21.4%WFETotal33,23736,75324,63613,11232,14436,97430,13027,92133,93433,61437,407YoY25.4%10.6%-33.0%-46.8%145.1%15.0%-18.5%-7.3%21.5%-0.9%11.3%Source:GartnerNote:WFE=WaferFabEquipment6 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure4:WorldSemiconductorSharebyEndUseForecast100%90%80%70%60%50%40%30%20%10%0%78901234567890123456789012345678901234567890888999999999900000000001111111111222222222239999999999999000000000000000000000000000000011111111111112222222222222222222222222222222ConsumerAutoComputerIndustryCommunicationsGovernmentSource:CompiledbyJ.P.MorganbasedonWSTSstatistic,J.P.MorganestimatesFigure5:Bottom-upSPECapexEstimatesCY20072008200920102011201220132014201520162017E2018ELogicIntel5,0005,1974,5155,20710,76411,02710,71110,1057,3269,5388,97910,000Samsung6134557832,5974,5156,4794,6602,8483,1082,4876,1955,310Others12,4079,2015,7087,1827,7645,2464,2714,3125,6895,4465,8866,000Total18,02014,85311,00714,98623,04322,75219,64217,26616,12417,47021,06021,310YoY-18.4%-17.6%-25.9%36.2%53.8%-1.3%-13.7%-12.1%-6.6%8.4%20.5%1.2%FoundryTSMC2,5591,8882,6745,9387,2848,3229,6909,5228,12310,20010,80011,600Globalfoundries7585765002,7005,4003,8004,0003,5002,5001,5002,0003,000UMC8613665341,9481,8141,7651,1091,4261,9132,8421,3501,280SMIC7176692174929504997041,0601,3322,6001,9001,900Others1,5821,4938391,1541,2519869639549509509501,100Total6,4774,9924,76412,23116,70015,37216,46616,46314,81818,09217,00018,880YoY4.7%-22.9%-4.6%156.8%36.5%-8.0%7.1%0.0%-10.0%22.1%-6.0%11.1%DRAMSamsung4,8003,5001,9003,4572,2562,6633,1986,6495,7463,8779,25011,454MicronTechnology1,1001,6504006007207007002,3002,0002,0003,8003,100SKHynix4,0001,6006002,2002,2501,7001,8003,7003,5003,8003,8004,409XMCandotherChinese---------3008001,800Others11,2004,0251,7554,5852,6997431,0141,1411,9311,4002,3002,000Total21,10010,7754,65510,8427,9265,8066,71113,79013,17611,37719,95022,763YoY36.3%-48.9%-56.8%132.9%-26.9%-26.7%15.6%105.5%-4.4%-13.7%75.4%14.1%NANDSamsung3,5003,3001,1003,7003,0003,5004,0002,9004,2005,50010,4347,130Toshiba3,5003,7001,0002,6003,5002,4002,1502,5003,5005,0004,5004,500SKHynix9505001508007502,0001,1001,1001,4001,6004,6734,409MicronTechnology2,3002,3004007001,8001,1009501,3001,5002,5003,7503,330Intel---------1,6002,5002,000XMCandotherChinese---------150325825Total10,4009,9002,6807,8009,0509,0008,2007,80010,60016,85026,58222,194YoY26.4%-4.8%-72.9%191.0%16.0%-0.6%-8.9%-4.9%35.9%59.0%57.8%-16.5%GrandTotal55,99740,51923,10545,85956,71852,92951,01955,31854,71863,78984,59285,147YoY7.7%-27.6%-43.0%98.5%23.7%-6.7%-3.6%8.4%-1.1%16.6%32.6%0.7%Source:CompanydataandJ.P.Morganestimates7 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure6:SPEShipmentandOrderTrends(Monthly)¥billionJapan-basedSPEJapan-basedFPDEquipmentMonthOrderYoYMoMShipmentYoYMoMBBRatioOrderYoYMoMShipmentYoYMoMBBRatio16/11145.954.2%4.7%126.721.5%-3.0%1.1549.013.0%25.9%36.857.4%-15.4%1.3316/12164.948.2%13.0%126.937.3%0.1%1.3054.14.8%10.5%40.058.2%8.6%1.3517/01179.651.3%8.9%129.246.8%1.9%1.3951.114.8%-5.6%40.636.2%1.7%1.2617/02186.047.3%3.6%137.253.8%6.2%1.3640.9-0.3%-19.9%39.131.9%-3.7%1.0517/03181.440.1%-2.5%162.339.5%18.3%1.1255.92.5%36.5%39.825.3%1.7%1.4017/04---165.841.2%2.1%----34.813.0%-12.6%-17/05--170.738.5%3.0%----38.05.2%9.1%-17/06---153.153.6%-10.3%----34.7-10.8%-8.6%-17/07---161.749.9%5.7%-----45.612.0%31.5%-17/08---162.141.9%0.2%-----41.0-13.5%-10.2%-17/09---158.919.9%-2.0%-----42.0-3.0%2.4%-17/10---154.518.3%-2.8%-----37.1-14.7%-11.6%-17/11---153.421.1%-0.7%-----36.1-1.9%-2.7%-Source:SEAJFigure7:SemiconductorvsSemiEquipment:HistoricalRatio$millionSemiconductor(Global)SPE(Global)SPE/SemiRatioCYShipmentYoYShipmentYoY(%)199154,607-8,893-16.3199259,8659.6%8,067-9.3%13.5199377,31029.1%10,35228.3%13.41994101,87931.8%14,50740.1%14.21995144,40441.7%24,02765.6%16.61996130,104-9.9%26,3379.6%20.21997135,6094.2%27,5884.8%20.31998125,612-7.4%21,531-22.0%17.11999149,37918.9%25,49718.4%17.12000204,39436.8%47,68087.0%23.32001138,963-32.0%28,038-41.2%20.22002140,7131.3%19,749-29.6%14.02003166,42618.3%22,18912.4%13.32004213,02728.0%37,08167.1%17.42005227,4846.8%32,882-11.3%14.52006247,7168.9%40,47423.1%16.32007255,6453.2%43,3167.0%16.92008248,603-2.8%29,664-31.5%11.92009226,313-9.0%15,900-46.4%7.02010298,31531.8%39,929151.1%13.42011299,5210.4%43,5269.0%14.52012291,562-2.7%37,078-14.8%12.72013305,9524.9%31,580-14.8%10.32014335,8439.8%37,41018.5%11.12015335,007-0.2%36,527-2.4%10.92016338,9311.2%41,00712.3%12.12017E409,20020.7%54,37532.6%13.32018E425,5004.0%54,7560.7%12.9Source:WSTS,SEMI,J.P.Morganestimates8 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure8:Bottom-upFPDCapexEstimates$millionCY200920102011201220132014201520162017E2018ELCDBOETechnologyGroup5482,0862,8376712,9813,4562,9614,5241,3111,464LGDisplay2,9634,1063,3713,3572,2151,7401,6421,7131,408885TCLCorporation(CSOT)--3,5002,2001,2001,0001,0001,0002,0002,500AUOptronicsCorp.1,8492,6891,9371,4658585601,0531,4341,5001,333SamsungElectronics1,5663,9823,0401,7501,5002,0001,425800800800Sharp1,4411,372898446274273206305338300Japandisplay---1,8211,2139911,5541,114386388Innolux1,2053,0491,5536706196777721,370667800CPT13811499196114125134200150150Hannstar4516346620021214146605050Others1,8002,3501,8502,6003,6201,5001,5001,5001,5001,500TotalLCDCapex11,00717,82516,71412,88410,6128,0167,7788,3828,4138,318Y/Ygrowth,%-15.5%61.9%-6.2%-22.9%-17.6%-24.5%-3.0%7.8%0.4%-1.1%OLEDSamsungDisplay1,0001,5004,4004,0003,6002,4002,9009,00013,3008,000BOETechnologyGroup---1002002501,0001,2503,0003,000OtherChinabrands---2505007501,0001,8003,5004,750LGDisplay-150501509501,0003001,4004,4005,200JapanDisplay-------120200150Sharp-------100200200TotalOLEDCapex1,0001,6504,4504,5005,2504,4005,20013,45024,20020,950Y/Ygrowth,%233.3%65.0%169.7%1.1%16.7%-16.2%18.2%158.7%79.9%-13.4%Bottom-upTotal12,00719,47521,16417,38415,86212,41612,97821,83232,61329,268Y/Ygrowth,%-9.9%62.2%8.7%-17.9%-8.8%-21.7%4.5%68.2%49.4%-10.3%Source:CompanydataandJ.P.MorganestimatesNote:JapaneseDisplay-Hitachi,IPS-alpha,Sony,andToshiba9 