Foundry

Have a seat, let's pour a cup and talk through how the books should run over the next two quarters. First, the trend: revenue has climbed from 16.0B across four quarters onto a 17.6–17.8B plateau. Gross margin, though, is a rollercoaster — Q3 2025 spiked to a high of 25.5%, Q4 immediately gave back to 17.4%, then Q1 2026 recovered to 21.5%. For anyone in manufacturing, this kind of volatility is old hat: new capacity ramp-up, swings in utilization, product mix shifts — every one of them pulls on gross margin. My two core assumptions: first, Q2 2026 is still in the digestion phase of the capacity ramp, with depreciation and amortization from the new line weighing heavily, so gross margin will be briefly pressured to around 20%; second, by Q3, as utilization climbs and demand for mature nodes enters peak season, gross margin recovers to roughly 22%. On revenue, I'm modeling sequential QoQ growth of 2–3% — Q2 landing at 18.05B and Q3 at 18.58B. The driver underneath is steady book from domestic customers across consumer electronics, IoT, and automotive-grade chips, plus continued ramp of mature-node products like power management and display drivers. Net income tracks gross margin — I have Q2 at 1.305B and Q3 stepping up to 1.625B, because Q3's gross profit in absolute terms is roughly 500M higher, and the operating leverage really kicks in. The biggest risk is still the geopolitical piece. Any movement on equipment delivery lead times or export controls will throw our capacity cadence off. On top of that, there's downside pressure on ASP for mature process nodes — domestic peers are all expanding, and a price war could break out at any moment. Squeezing another point out of process yield buys us breathing room, but we can't afford to let our guard down.