BofA Upgrades China Power Semiconductor Ratings, Top Pick Is NCE Power
N.R. Finch
Bank of America sees China's power-semiconductor cycle entering an upcycle, lifting NCE Power's (新洁能) target price from ¥47 to ¥119 and upgrading Silan Micro (士兰微) from underperform to neutral — the thesis rests on tightening MOSFET supply and surging AI data-center demand triggering a pricing inflection.
What is driving this round of price hikes?
New capacity for low-/mid-voltage MOSFETs — basic chips that switch electrical current on and off — remains limited, while global suppliers are reallocating production lines to higher-value AI and data-center customers.
This means → supply available to traditional industrial buyers is shrinking further, and shortages are pushing prices up.
Year to date, NCE Power, Silan Micro, and CR Micro have already raised prices twice, by 10%–20%. BofA expects more hikes in H2 2026.
Why is NCE Power BofA's top pick?
79% of NCE's revenue comes from MOSFETs — the exact product in short supply. It sells what the market lacks.
BofA raised its target price from ¥47 to ¥119, valued at 55× P/E for H2 2027–H1 2028, a 10% premium to the China power-semi peer average.
In plain terms = BofA believes NCE is not just riding the sector wave — its revenue growth and ROE both lead peers, justifying a higher multiple.
BofA also expects NCE to secure additional capacity from a key foundry partner starting Q3 2026, supporting faster revenue ramp.
Silan Micro upgraded to neutral — why not buy?
BofA upgraded Silan Micro from underperform to neutral, raising its target from ¥20.3 to ¥57 at 50× P/E, in line with peers.
Earnings forecasts were lifted by 52%–63% — seemingly aggressive, but BofA notes Silan already trades at roughly 60× forward P/E.
This means → the pricing upside is largely priced in, leaving limited room to run — hence neutral, not buy.
How does AI data-center demand lift power-semiconductor value?
AI workloads consume far more power than traditional computing, and each layer of the power chain requires different devices: low-voltage MOSFETs for board-level voltage regulation, high-voltage MOSFETs, SiC, and GaN for power-supply units and rack-level delivery, plus additional protection and conversion devices for emerging 800V DC architectures.
In plain terms = AI servers are far hungrier for electricity than conventional ones, and every layer of power delivery needs pricier, higher-spec chips.
BofA's US semiconductor team forecasts the data-center analog-semiconductor opportunity will grow from $7.6 bn in 2025 to $25 bn by 2030 — a ~26% CAGR.
What does the sector's supply-demand picture look like?
China's power-discrete market is projected to grow from $13.2 bn in 2025 to $17.7 bn by 2028, a 10% CAGR.
The fastest-growing segment is compute & storage (~30% CAGR), followed by industrial (12%) and automotive (8%).
On the supply side, six leading domestic IDMs — Silan Micro, CR Micro, CRRC Times Electric, Yangjie Tech, JieJie Micro, and StarPower — are expanding combined capacity at only ~6% CAGR, a disciplined pace.
This reflects a supply growth rate well below demand growth — the foundation of BofA's conviction that pricing power can persist. But whether elevated valuations hold depends on sustained price hikes and continued AI volume ramp — that is the sector's key test in the next phase.
Content is for reference only, not financial advice.