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure9:DRAM(2GB)/NAND(64GB):ASPForecast2005200620072008200920102011201220132014201520162017E2018E2019EDRAM(2GB.Eq.)Consumption(WSTS)(Munits)9341,3712,6214,2665,1927,37211,23814,26018,24323,84227,22738,01045,72856,35167,913YoY52%47%91%63%22%42%52%27%28%31%14%40%20%23%21%Revenues($mn)25,59633,66531,27524,02122,42039,21529,36826,09734,78846,85844,97041,17972,34471,47752,893YoY-5%32%-7%-23%-7%75%-25%-11%33%35%-4%-8%76%-1%-26%DRAMASP($)27.4124.5511.935.634.325.322.611.831.911.971.651.081.581.270.78YoY-37%-10%-51%-53%-23%23%-51%-30%4%3%-16%-34%46%-20%-39%NAND(64GB.Eq.)Consumption(Munits)30882485498431,3932,5204,0515,8438,05511,36716,64021,97030,93942,805YoY246%195%182%122%53%65%81%61%44%38%41%46%32%41%38%Revenues($mn)10,59811,49314,51012,28214,83821,73524,41825,76327,46528,23428,84532,02347,60852,33850,205YoY63%8%26%-15%21%46%12%6%7%3%2%11%49%10%-4%NANDASP($)356.22130.8758.5022.3517.5915.609.696.364.703.512.541.922.171.691.17YoY-53%-63%-55%-62%-21%-11%-38%-34%-26%-25%-28%-24%13%-22%-31%Source:iSuppli,Gartner,WSTS,J.P.MorganestimatesFigure10:DRAM(2GB)demandmodelbyusemillionunits2Gb.Eq.2005200620072008200920102011201220132014201520162017E2018E2019EPCDRAM5708681,7442,8893,7485,0466,4427,5697,5758,6718,52210,47211,22512,48414,062Desktop2803917901,1811,4671,7872,0722,3482,2312,3402,0411,9741,9942,1512,367Notebooks1192105531,0921,6102,2472,9763,5893,1383,5713,3903,5543,8804,1794,698Upgrades+OtherEDP1702674016166711,0121,3941,6322,2062,7603,0924,9445,3516,1556,998Server881191923293216349801,4971,9752,8414,6316,4888,76611,93315,925MobileDRAM43811642754118921,7373,1975,5207,68510,48714,71618,09622,74026,630Others1722704336427261,0631,5181,9102,7433,7664,3245,3996,5238,07310,301Total8731,3382,5344,1345,2077,63610,67614,17417,81422,96427,96437,07344,61055,23066,918YoYPCDRAM53%52%101%66%30%35%28%18%0%14%-2%23%7%11%13%Desktop34%39%102%49%24%22%16%13%-5%5%-13%-3%1%8%10%Notebook66%76%164%97%47%40%32%21%-13%14%-5%5%9%8%12%Upgrades+OtherEDP87%57%50%54%9%51%38%17%35%25%12%60%8%15%14%Server35%60%72%-2%97%55%53%32%44%62%40%35%36%33%MobileDRAM64%89%103%67%42%114%98%83%76%39%36%40%23%26%17%Others71%57%61%48%13%46%43%26%44%37%15%25%21%24%28%Total57%53%89%63%25%46%40%32%26%29%22%33%20%24%21%DemandcompositionPCDRAM65%65%69%70%72%66%60%53%43%38%30%28%25%23%21%Desktop32%29%31%29%28%23%19%17%13%10%7%5%4%4%4%Notebook14%16%22%26%31%29%28%25%18%16%12%10%9%8%7%Upgrades+OtherEDP20%20%16%15%13%13%13%12%12%12%11%13%12%11%10%Server10%9%8%8%6%8%9%11%11%12%17%17%20%22%24%MobileDRAM5%6%6%7%8%12%16%23%31%33%38%40%41%41%40%Others20%20%17%16%14%14%14%13%15%16%15%15%15%15%15%Total100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%Source:Gartner,J.P.Morganestimates10 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure11:NAND(64GB)demandmodelbyusemillionunits64Gb.Eq.2005200620072008200920102011201220132014201520162017E2018E2019EUSB51332961451912784105126199031,2621,6201,9112,164Flashcards1437922013184666939371,0961,4671,8182,1602,0172,0682,309SSDs-011239922446381,2032,1383,2765,8909,09212,58818,007Smartphones2726481032625691,0651,6362,3343,4924,6107,0189,30513,968Tablets-----712303795946887978471,0221,2451,510Featurephones136111523303031302626242120Others933931581972854236737748901,1351,5872,0092,6793,493Total31932495258161,3892,4684,1335,8468,16711,44716,38222,80129,81641,470YoYUSB261%158%148%202%51%32%46%47%25%21%46%40%28%18%13%Flashcards193%168%150%119%58%47%49%35%17%34%24%19%-7%3%12%SSDs773%951%234%133%166%161%88%78%53%80%54%38%43%Smartphones230%245%87%116%156%117%87%54%43%50%32%52%33%50%Tablets227%65%57%16%16%6%21%22%21%Featurephones13%194%136%77%43%50%31%0%2%-5%-12%-2%-7%-12%-7%Others486%266%178%70%24%45%48%59%15%15%27%40%27%33%30%Total268%201%168%110%56%70%78%67%41%40%40%43%39%31%39%DemandcompositionUSB16%14%13%18%18%14%11%10%9%8%8%8%7%6%5%Flashcards44%39%37%38%39%34%28%23%19%18%16%13%9%7%6%SSDs0%0%0%2%5%7%10%15%21%26%29%36%40%42%43%Smartphones7%8%10%9%13%19%23%26%28%29%31%28%31%31%34%Tablets0%0%0%0%0%5%9%9%10%8%7%5%4%4%4%Featurephones3%3%2%2%2%2%1%1%1%0%0%0%0%0%0%Others30%36%37%30%24%21%17%16%13%11%10%10%9%9%8%Total100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%Source:Gartner,J.P.MorganestimatesFigure12:WSTSSemiconductorMarketForecast$million2011201220132014201520162017E2018ECAGR15-18Discrete21,38719,13818,20120,17018,61219,41821,49822,490YoY(%)8.0%-10.5%-4.9%10.8%-7.7%4.3%10.7%4.6%6.5%Optoelectronics23,09226,17527,57129,86833,25631,99434,46737,302YoY(%)6.4%13.4%5.3%8.3%11.3%-3.8%7.7%8.2%3.9%Sensor7,9708,0098,0368,5028,81610,82112,53713,439YoY(%)15.5%0.5%0.3%5.8%3.7%22.7%15.9%7.2%15.1%TotalIC247,073238,240251,776277,302274,484276,698340,189364,034YoY(%)-1.1%-3.6%5.7%10.1%-1.0%0.8%22.9%7.0%9.9%Analog42,33839,30340,11744,36545,22847,84852,71155,909YoY(%)0.1%-7.2%2.1%10.6%1.9%5.8%10.2%6.1%7.3%Micro65,20460,23858,68862,07261,29860,58563,14765,331YoY(%)7.5%-7.6%-2.6%5.8%-1.2%-1.2%4.2%3.5%2.1%Logic78,78281,70385,92891,63390,75391,498101,413108,467YoY(%)1.8%3.7%5.2%6.6%-1.0%0.8%10.8%7.0%6.1%Memory60,74956,99567,04379,23277,20576,767122,918134,327YoY(%)-12.7%-6.2%17.6%18.2%-2.6%-0.6%60.1%9.3%20.3%Total299,521291,562305,584335,843335,168338,931408,691437,265YoY(%)0.4%-2.7%4.8%9.9%-0.2%1.1%20.6%7.0%9.3%Source:WSTS(Nov2017)11 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure13:HistoricalSemiconductorShipments$billion40033633533935029830029230630024825624925022722621320420016614414913914113213712615010210077556045495150263301111111111111122222222222222222999999999999990000000000000000088889999999999000000000011111116789012345678901234567890123456Source:WSTSFigure14:ASML:Steppermodel20102011201220132014201520162017A2018E2019EUnitsEUV311515112232Immersion,new93996975767174868460Dry,new61937666357262755035Refurbs43272415202518262620合計197222170157136169159198182147ASPonshipments(€mn)EUV40.044.057.662.668.065.899.3105.5115.0Immersion,new32.837.039.341.745.345.947.146.452.052.0Dry,new10.910.611.310.810.410.911.111.612.012.0Refurbs4.34.37.56.56.15.14.15.56.06.0AverageASP19.822.022.425.431.225.128.730.8409.49.9RevenueBreakdown(€mn)EUV1204458313683291,0922,3203,680Immersion,new3,0473,6592,7153,1253,4453,2573,4833,9934,3683,120Dry,new663989863713363784686870600420Refurbs1851151809812212873142156120Metrology&Inspection227320525Total(Hardonly)3,8954,8843,8013,9934,2434,2374,5706,3747,7947,865Service6137679301,2521,6142,0502,2242,6792,7203,046Total4,5085,6514,7315,2455,8576,2876,7949,05310,51410,911Source:Companydata,J.P.Morganestimates.Note:ASMLiscoveredbySandeepDeshpande.12 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure15:Top7CSP(CloudServerProviders)CapexForecasts$bn58605044403330252618201002013A2014A2015A2016A2017E2018EAlphabetFacebookAmazonMicrosoftAlibabaTencentBaiduY/YGrowth+40%+2%+29%+31%+34%$bnAlphabetFacebookAmazonMicrosoftAlibabaTencentBaiduTotalYoY(Google)2013A7.361.483.444.260.410.780.4518.18-2014A10.961.834.895.490.780.700.7825.4240%2015A9.932.524.595.941.230.870.8325.912%2016A10.214.496.748.341.631.260.6333.3129%2017E12.476.929.788.132.662.940.7643.6531%2018E14.7613.8712.088.883.714.280.8858.4534%Source:Companydata,Bloomberg,J.P.Morganestimates(coveredbyDougAnmuth).Figure16:SamsungElectronicsCapexBreakdownEstimatesWintrillionParentbasis20102011201220132014201520162017E2018EWon/US$1,1551,1081,1271,0951,0531,1261,1591,1361,130Semiconductor11.911.013.512.613.514.712.729.527.2Memory8.26.06.27.510.511.210.022.521.2DRAM4.02.53.03.57.06.54.010.513.0NAND4.23.53.24.03.54.76.012.08.2SystemLSI3.05.07.35.13.03.52.77.06.0Display6.26.46.05.54.04.79.814.18.8TFT-LCD4.51.51.51.51.51.40.80.80.8AM-OLED1.74.94.54.02.53.39.013.38.0Telecom0.51.00.72.52.93.01.21.41.0Others2.03.03.03.03.03.11.21.21.0Total(Wintrillion)20.621.423.223.623.425.524.946.238.0Total(US$inbillion)17.819.320.621.622.222.721.440.733.6ChangeY/Y,%178.4%3.9%8.4%1.7%-0.8%9.1%-2.6%85.9%-17.7%Source:Companydata,J.P.MorganestimatesNote:SamsungElectronicsiscoveredbyJJPark.13 