Nexchip (688249.SS): China AI Tour: Capacity expansion towards 40nm/28nm/22nm; Strong demand from PMIC clients; Neutral

We hosted Nexchip management during our China AI Tour on Sep 11th in Beijing. Key discussions focused on (1) capacity expansion plan, (2) product mix and key growth drivers, and (3) pricing outlook. Overall, management notes the utilization rate of company's production line has remained at high-level, and the company has plans to expand 28nm/ 22nm capacity in 2027E, with long-term capacity expansion plans through 2030E. The company has raised price in 1H26, while notes there's no price increase in 2H26E, and expects the next round of price increase to happen in 2027E. Mgmt. notes the company has high exposure to consumer electronics, while sees strong orders due to some capacity being shifted to AI product. Meanwhile, the company continues the product diversification to new segments and products (e.g. PMIC). Maintain Neutral.