Margins expanded by NT$250M but the CFO admitted it was an accounting reversal. CEO says visibility for logic is poor.
Thesis: PSMC is a commodity memory foundry using 2% AI revenue to mask a structural decline in logic pricing power. The margin expansion is a non-recurring accounting reversal. Increased depreciation creates a significant earnings risk.
Verdict: SHORT — Conviction: HIGH
Catalyst: Confirmation of the NT$110B depreciation charge in 2026 guidance. Failure of interposer revenue to scale beyond 2%.
Key Risk: A massive surge in memory spot pricing that sustains through H2 2026.
The Tell: CEO volunteered a pivot to High Bandwidth Flash unprompted. This is a distraction from missing the HBM cycle.
Friction Level: MODERATE_FRICTION — Disagreement on whether memory ASP recovery and AI packaging (2% of revenue) can offset the lack of pricing power in logic and a NT$110B depreciation increase.
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