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure17:SemiconductorMakers"MemoryProductionCapacityCompanyYearofInitialFabNameCountryCityCurrentPlannedMinimumProductsDRAM/NANDCapacityProductionCapacityCapacityLinewidth(wpm)(wpm)Samsung2003Fab12-1SouthKoreaHwaseong130,000130,0000.022MemoryDRAM&NANDD(50K),N(100K)2004Fab13SouthKoreaHwaseong120,000120,0000.022MemoryDRAM130K2006Fab15SouthKoreaHwaseong220,000220,0000.0MemoryDRAM130K2006NRDSouthKoreaHwaseong25,00025,0000.09Logic,MemorySystemLSI80K2010Fab10SouthKoreaGiheung-up100,000100,0000.032MemoryDRAMN/A2011Fab16SouthKoreaHwaseong200,000200,0000.014MemoryNAND230K2014ChinaFabChinaXi"an120,000120,0003DNANDMemoryNAND100K2014Line17,Phase1SouthKoreaHwaseong50,00050,0000.022MemoryDRAMD(80K),N(60K)2017Line17,Phase2SouthKoreaHwaseong040,0003DNANDMemoryDRAM2017Line18SouthKoreaPyeongtaek0120,0000.022Memory3DNAND200K2018Line18SouthKoreaPyeongtaek050,000-Memory3DNANDSKHynix2005M10SouthKoreaIcheon100,000100,0000.022MemoryDRAM100K2006C2ChinaWuxi130,000130,0000.022MemoryDRAM140K2006R3SouthKoreaIcheon3,0003,0000.0MemoryDRAMN/A2008M11SouthKoreaCheongju140,000140,0000.022MemoryNAND150K2012M12SouthKoreaCheongju120,000120,0000.022MemoryNAND80K2015M14SouthKoreaIcheon30,000100,0000.022MemoryDRAM&NAND30K2019-SouthKoreaCheongju0220,000-MemoryMicronTechnology2003Fab6U.S.Manassas70,00070,0000.022Memory2006Fab10WSingaporeWoodlands65,00065,0000.022Memory2007Fab16TaiwanTaichung80,00080,0000.032Memory2011Fab10NSingapore-100,000100,0003DNANDMemory2016Fab10XSingapore-5,000100,0003DNANDMemory-M6ItalyCatania022,0000.045Memory-Fab-MTaiwan-0--Memory-R2TaiwanTaichung080,000-Memory-R3TaiwanTaichung080,0000.09Memory-R4TaiwanHsin-chu080,000-MemorySource:Gartner(December2016)、J.P.Morganestimates14 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure18:Semiconductor,SPEShipmentandOrderTrends$million¥billionSemiconductor(Global)SPE(Global)SPE/SemiJapan-basedSPEJapan-basedFPDEquipmentCYShipmentYoYOrderYoYShipmentYoYBBRatioRatio(%)OrderYoYShipmentYoYBBRatioOrderYoYShipmentYoYBBRatio2006247,7168.9%43,54444.6%40,47423.1%1.0816.31,95638.1%1,69315.5%1.165341.1%5799.6%0.922007255,6453.2%39,551-9.2%43,3167.0%0.9116.91,864-4.7%1,93814.5%0.96321-40.0%394-32.0%0.812008248,603-2.8%26,750-32.4%29,664-31.5%0.9011.91,048-43.8%1,216-37.2%0.86708120.7%46518.2%1.522009226,313-9.0%15,629-41.6%15,900-46.4%0.987.0507-51.7%521-57.2%0.97210-70.3%348-25.2%0.602010298,31531.8%44,374183.9%39,929151.1%1.1113.41,312159.0%1,080107.3%1.2238281.9%38610.9%0.992011299,5210.4%39,398-11.2%43,5269.0%0.9114.51,175-10.4%1,26717.3%0.93300-21.3%340-12.0%0.882012291,562-2.7%34,323-12.9%37,078-14.8%0.9312.71,014-13.7%1,157-8.7%0.88210-30.2%236-30.6%0.892013305,9524.9%35,1912.5%31,580-14.8%1.1110.31,17115.5%947-18.1%1.2423411.6%30529.3%0.772014335,8439.8%38,87610.5%37,41018.5%1.0411.11,30011.0%1,30137.4%1.002412.8%285-6.5%0.842015335,007-0.2%37,338-4.0%36,527-2.4%1.0210.91,3241.9%1,3775.8%0.96515114.1%277-2.7%1.862016338,9311.2%44,50819.2%41,00712.3%1.0912.11,61922.3%1,371-0.4%1.1857711.9%44961.9%1.28Source:WSTS,SEMI,SEAJFigure19:GlobalSPEShipmentTrendbyCategory$millionCYMaskYoYWaferMfgYoYWaferProcessYoYAssembleYoYTestYoYFabYoYTotalYoY200678215.9%19837.0%28,74026.1%2,46315.5%6,41621.2%1,8751.6%40,47423.1%2007782-0.1%25327.9%32,50813.1%2,83915.2%5,062-21.1%1,8820.4%43,3167.0%2008511-34.6%2644.4%22,127-31.9%2,062-27.4%3,439-32.1%1,261-33.0%29,664-31.5%2009421-17.6%125-52.5%11,873-46.3%1,412-31.5%1,536-55.3%533-57.7%15,900-46.4%201081693.6%89-28.7%29,912151.9%3,882174.9%4,151170.3%1,079102.4%39,929151.1%20111,11336.4%10719.5%34,34514.8%3,338-14.0%3,772-9.1%852-21.1%43,5269.0%20121,26213.4%87-18.5%28,340-17.5%3,051-8.6%3,541-6.1%796-6.5%37,078-14.8%2013682-46.0%53-38.8%25,183-11.1%2,288-25.0%2,691-24.0%683-14.2%31,580-14.8%201480217.6%588.6%29,16515.8%3,07134.2%3,55532.1%76011.2%37,41018.5%201596320.1%615.4%28,796-1.3%2,504-18.4%3,328-6.4%87515.1%36,527-2.4%2016734-23.7%645.0%32,54513.0%2,99319.5%3,69010.9%98112.2%41,00712.3%Source:J.P.MorganbasedonSEMIdataFigure20:SPEShipmentTrendbyGeography$millionCYJapanYoYU.SYoYEuropeYoYKoreaYoYTaiwanYoYChinaYoYOthersYoYTotalYoY20069,20912.5%7,32428.7%3,59510.3%7,01420.3%7,30827.8%2,31574.9%3,70929.3%40,47423.1%20079,3741.8%6,651-9.2%2,998-16.6%7,4285.9%10,81448.0%2,93927.0%3,113-16.1%43,3167.0%20087,076-24.5%5,599-15.8%2,448-18.3%4,965-33.2%5,042-53.4%1,887-35.8%2,647-15.0%29,664-31.5%20092,218-68.7%3,371-39.8%952-61.1%2,671-46.2%4,302-14.7%937-50.3%1,449-45.3%15,900-46.4%20104,440100.2%5,75470.7%2,336145.4%8,633223.2%11,245161.4%3,779303.2%4,088182.1%39,929151.1%20115,80730.8%9,25660.9%4,21580.4%8,6550.3%8,525-24.2%3,654-3.3%3,414-16.5%43,5269.0%20123,367-42.0%8,159-11.9%2,523-40.2%8,9203.1%9,53911.9%2,487-31.9%2,084-39.0%37,078-14.8%20133,3800.4%5,255-35.6%1,913-24.2%5,130-42.5%10,56810.8%3,26731.3%2,068-0.7%31,580-14.8%20144,17723.6%8,18555.7%2,38324.6%6,74331.4%9,392-11.1%4,37033.8%2,1614.5%37,41018.5%20155,48631.3%5,121-37.4%1,944-18.4%7,46710.7%9,6362.6%4,90412.2%1,971-8.8%36,527-2.4%20164,633-15.5%4,475-12.6%2,17111.7%7,6101.9%12,15026.1%6,42831.1%3,54079.6%41,00712.3%Source:J.P.MorganbasedonSEMIdata15 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure21:Semiconductormanufacturersmarketshareranking(2016)$billion20152016Vendor20152016YoYShareRankRank11Intel51.754.14.6%16%22SamsungElectronics37.940.15.9%12%43Qualcomm16.115.4-4.1%4%34SKHynix16.414.7-10.2%4%165BroadcomLimited(FormerlyAvago)4.513.2191.1%4%56MicronTechnology13.813.0-6.3%4%67TexasInstruments11.611.92.3%3%78Toshiba9.29.98.3%3%129NXP6.59.342.8%3%1110MediaTek6.78.730.1%3%1311Apple6.47.09.2%2%912InfineonTechnologies6.66.95.2%2%1013STMicroelectronics6.86.91.4%2%1414RenesasElectronics5.75.70.1%2%1515Sony5.65.5-2.0%2%2216Nvidia3.34.637.5%1%NM17WesternDigital0.04.20.0%1%1918OnSemiconductor3.44.119.7%1%1819AMD3.84.06.0%1%2320HiSiliconTechnologies3.13.721.9%1%2121AnalogDevices3.43.63.8%1%3022MicrochipTechnology2.12.941.0%1%2423SkyworksSolutions3.02.9-5.0%1%2624Rohm2.32.57.7%1%2525MarvellTechnologyGroup2.82.4-14.2%1%Top25232.8257.310.5%75%Others102.186.2-15.6%25%TotalMarket334.9343.52.6%100%Source:GartnerFigure22:MajorSemiconductorManufacturers’ProcessRoadmap20102011201220132014201520162017201820192020LogicIntel32nmHKMG22nmtri-gate14nmtri-gate10nmtri-gate7nmtri-gate7nmFinFETTSMC40nm/45nm28nmSiON/HKMG20nmSoC16nmFinFET10nmFinFET7nmFinFET5nmFinFET(EUV)(EUV)GLOBALFOUNDRIES45nm32nm/28nm20nm14nmFinFET7nmFinFETSamsung45nm32nm/28nm14nmFinFET10nmFinFETEUVL7nmSamsungPlanar28nm20nm17nm1znm(15nm)V-NANDV-NANDV-NAND3D(24layers)(32layers)(48layers~)1xnm1ynmToshibaPlanar32nm28nm1znm(15nm)(19nmx26nm,19nm)(19nmx19nm,A19nm)3DBiCs(48layers~)Micron/IntelPlanar34nm25nm20nm16nm3DNAND3DNAND3D(32layers)(48layers~)SKHynixPlanar40nm32nm26nm16nm1ynm3DNAND3DNAND3D(36layers)(48layers~)Source:ASML(permissionreceived)16 