Nexchip (688249.SS): 28nm/22nm capacity in expansion; better mix toward power semis; Neutral

We expect Nexchip's continued capacity expansion, toward 28nm / 22nm in 2027E, supporting its product mix upgrade toward more advanced process nodes, and better end market exposure (e.g. more advanced logics, power semis, and less exposure to consumer electronics). Power semis enjoy exposure to servers, starting contribution in 2H26, and will continue to ramp up through 2027; the expansion toward 28nm in 2027E will also support the company's expansion in OLED DDIC; Silicon photonics IC fabrication is also under preparation, targeting sampling 100G / 200G per lane in 4Q27. We expect these new products along with rising price on power semis under strong AI spending will continue to support the company's growth. We expect revenues to grow at 24% / 29% YoY in 2026–27E with OPM up to 14% by 2027E. Earnings revisions: We factor in 2Q26 results and revise our 2026E-28E net income by -17%/-6%/-14%. We lower our 2026E-27E revenues by -10%/-7% to reflect the 2Q26 miss, which we attribute to slow