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure23:SPEGlobalShareRanking(2016)$millionCompanyNameCountry20152016YoYShare1AppliedMaterialsUS6,4207,73720.5%20.7%2LamResearchUS4,8085,2138.4%13.9%3ASMLNetherlands4,7315,0917.6%13.6%4TokyoElectronJapan4,3254,86112.4%13.0%5KLA-TencorUS2,0432,40617.8%6.4%6ScreenSemiconductorSolutionsJapan9711,37541.5%3.7%7HitachiHigh-TechnologiesJapan78898024.3%2.6%8NikonJapan7247321.0%2.0%9HitachiKokusaiElectricJapan634528-16.6%1.4%10ASMInternationalHongKong583497-14.7%1.3%11MurataMachineryJapan40249322.5%1.3%12DaifukuJapan39347220.3%1.3%13EbaraJapan25544173.0%1.2%14SEMESKorea580434-25.1%1.2%15CanonJapan399392-1.7%1.0%16TokyoSeimitsuJapan25030521.8%0.8%17NuFlareTechnologyJapan358265-26.0%0.7%18UlvacJapan1901900.1%0.5%19NanometricsUS15318420.4%0.5%20DiscoJapan1631789.8%0.5%21RudolphTechnologiesUS187177-5.4%0.5%22AixtronGermany1671691.2%0.5%23OrbotechUS1581654.4%0.4%24UltratechUS11715734.2%0.4%25AxcelisTechnologiesUS187155-17.1%0.4%26WonikIPSKorea1281376.8%0.4%27EVGroupAustria136131-4.0%0.3%28TESKorea7212876.6%0.3%29MattsonTechnologyUS125123-2.0%0.3%30NovaMeasuringInstrumentsUS11112210.1%0.3%Others-3,0563,1713.8%8.5%TotalMarket-33,61437,40711.3%100.0%Source:GartnerFigure24:SPEGlobalShareRanking(2016)Figure25:ShareRankingbyCountry(2016)GermanyAustria0.5%0.3%NuFlareTechnologyUltratechUSTokyoSeimitsuJapanJapan0.4%0.7%DiscoJapanHongKong0.8%0.5%Others1.3%CanonJapan8.5%1.0%Others8.5%SEMESKorea1.2%EbaraJapanAppliedMaterialsDaifukuJapan1.3%1.2%USJapanMurataMachineryJapan20.7%Netherlands30.0%ASMInternationalHong1.3%13.6%Kong1.3%KoreaHitachiKokusaiElectricJapanNikonJapanLamResearchUS1.9%1.4%2.0%13.9%HitachiHigh-KLA-TencorTechnologiesJapanUSTokyoASMLUS2.6%ScreenSemiconductor6.4%ElectronNetherlandsSolutionsJapan43.9%Japan13.6%3.7%13.0%Source:GartnerSource:Gartner17 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure26:3DNANDSource:TokyoElectronCompiledbyJ.P.Morgan(permissionreceived)Figure27:DryEtchSales$millionDryEtch201220132014201520161LamResearch1,746.11,914.52,544.43,252.23,460.3Share45.5%49.4%45.2%52.0%47.6%2TokyoElectron1,146.3722.31,459.41,218.61,549.1Share29.9%18.6%25.9%19.5%21.3%3AppliedMaterials395.8638.1965.81,130.01,463.8Share10.3%16.5%17.2%18.1%20.2%4HitachiHigh-Technologies373.4399.7383.6321.4446.9Share9.7%10.3%6.8%5.1%6.2%5SEMES30.066.048.2115.7100.6Share0.8%1.7%0.9%1.9%1.4%6AMEC-27.253.059.064.0Share-0.7%0.9%0.9%0.9%7MattsonTechnology25.629.773.954.462.5Share0.7%0.8%1.3%0.9%0.9%8SPTSTechnologies-32.946.651.454.2Share-0.8%0.8%0.8%0.7%9Ulvac24.329.134.433.930.8Share0.6%0.8%0.6%0.5%0.4%-JusungEngineering0.54.01.0--Share0.0%0.1%0.0%---Others97.814.017.915.130.8Share2.5%0.4%0.3%0.2%0.4%Total3,839.83,877.55,628.26,251.67,263.0Share100.0%100.0%100.0%100.0%100.0%Source:Gartner18 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure28:SemiconductorProductionProcess(Front-End)AutoWetStationCY2016ShareSCREEN54%RTPandTokyoElectron23%Oxidation/DiffusionKCTech16%SCREENWetStationFC-3100CVD(includingTSV)CY2016ShareCY2016ShareAMAT50%TokyoElectron21%WashAMAT35%TELHitachiKokusai12%LamResearch23%CVDEquipmentTokyoElectron17%Triase+™ResistDepositionTi/TiNremovalSprayProcessorsDryEtchAfterCY2016ShareCY2016ShareEtchingdepositionSCREEN53%LamResearch47%TELwashTokyoElectron18%SCREENSinglewafercleanerTokyoElectron21%PlasmaLamResearch17%SU-3200etchingAMAT20%equipmentTactras™Vigus™ResistEtchingcoatingPhotoresistProcessing(Track)PhotoresistProcessing(Track)LithographyCY2016ShareCY2016ShareTokyoElectron90%TokyoElectron90%SCREEN7%TELSCREEN7%CoaterdeveloperTELSteppers(includingEUV)CLEANTRACK™CoaterdeveloperLITHIUSPro™APCLEANTRACK™LITHIUSPro™APCY2016ShareASML82%Nikon12%NikonCanon6%i-lnestepperNSR-SF155Source:Gartner,Companydata.CompiledbyJ.P.Morgan.Imagesusedwithpermission19 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure29:SPEProcess-FrontEnd1FrontEndProcessFunctionEquipmentGartnerDefinitionMktSizeMainPlayersFEOLFrontEndOftheLineWashWaferSurfaceWashingCleaningEquipmentAutoWetStations(includingTSV$0.5bn【Screen55%】,TokyoElectron23%andBump)(Separator)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,ResistCoatingSpincoatingofresistCoaterDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%MaskWriterMask-MakingLithography$0.3bn【NuFlare83%】,AppliedMaterials11%,JOEL5%LithographyTranscribedesignpatternbyStepperSteppers(includingEUV)$6.0bn【ASML82%】、Nikon12%、Canon6%StepperDevelopmentCoaterDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%EtchingRemoveNitrideSilicon&OxidizedSiliconEtchingEquipmentDielectricEtch(includingBump)$2.6bn【TokyoElectron52%】,LamResearch39%SiliconConductorEtch(includingTSV)$4.6bn【LamResearch53%】,AMAT32%、HitachiHigh-Tech10%,TEL4%ResistRemovalRemoveResistAshingEquipmentRTPandOxidation/Diffusion$1.0bn【AMAT50%】、TokyoElectron21%,HitachiKokusai12%WashWaferSurfaceWashingCleaningEquipmentAutoWetStations(includingTSV$0.5bn【Screen55%】,TokyoElectron23%andBump)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,DepositionDepositOxidizedDielectricLayerCVDEquipmentCVD(includingTSV)$5.1bn【AMAT35%】,LamResearch23%,TokyoElectron17%,ASMI8%,HitachiKokusai8%Sputtering(includingTSV)$1.6bn【AMAT74%】,Ulvac9%,Evatec8%Epitaxy$0.6bn【AMAT90%】,ASMI6%GrindFlatteringWaferCMPEquipmentCMPandPost-CMPClean$1.3bn【AMAT66%】,Ebara30%(includingTSV)Source:Gartner,J.P.MorganbasedonvariousdataNote:Marketsizeisasof2016data20 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure30:SPEProcess-FrontEnd2FrontEndProcessFunctionEquipmentGartnerDefinitionMktSizeMainPlayersFEOLFrontEndOftheLineDepositionFormingOxidizedDielectricThermalEquipmentRTPandOxidation/Diffusion$1.0bn【AMAT50%】、TokyoElectron21%,HitachiKokusai12%Layer(GateDevelopment)DepositionDepositPolysiliconLayerCVDEquipmentCVD(includingTSV)$5.1bn【AMAT35%】,LamResearch23%,TokyoElectron17%,ASMI8%,HitachiKokusai8%Sputtering(includingTSV)$1.6bn【AMAT74%】,Ulvac9%,Evatec8%Epitaxy$0.6bn【AMAT90%】,ASMI6%WashWaferSurfaceWashingCleaningEquipmentAutoWetStations(including$0.5bn【Screen55%】,TokyoElectron23%TSVandBump)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,ResistCoatingSpincoatingofresistCoaterDeveloperPhotoresistProcessing(Track)$1.6bn【TokyoElectron88%】,Screen7%LithographyTranscribedesignpatternbyStepperSteppers(includingEUV)$6.0bn【ASML82%】、Nikon12%、Canon6%StepperDevelopmentDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%EtchingRemoveNitrideSilicon&SiliconEtchingEquipmentDielectricEtch(includingBump)$2.6bn【TokyoElectron52%】,LamResearch39%OxidizedSiliconConductorEtch(includingTSV)$4.6bn【LamResearch53%】,AMAT32%、HitachiHigh-Tech10%,TEL4%ResistRemovalRemoveResistAshingEquipmentRTPandOxidation/Diffusion$1.0bn【AMAT50%】、TokyoElectron21%,HitachiKokusai12%IonImplantImplantionizedphosphorusinIonImplantEquipmentIonImplanter$0.9bn【AMAT73%】,AxcelisTechnologies16%,SMIT9%WaferDiffuseimpuritiesRapidThermalProcesstoRTPEquipmentRTPandOxidation/Diffusion$1.0bn【AMAT50%】、TokyoElectron21%,HitachiKokusai12%activateionconductingDepositionFormDielectricLayerCVDEquipmentCVD(includingTSV)$5.1bn【AMAT35%】,LamResearch23%,TokyoElectron17%,ASMI8%,HitachiKokusai8%Sputtering(includingTSV)$1.6bn【AMAT74%】,Ulvac9%,Evatec8%Epitaxy$0.6bn【AMAT90%】,ASMI6%GrindFlatteringWaferCMPEquipmentCMPandPost-CMPClearn$1.3bn【AMAT66%】,Ebara30%(includingTSV)Source:Gartner,J.P.MorganbasedonvariousdataNote:Marketsizeisasof2016data21 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure31:SPEProcess-FrontEnd3FrontEndProcessFunctionEquipmentGartnerDefinitionMktSizeMainPlayersBEOLBackEndOftheLineWashWaferSurfaceWashingCleaningEquipmentAutoWetStations(including$0.5bn【Screen55%】,TokyoElectron23%TSVandBump)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,(WiringDevelopment)ResistCoatingSpincoatingofresistCoaterDeveloperPhotoresistProcessing(Track)$1.6bn【TokyoElectron88%】,Screen7%LithographyTranscribedesignpatternbyStepperSteppers(includingEUV)$6.0bn【ASML82%】、Nikon12%、Canon6%StepperDevelopmentCoaterDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%EtchingFormcontactholeDie-electricEtchingDielectricEtch(includingBump)$2.6bn【TokyoElectron52%】,LamResearch39%EquipmentSputteringDepositNitridetitaniumlayer&PVDEquipmentSputtering(includingTSV)$1.6bn【AMAT74%】,Ulvac9%,Evatec8%MetalLayer.FlatteringSurfaceGrindFlatteringWaferCMPEquipmentCMPandPost-CMPClearn$1.3bn【AMAT66%】,Ebara30%(includingTSV)WashWaferSurfaceWashingCleaningEquipmentAutoWetStations(including$0.5bn【Screen55%】,TokyoElectron23%TSVandBump)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,ResistCoatingCoatingofresistCoaterDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%LithographyTranscribedesignpatternbyStepperSteppers(includingEUV)$6.0bn【ASML82%】、Nikon12%、Canon6%StepperDevelopmentCoaterDeveloperPhotoresistProcessing(Track)$1.4bn【TokyoElectron90%】,Screen7%EtchingFormMetalWireMetalEtchingEquipmentConductorEtch(includingTSV)$4.6bn【LamResearch53%】,AMAT32%、HitachiHigh-Tech10%,TEL4%ResistRemovalRemoveResistAshingEquipmentRTPandOxidation/Diffusion$1.0bn【AMAT50%】、TokyoElectron21%,HitachiKokusai12%WashWaferSurfaceWashingCleaningEquipmentAutoWetStations(including$0.5bn【Screen55%】,TokyoElectron23%TSVandBump)SprayProcessors$1.6bn【Screen53%】,TokyoElectron19%,LamResearch17%,SEMES11%,DepositionFormDielectricLayerCVDEquipmentDielectricEtch(includingBump)$2.6bn【TokyoElectron52%】,LamResearch39%GrindFlatteringWaferCMPEquipmentCMPandPost-CMPClean$1.3bn【AMAT66%】,Ebara30%(includingTSV)Source:Gartner,J.P.MorganbasedonvariousdataNote:Marketsizeisasof2016data22 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comFigure32:SPEProcess-BackEndBackEndProcessFunctionEquipmentGartnerDefinitionMktSizeMainPlayersWaferInspectionDCParametricTestTestWaferProberContactProbers$0.4bn【TokyoSeimitsu55%】,TokyoElectron36%ParametricTester,ProbeCardPre-WaferTestTestElectricPropertyofMemoryTesterSoCTestEquipment$1.1bn【Teradyne53%】,Advantest44%ChipMemoryICTestEquipment$0.3bn【Advantest69%】,Teradyne26%AdvancedRFTestEquipment$0.3bn【Teradyne50%】,Advantest32%Prober,ProbeCardContactProbers$0.4bn【TokyoSeimitsu55%】、TokyoElectron36%LaserRepairRepairdefaultchipLaserRepairEquipmentFinalWaferTestTestElectricPropertyofMemoryTesterSoCTestEquipment$1.1bn【Teradyne53%】,Advantest44%ChipMemoryICTestEquipment$0.3bn【Advantest69%】,Teradyne26%AdvancedRFTestEquipment$0.3bn【Teradyne50%】,Advantest32%Prober,ProbeCardContactProbers$0.5bn【TokyoSeimitsu55%】,TokyoElectron36%AssemblyBackGrindingGrindingbackofWaferBackGrinderWaferDicingSawsWafer-DicingSaws$0.3bn【Disco84%】,TokyoSeimitsu16%DicingSeparateChipintopiecesDicerFlip-ChipBonders$0.2bn【PanasonicFactorySolutions46%】,Besi34%DieBondingAttachLeadframeDieBonderDieBonders$0.4bn【Besi37%】,ASMPacific33%,HitachiHigh-Tech14%WireBondingConnectLeadWireBonderInterconnectBonding$1.1bn【Kulicke&Soffa40%】,ASMPacific29%PackagingSealingMolding/Encapsulation$0.2bn【Towa42%】,Besi16%,ASMPacific29%,Dai-ichiSeiko14%,ApicYamada14%CoatingCoatingLeadCuttingLeadCutterMarkingMarkerPackageTestPre-BurnintestRemovingInitialDefaultMemoryTester,Handler,SoCTestEquipment$1.1bn【Teradyne53%】,Advantest44%DUTInterfaceBurn-inTestBurn-inTestBurn-inequipment,Burn-inBoard,Burn-inSocketThermalTestHigh-LowTemperatureMemoryTester,Handler,SoCTestEquipment$1.1bn【Teradyne53%】,Advantest44%ElectricPropertyTestDUTInterfaceMemoryICTestEquipment$0.3bn【Advantest69%】,Teradyne26%AdvancedRFTestEquipment$0.3bn【Teradyne50%】,Advantest32%InspectionandShipmentSource:Gartner,J.P.MorganbasedonvariousdataNote:Marketsizeisasof2013data.Note:Dataprovidedonlyupto20123 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comCompaniesDiscussedinThisReport(allpricesinthisreportasofmarketcloseon18January2018,unlessotherwiseindicated)ASML(ASML.AS/€161.25[17January2018]/Overweight),Advantest(6857)(6857.T/¥2338/Overweight),HitachiHigh-Technologies(8036)(8036.T/¥5120/Neutral),InfineonTechnologies(IFXGn.F/€24.08[17January2018]/Overweight),KLA-Tencor(KLAC/$113.49[17January2018]/Overweight),MediaTekInc.(2454.TW/NT$319.50/Overweight),RenesasElectronics(6723)(6723.T/¥1313/Overweight),Rohm(6963)(6963.T/¥12710/Overweight),STMicroelectronics(STM.PA/€19.64[17January2018]/Overweight),SamsungElectronics(005930.KS/W2495000/Overweight),TSMC(2330.TW/NT$248.5/Overweight),ULVAC(6728)(6728.T/¥7730/Overweight),ams(AMS.S/SF88.14[17January2018]/Overweight)AnalystCertification:Theresearchanalyst(s)denotedbyan“AC”onthecoverofthisreportcertifies(or,wheremultipleresearchanalystsareprimarilyresponsibleforthisreport,theresearchanalystdenotedbyan“AC”onthecoverorwithinthedocumentindividuallycertifies,withrespecttoeachsecurityorissuerthattheresearchanalystcoversinthisresearch)that:(1)alloftheviewsexpressedinthisreportaccuratelyreflecthisorherpersonalviewsaboutanyandallofthesubjectsecuritiesorissuers;and(2)nopartofanyoftheresearchanalyst"scompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewsexpressedbytheresearchanalyst(s)inthisreport.ForallKorea-basedresearchanalystslistedonthefrontcover,theyalsocertify,asperKOFIArequirements,thattheiranalysiswasmadeingoodfaithandthattheviewsreflecttheirownopinion,withoutundueinfluenceorintervention.ImportantDisclosuresMarketMaker:JPMSmakesamarketinthestockofKLA-Tencor.MarketMaker/LiquidityProvider:J.P.MorganSecuritiesplcand/oranaffiliateisamarketmakerand/orliquidityproviderinsecuritiesissuedbyAdvantest(6857),ams,ASML,InfineonTechnologies,KLA-Tencor,MediaTekInc.,RenesasElectronics(6723),Rohm(6963),SamsungElectronics,STMicroelectronics,TSMC,ULVAC(6728),HitachiHigh-Technologies(8036).LeadorCo-manager:J.P.Morganactedasleadorco-managerinapublicofferingofequityand/ordebtsecuritiesforKLA-Tencor,RenesasElectronics(6723),STMicroelectronicswithinthepast12months.Client:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients:Advantest(6857),ASML,InfineonTechnologies,KLA-Tencor,MediaTekInc.,RenesasElectronics(6723),Rohm(6963),SamsungElectronics,STMicroelectronics,TSMC,HitachiHigh-Technologies(8036).Client/InvestmentBanking:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asinvestmentbankingclients:KLA-Tencor,RenesasElectronics(6723),SamsungElectronics,STMicroelectronics,HitachiHigh-Technologies(8036).Client/Non-InvestmentBanking,Securities-Related:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients,andtheservicesprovidedwerenon-investment-banking,securities-related:Advantest(6857),ASML,InfineonTechnologies,KLA-Tencor,MediaTekInc.,Rohm(6963),SamsungElectronics,STMicroelectronics,TSMC,HitachiHigh-Technologies(8036).Client/Non-Securities-Related:J.P.Morgancurrentlyhas,orhadwithinthepast12months,thefollowingentity(ies)asclients,andtheservicesprovidedwerenon-securities-related:ASML,KLA-Tencor,SamsungElectronics,STMicroelectronics,HitachiHigh-Technologies(8036).InvestmentBanking(past12months):J.P.Morganreceivedinthepast12monthscompensationforinvestmentbankingservicesfromKLA-Tencor,RenesasElectronics(6723),SamsungElectronics,STMicroelectronics,HitachiHigh-Technologies(8036).InvestmentBanking(next3months):J.P.Morganexpectstoreceive,orintendstoseek,compensationforinvestmentbankingservicesinthenextthreemonthsfromInfineonTechnologies,KLA-Tencor,RenesasElectronics(6723),SamsungElectronics,STMicroelectronics,TSMC,HitachiHigh-Technologies(8036).Non-InvestmentBankingCompensation:J.P.Morganhasreceivedcompensationinthepast12monthsforproductsorservicesotherthaninvestmentbankingfromAdvantest(6857),ASML,InfineonTechnologies,KLA-Tencor,MediaTekInc.,Rohm(6963),SamsungElectronics,STMicroelectronics,TSMC,HitachiHigh-Technologies(8036).OtherSignificantFinancialInterests:J.P.Morganownsapositionof1millionUSDormoreinthedebtsecuritiesofAdvantest(6857),ams,ASML,InfineonTechnologies,KLA-Tencor,MediaTekInc.,RenesasElectronics(6723),Rohm(6963),SamsungElectronics,STMicroelectronics,TSMC,ULVAC(6728),HitachiHigh-Technologies(8036).JPMorganSecuritiesJapanCo.,Ltd.actedasajointleadmanagerinthesecondaryofferingofRenesasElectronicsCorporation’sshares.24 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comGartner:AllstatementsinthisreportattributabletoGartnerrepresentJ.P.Morgan"sinterpretationofdataopinionorviewpointspublishedaspartofasyndicatedsubscriptionservicebyGartner,Inc.,andhavenotbeenreviewedbyGartner.EachGartnerpublicationspeaksasofitsoriginalpublicationdate(andnotasofthedateofthisreport).TheopinionsexpressedinGartnerpublicationsarenotrepresentationsoffact,andaresubjecttochangewithoutnotice.Company-SpecificDisclosures:Importantdisclosures,includingpricechartsandcreditopinionhistorytables,areavailableforcompendiumreportsandallJ.P.Morgan–coveredcompaniesbyvisitinghttps://www.jpmm.com/research/disclosures,calling1-800-477-0406,ore-mailingresearch.disclosure.inquiries@jpmorgan.comwithyourrequest.J.P.Morgan’sStrategy,Technical,andQuantitativeResearchteamsmayscreencompaniesnotcoveredbyJ.P.Morgan.Forimportantdisclosuresforthesecompanies,pleasecall1-800-477-0406ore-mailresearch.disclosure.inquiries@jpmorgan.com.ExplanationofEquityResearchRatings,DesignationsandAnalyst(s)CoverageUniverse:J.P.Morganusesthefollowingratingsystem:Overweight[Overthenextsixtotwelvemonths,weexpectthisstockwilloutperformtheaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]Neutral[Overthenextsixtotwelvemonths,weexpectthisstockwillperforminlinewiththeaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]Underweight[Overthenextsixtotwelvemonths,weexpectthisstockwillunderperformtheaveragetotalreturnofthestocksintheanalyst’s(ortheanalyst’steam’s)coverageuniverse.]NotRated(NR):J.P.Morganhasremovedtheratingand,ifapplicable,thepricetarget,forthisstockbecauseofeitheralackofasufficientfundamentalbasisorforlegal,regulatoryorpolicyreasons.Thepreviousratingand,ifapplicable,thepricetarget,nolongershouldbereliedupon.AnNRdesignationisnotarecommendationorarating.InourAsia(ex-Australiaandex-India)andU.K.small-andmid-capequityresearch,eachstock’sexpectedtotalreturniscomparedtotheexpectedtotalreturnofabenchmarkcountrymarketindex,nottothoseanalysts’coverageuniverse.IfitdoesnotappearintheImportantDisclosuressectionofthisreport,thecertifyinganalyst’scoverageuniversecanbefoundonJ.P.Morgan’sresearchwebsite,www.jpmorganmarkets.com.CoverageUniverse:Moriyama,Hisashi:Advantest(6857)(6857.T),Canon(7751)(7751.T),Disco(6146)(6146.T),FUJIFILMHoldings(4901)(4901.T),Hitachi(6501)(6501.T),HitachiHigh-Technologies(8036)(8036.T),KonicaMinolta(4902)(4902.T),MitsubishiElectric(6503)(6503.T),Nikon(7731)(7731.T),Ricoh(7752)(7752.T),SCREENHoldings(7735)(7735.T),SeikoEpson(6724)(6724.T),TokyoElectron(8035)(8035.T),TokyoSeimitsu(7729)(7729.T),Toshiba(6502)(6502.T),ULVAC(6728)(6728.T)J.P.MorganEquityResearchRatingsDistribution,asofJanuary02,2018OverweightNeutralUnderweight(buy)(hold)(sell)J.P.MorganGlobalEquityResearchCoverage45%43%12%IBclients*53%50%35%JPMSEquityResearchCoverage44%46%10%IBclients*70%66%54%*Percentageofinvestmentbankingclientsineachratingcategory.ForpurposesonlyofFINRA/NYSEratingsdistributionrules,ourOverweightratingfallsintoabuyratingcategory;ourNeutralratingfallsintoaholdratingcategory;andourUnderweightratingfallsintoasellratingcategory.PleasenotethatstockswithanNRdesignationarenotincludedinthetableabove.EquityValuationandRisks:Forvaluationmethodologyandrisksassociatedwithcoveredcompaniesorpricetargetsforcoveredcompanies,pleaseseethemostrecentcompany-specificresearchreportathttp://www.jpmorganmarkets.com,contacttheprimaryanalystoryourJ.P.Morganrepresentative,oremailresearch.disclosure.inquiries@jpmorgan.com.Formaterialinformationabouttheproprietarymodelsused,pleaseseetheSummaryofFinancialsincompany-specificresearchreportsandtheCompanyTearsheets,whichareavailabletodownloadonthecompanypagesofourclientwebsite,http://www.jpmorganmarkets.com.Thisreportalsosetsoutwithinitthematerialunderlyingassumptionsused.EquityAnalysts"Compensation:Theequityresearchanalystsresponsibleforthepreparationofthisreportreceivecompensationbaseduponvariousfactors,includingthequalityandaccuracyofresearch,clientfeedback,competitivefactors,andoverallfirmrevenues.Registrationofnon-USAnalysts:Unlessotherwisenoted,thenon-USanalystslistedonthefrontofthisreportareemployeesofnon-USaffiliatesofJPMS,arenotregistered/qualifiedasresearchanalystsunderNASD/NYSErules,maynotbeassociatedpersonsofJPMS,andmaynotbesubjecttoFINRARule2241restrictionsoncommunicationswithcoveredcompanies,publicappearances,andtradingsecuritiesheldbyaresearchanalystaccount.OtherDisclosuresJ.P.Morgan("JPM")istheglobalbrandnameforJ.P.MorganSecuritiesLLC("JPMS")anditsaffiliatesworldwide.J.P.MorganCazenoveisamarketingnamefortheU.K.investmentbankingbusinessesandEMEAcashequitiesandequityresearchbusinessesofJPMorganChase&Co.anditssubsidiaries.25 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comAllresearchreportsmadeavailabletoclientsaresimultaneouslyavailableonourclientwebsite,J.P.MorganMarkets.Notallresearchcontentisredistributed,e-mailedormadeavailabletothird-partyaggregators.Forallresearchreportsavailableonaparticularstock,pleasecontactyoursalesrepresentative.Optionsrelatedresearch:Iftheinformationcontainedhereinregardsoptionsrelatedresearch,suchinformationisavailableonlytopersonswhohavereceivedtheproperoptionriskdisclosuredocuments.ForacopyoftheOptionClearingCorporation"sCharacteristicsandRisksofStandardizedOptions,pleasecontactyourJ.P.MorganRepresentativeorvisittheOCC"swebsiteathttps://www.theocc.com/components/docs/riskstoc.pdfLegalEntitiesDisclosuresU.S.:JPMSisamemberofNYSE,FINRA,SIPCandtheNFA.JPMorganChaseBank,N.A.isamemberofFDIC.U.K.:JPMorganChaseN.A.,LondonBranch,isauthorisedbythePrudentialRegulationAuthorityandissubjecttoregulationbytheFinancialConductAuthorityandtolimitedregulationbythePrudentialRegulationAuthority.DetailsabouttheextentofourregulationbythePrudentialRegulationAuthorityareavailablefromJ.P.Morganonrequest.J.P.MorganSecuritiesplc(JPMSplc)isamemberoftheLondonStockExchangeandisauthorisedbythePrudentialRegulationAuthorityandregulatedbytheFinancialConductAuthorityandthePrudentialRegulationAuthority.RegisteredinEngland&WalesNo.2711006.RegisteredOffice25BankStreet,London,E145JP.SouthAfrica:J.P.MorganEquitiesSouthAfricaProprietaryLimitedisamemberoftheJohannesburgSecuritiesExchangeandisregulatedbytheFinancialServicesBoard.HongKong:J.P.MorganSecurities(AsiaPacific)Limited(CEnumberAAJ321)isregulatedbytheHongKongMonetaryAuthorityandtheSecuritiesandFuturesCommissioninHongKongand/orJ.P.MorganBroking(HongKong)Limited(CEnumberAAB027)isregulatedbytheSecuritiesandFuturesCommissioninHongKong.Korea:ThismaterialisissuedanddistributedinKoreabyorthroughJ.P.MorganSecurities(FarEast)Limited,SeoulBranch,whichisamemberoftheKoreaExchange(KRX)andisregulatedbytheFinancialServicesCommission(FSC)andtheFinancialSupervisoryService(FSS).Australia:J.P.MorganAustraliaLimited(JPMAL)(ABN52002888011/AFSLicenceNo:238188)isregulatedbyASICandJ.P.MorganSecuritiesAustraliaLimited(JPMSAL)(ABN61003245234/AFSLicenceNo:238066)isregulatedbyASICandisaMarket,ClearingandSettlementParticipantofASXLimitedandCHI-X.Taiwan:J.P.MorganSecurities(Taiwan)LimitedisaparticipantoftheTaiwanStockExchange(company-type)andregulatedbytheTaiwanSecuritiesandFuturesBureau.India:J.P.MorganIndiaPrivateLimited(CorporateIdentityNumber-U67120MH1992FTC068724),havingitsregisteredofficeatJ.P.MorganTower,Off.C.S.T.Road,Kalina,Santacruz-East,Mumbai–400098,isregisteredwithSecuritiesandExchangeBoardofIndia(SEBI)asa‘ResearchAnalyst’havingregistrationnumberINH000001873.J.P.MorganIndiaPrivateLimitedisalsoregisteredwithSEBIasamemberoftheNationalStockExchangeofIndiaLimited(SEBIRegistrationNumber-INB230675231/INF230675231/INE230675231),theBombayStockExchangeLimited(SEBIRegistrationNumber-INB010675237/INF010675237)andasaMerchantBanker(SEBIRegistrationNumber-MB/INM000002970).Telephone:91-22-61573000,Facsimile:91-22-61573990andWebsite:www.jpmipl.com.Fornonlocalresearchreports,thismaterialisnotdistributedinIndiabyJ.P.MorganIndiaPrivateLimited.Thailand:ThismaterialisissuedanddistributedinThailandbyJPMorganSecurities(Thailand)Ltd.,whichisamemberoftheStockExchangeofThailandandisregulatedbytheMinistryofFinanceandtheSecuritiesandExchangeCommissionanditsregisteredaddressis3rdFloor,20NorthSathornRoad,Silom,Bangrak,Bangkok10500.Indonesia:PTJ.P.MorganSecuritiesIndonesiaisamemberoftheIndonesiaStockExchangeandisregulatedbytheOJKa.k.a.BAPEPAMLK.Philippines:J.P.MorganSecuritiesPhilippinesInc.isaTradingParticipantofthePhilippineStockExchangeandamemberoftheSecuritiesClearingCorporationofthePhilippinesandtheSecuritiesInvestorProtectionFund.ItisregulatedbytheSecuritiesandExchangeCommission.Brazil:BancoJ.P.MorganS.A.isregulatedbytheComissaodeValoresMobiliarios(CVM)andbytheCentralBankofBrazil.Mexico:J.P.MorganCasadeBolsa,S.A.deC.V.,J.P.MorganGrupoFinancieroisamemberoftheMexicanStockExchangeandauthorizedtoactasabrokerdealerbytheNationalBankingandSecuritiesExchangeCommission.Singapore:ThismaterialisissuedanddistributedinSingaporebyorthroughJ.P.MorganSecuritiesSingaporePrivateLimited(JPMSS)[MCI(P)202/03/2017andCo.Reg.No.:199405335R],whichisamemberoftheSingaporeExchangeSecuritiesTradingLimitedand/orJPMorganChaseBank,N.A.,Singaporebranch(JPMCBSingapore)[MCI(P)059/09/2017],bothofwhichareregulatedbytheMonetaryAuthorityofSingapore.ThismaterialisissuedanddistributedinSingaporeonlytoaccreditedinvestors,expertinvestorsandinstitutionalinvestors,asdefinedinSection4AoftheSecuritiesandFuturesAct,Cap.289(SFA).Thismaterialisnotintendedtobeissuedordistributedtoanyretailinvestorsoranyotherinvestorsthatdonotfallintotheclassesof“accreditedinvestors,”“expertinvestors”or“institutionalinvestors,”asdefinedunderSection4AoftheSFA.RecipientsofthisdocumentaretocontactJPMSSorJPMCBSingaporeinrespectofanymattersarisingfrom,orinconnectionwith,thedocument.Japan:JPMorganSecuritiesJapanCo.,Ltd.andJPMorganChaseBank,N.A.,TokyoBranchareregulatedbytheFinancialServicesAgencyinJapan.Malaysia:ThismaterialisissuedanddistributedinMalaysiabyJPMorganSecurities(Malaysia)SdnBhd(18146-X)whichisaParticipatingOrganizationofBursaMalaysiaBerhadandaholderofCapitalMarketsServicesLicenseissuedbytheSecuritiesCommissioninMalaysia.Pakistan:J.P.MorganPakistanBroking(Pvt.)LtdisamemberoftheKarachiStockExchangeandregulatedbytheSecuritiesandExchangeCommissionofPakistan.SaudiArabia:J.P.MorganSaudiArabiaLtd.isauthorizedbytheCapitalMarketAuthorityoftheKingdomofSaudiArabia(CMA)tocarryoutdealingasanagent,arranging,advisingandcustody,withrespecttosecuritiesbusinessunderlicencenumber35-07079anditsregisteredaddressisat8thFloor,Al-FaisaliyahTower,KingFahadRoad,P.O.Box51907,Riyadh11553,KingdomofSaudiArabia.Dubai:JPMorganChaseBank,N.A.,DubaiBranchisregulatedbytheDubaiFinancialServicesAuthority(DFSA)anditsregisteredaddressisDubaiInternationalFinancialCentre-Building3,Level7,POBox506551,Dubai,UAE.CountryandRegionSpecificDisclosuresU.K.andEuropeanEconomicArea(EEA):Unlessspecifiedtothecontrary,issuedandapprovedfordistributionintheU.K.andtheEEAbyJPMSplc.InvestmentresearchissuedbyJPMSplchasbeenpreparedinaccordancewithJPMSplc"spoliciesformanagingconflictsofinterestarisingasaresultofpublicationanddistributionofinvestmentresearch.ManyEuropeanregulatorsrequireafirmtoestablish,implementandmaintainsuchapolicy.FurtherinformationaboutJ.P.Morgan"sconflictofinterestpolicyandadescriptionoftheeffectiveinternalorganisationsandadministrativearrangementssetupforthepreventionandavoidanceofconflictsofinterestissetoutatthefollowinglinkhttps://www.jpmorgan.com/jpmpdf/1320742677360.pdf.ThisreporthasbeenissuedintheU.K.onlytopersonsofakinddescribedinArticle19(5),38,47and49oftheFinancialServicesandMarketsAct2000(FinancialPromotion)Order2005(allsuchpersonsbeingreferredtoas"relevantpersons").Thisdocumentmustnotbeactedonorreliedonbypersonswhoarenotrelevantpersons.Anyinvestmentorinvestmentactivitytowhichthisdocumentrelatesisonlyavailabletorelevantpersonsandwillbeengagedinonlywithrelevantpersons.InotherEEAcountries,thereporthasbeenissuedtopersonsregardedasprofessionalinvestors(orequivalent)intheirhomejurisdiction.Australia:ThismaterialisissuedanddistributedbyJPMSALinAustraliato"wholesaleclients"only.Thismaterialdoesnottakeintoaccountthespecificinvestmentobjectives,financialsituationorparticularneedsoftherecipient.TherecipientofthismaterialmustnotdistributeittoanythirdpartyoroutsideAustraliawithoutthepriorwrittenconsentofJPMSAL.Forthepurposesofthisparagraphtheterm"wholesaleclient"hasthemeaninggiveninsection761GoftheCorporationsAct2001.Germany:ThismaterialisdistributedinGermanybyJ.P.MorganSecuritiesplc,FrankfurtBranchwhichisregulatedbytheBundesanstaltfürFinanzdienstleistungsaufsicht.HongKong:The1%ownershipdisclosureasofthepreviousmonthend26 JPMorganSecuritiesJapanCo.,Ltd.AsiaPacificEquityResearchHisashiMoriyama18January2018(81-3)6736-8601hisashi.moriyama@jpmorgan.comsatisfiestherequirementsunderParagraph16.5(a)oftheHongKongCodeofConductforPersonsLicensedbyorRegisteredwiththeSecuritiesandFuturesCommission.(Forresearchpublishedwithinthefirsttendaysofthemonth,thedisclosuremaybebasedonthemonthenddatafromtwomonthsprior.)J.P.MorganBroking(HongKong)Limitedistheliquidityprovider/marketmakerforderivativewarrants,callablebullbearcontractsandstockoptionslistedontheStockExchangeofHongKongLimited.AnupdatedlistcanbefoundonHKExwebsite:http://www.hkex.com.hk.Korea:ThisreportmayhavebeeneditedorcontributedtofromtimetotimebyaffiliatesofJ.P.MorganSecurities(FarEast)Limited,SeoulBranch.Singapore:Asatthedateofthisreport,JPMSSisadesignatedmarketmakerforcertainstructuredwarrantslistedontheSingaporeExchangewheretheunderlyingsecuritiesmaybethesecuritiesdiscussedinthisreport.Arisingfromitsroleasdesignatedmarketmakerforsuchstructuredwarrants,JPMSSmayconducthedgingactivitiesinrespectofsuchunderlyingsecuritiesandholdorhaveaninterestinsuchunderlyingsecuritiesasaresult.TheupdatedlistofstructuredwarrantsforwhichJPMSSactsasdesignatedmarketmakermaybefoundonthewebsiteoftheSingaporeExchangeLimited:http://www.sgx.com.Inaddition,JPMSSand/oritsaffiliatesmayalsohaveaninterestorholdinginanyofthesecuritiesdiscussedinthisreport–pleaseseetheImportantDisclosuressectionabove.Forsecuritieswheretheholdingis1%orgreater,theholdingmaybefoundintheImportantDisclosuressectionabove.Forallothersecuritiesmentionedinthisreport,JPMSSand/oritsaffiliatesmayhaveaholdingoflessthan1%insuchsecuritiesandmaytradetheminwaysdifferentfromthosediscussedinthisreport.EmployeesofJPMSSand/oritsaffiliatesnotinvolvedinthepreparationofthisreportmayhaveinvestmentsinthesecurities(orderivativesofsuchsecurities)mentionedinthisreportandmaytradetheminwaysdifferentfromthosediscussedinthisreport.Taiwan:ThismaterialisissuedanddistributedinTaiwanbyJ.P.MorganSecurities(Taiwan)Limited.AccordingtoParagraph2,Article7-1ofOperationalRegulationsGoverningSecuritiesFirmsRecommendingTradesinSecuritiestoCustomers(asamendedorsupplemented)and/orotherapplicablelawsorregulations,pleasenotethattherecipientofthismaterialisnotpermittedtoengageinanyactivitiesinconnectionwiththematerialwhichmaygiverisetoconflictsofinterests,unlessotherwisedisclosedinthe“ImportantDisclosures”inthismaterial.India:Forprivatecirculationonly,notforsale.Pakistan:Forprivatecirculationonly,notforsale.NewZealand:ThismaterialisissuedanddistributedbyJPMSALinNewZealandonlytopersonswhoseprincipalbusinessistheinvestmentofmoneyorwho,inthecourseofandforthepurposesoftheirbusiness,habituallyinvestmoney.JPMSALdoesnotissueordistributethismaterialtomembersof"thepublic"asdeterminedinaccordancewithsection3oftheSecuritiesAct1978.TherecipientofthismaterialmustnotdistributeittoanythirdpartyoroutsideNewZealandwithoutthepriorwrittenconsentofJPMSAL.Canada:Theinformationcontainedhereinisnot,andundernocircumstancesistobeconstruedas,aprospectus,anadvertisement,apublicoffering,anoffertosellsecuritiesdescribedherein,orsolicitationofanoffertobuysecuritiesdescribedherein,inCanadaoranyprovinceorterritorythereof.AnyofferorsaleofthesecuritiesdescribedhereininCanadawillbemadeonlyunderanexemptionfromtherequirementstofileaprospectuswiththerelevantCanadiansecuritiesregulatorsandonlybyadealerproperlyregisteredunderapplicablesecuritieslawsor,alternatively,pursuanttoanexemptionfromthedealerregistrationrequirementintherelevantprovinceorterritoryofCanadainwhichsuchofferorsaleismade.TheinformationcontainedhereinisundernocircumstancestobeconstruedasinvestmentadviceinanyprovinceorterritoryofCanadaandisnottailoredtotheneedsoftherecipient.Totheextentthattheinformationcontainedhereinreferencessecuritiesofanissuerincorporated,formedorcreatedunderthelawsofCanadaoraprovinceorterritoryofCanada,anytradesinsuchsecuritiesmustbeconductedthroughadealerregisteredinCanada.NosecuritiescommissionorsimilarregulatoryauthorityinCanadahasreviewedorinanywaypassedjudgmentuponthesematerials,theinformationcontainedhereinorthemeritsofthesecuritiesdescribedherein,andanyrepresentationtothecontraryisanoffence.Dubai:ThisreporthasbeenissuedtopersonsregardedasprofessionalclientsasdefinedundertheDFSArules.Brazil:OmbudsmanJ.P.Morgan:0800-7700847/ouvidoria.jp.morgan@jpmorgan.com.General:Additionalinformationisavailableuponrequest.InformationhasbeenobtainedfromsourcesbelievedtobereliablebutJPMorganChase&Co.oritsaffiliatesand/orsubsidiaries(collectivelyJ.P.Morgan)donotwarrantitscompletenessoraccuracyexceptwithrespecttoanydisclosuresrelativetoJPMSand/oritsaffiliatesandtheanalyst"sinvolvementwiththeissuerthatisthesubjectoftheresearch.Allpricingisindicativeasofthecloseofmarketforthesecuritiesdiscussed,unlessotherwisestated.Opinionsandestimatesconstituteourjudgmentasofthedateofthismaterialandaresubjecttochangewithoutnotice.Pastperformanceisnotindicativeoffutureresults.Thismaterialisnotintendedasanofferorsolicitationforthepurchaseorsaleofanyfinancialinstrument.Theopinionsandrecommendationshereindonottakeintoaccountindividualclientcircumstances,objectives,orneedsandarenotintendedasrecommendationsofparticularsecurities,financialinstrumentsorstrategiestoparticularclients.Therecipientofthisreportmustmakeitsownindependentdecisionsregardinganysecuritiesorfinancialinstrumentsmentionedherein.JPMSdistributesintheU.S.researchpublishedbynon-U.S.affiliatesandacceptsresponsibilityforitscontents.Periodicupdatesmaybeprovidedoncompanies/industriesbasedoncompanyspecificdevelopmentsorannouncements,marketconditionsoranyotherpubliclyavailableinformation.ClientsshouldcontactanalystsandexecutetransactionsthroughaJ.P.Morgansubsidiaryoraffiliateintheirhomejurisdictionunlessgoverninglawpermitsotherwise."OtherDisclosures"lastrevisedJanuary01,2018.Copyright2018JPMorganChase&Co.Allrightsreserved.Thisreportoranyportionhereofmaynotbereprinted,soldorredistributedwithoutthewrittenconsentofJ.P.Morgan.#$J&098$#*P27'