AI insights from China’s Tech giants
Technology
Westlake’s latest reports draw on discussions with AI experts from Tencent, ByteDance and Alibaba, offering fresh perspectives on China’s evolving GPU and ASIC landscape. Tencent’s AI Product Manager detailed the rationale behind increased domestic GPU procurement this year and outlined potential market shifts if B30A and H20 export policies are relaxed. ByteDance’s AI Solution Architect described surging AI compute and token usage and the rapid expansion of AI investments and custom chip development. Alibaba’s AI Project Manager discussed GPU procurement trends, progress in its T-Head ASIC programme and ongoing Qwen model development, including on-device use-cases.
Edition: 222
- 17 October, 2025
Chemicals: Is the worst behind us?
Materials
Frank Mitsch sees early signs of stabilisation in the chemicals sector, despite short interest sitting at 52-week (or longer) highs and persistent investor concerns around potential dividend cuts. While he remains cautious on Tronox and Huntsman’s payouts, he considers dividends from Dow and LyondellBasell to be safe. Roughly 60% of 1Q results landed within 4% of his expectations, with Olin, Corteva, FMC and Celanese leading on beats vs. the Street. Westlake was the notable miss, due to underperformance in its PEM segment, partly from unplanned downtime. After over two years of sector underperformance, exacerbated by the overreaction to Liberation Day, Frank believes the worst may be behind us; hence his recent upgrades (to Buy) on DOW, LYB and PPG. He has also been heartened by how the credit markets have been open to companies such as CE and OLN.
Edition: 212
- 30 May, 2025
Global Chemicals: PVC - some green shoots emerging?
Materials
Slowing demand on the back of a weak housing and construction end-market has put downward pressure on PVC prices and margins with Asian PVC prices declining 53% from their 2021 highs and US prices down over 60%. However, it is not all doom and gloom. Hassan Ahmed sees demand growing at an AAGR of 3.5% (2023-2027), outstripping capacity growth of 2.3%. Tightening global utilisation rates should lift pricing and margins from current depressed levels in the near- to medium-term, thereby buoying corporate earnings. Amongst Alembic’s coverage universe Braskem and Westlake (both rated Buy) are most exposed to the PVC cycle.
Edition: 197
- 18 October, 2024
Nvidia's H20 remains the top choice for Chinese CSPs
Technology
Based on Westlake’s conversations with industry experts, Chinese CSPs remain major customers for the H20 despite Chinese regulators’ guidelines. With speculation the DoC BIS will propose even stricter restrictions on advanced GPU exports to China at its annual review in Q4, Chinese CSPs and leading server ODMs / OEMs are stockpiling H20s in case of potential bans. Contacts estimate the H20 shipment units in China to be ~50k in Q2, ~350k in Q3 and ~400k in Q4, for a total ~800k units in '24. NVDA could potentially see H20 revenue reach $9bn-$9.8bn in 2H24. Chinese CSPs currently rely on NVDA’s GPUs including H20 for training, while deploying a variety of GPUs, e.g. Huawei’s 910B, for inference. Huawei’s Ascend 910B/910C shipments are estimated to grow from 100k-200k in ’23 to 350k-400k in ’24 and 650k-700k in ’25.
Edition: 196
- 04 October, 2024
Materials
WLK posted a nice 1Q upside though 2024 consensus barely moved; likely a function of its inherent conservatism (Fermium stands 8% higher than consensus). Over the last few years, it has deemphasized the commodity side of the portfolio and materially added to its more specialty B&C products, which peers trade at higher multiples. An upcoming investor event focused on this side of the portfolio may serve to establish more credibility on the sustainability of these results. It's modestly contrarian with only 30% of sell-side at BUY, and lastly, management is considered among the industry’s best.
Edition: 186
- 17 May, 2024
Materials
Market confusion surrounds its true earnings power - WLK has been very active on the M&A front recently and now generates around two-thirds of its earnings from chlorovinyls. Since hitting its Mar 2020 lows, its share price, while keeping pace with ethylene/polyethylene-biased name LyondellBasell, has significantly underperformed the company’s main chlorovinyl peer, Olin. Hassan Ahmed believes this underperformance is unwarranted and makes the case that WLK has been acquiring businesses that have a far more stable earnings profile, which should reduce the company’s overall cyclicality and result in a multiple re-rating.
Edition: 182
- 22 March, 2024
China: Cautious ad spending outlook but branding ads likely to be driven by major 2024 sports events
Communications
From Westlake's primary research, most large advertisers remain cautious about their 4Q ad spending and 2024 ad allocation outlook, but the UEFA European Football Championship and Paris Olympics this year will likely drive branding ad spending growth. Baidu can deliver 4Q online marketing (primarily search and feed) revenue growth at least in line with street expectation of 5-6% given the strength from medical, eComm, EV, travel and restaurants, offsetting some share loss to closed-loop searches within mega or popular apps. Tencent saw solid 4Q social ads, healthy online video ads & subscriptions and in line global game performance, and is likely on track to meet street revenue expectation. Westlake continues to see strong growth momentum from Tencent's Video Account ads.
Edition: 178
- 26 January, 2024
China eCommerce primary research report
Consumer Discretionary
Based on a variety of data and feedback from 27 eCommerce professionals, Westlake observed 1Q apparel sales recovered the strongest among online discretionary categories, cosmetics rebounded modestly but appliances sales softened slightly. Mar & Apr saw a marked acceleration in online discretionary category sales growth (except for skincare), likely due to further consumption recovery and a low base last Mar & Apr. Alibaba, JD.com, Pinduoduo, Vipshop and Kuaishou eComm can likely at least meet 1Q China-related eComm sales or marketing revenue expectation. JD Retail had relatively weaker 1Q given the restructuring and soft appliance & general merchandise sales.
Edition: 160
- 12 May, 2023
iQIYI (IQ US), Bilibili (9626 HK), Kuaishou (1024 HK)
Based on Westlake’s proprietary analysis and survey of 19 large agencies and advertisers, IQ has outperformed its peers in recent quarters with strong content and can meet 4Q street revenue expectations. Bilibili can at least deliver in-line 4Q revenue growth propelled by solid VAS and better-than-expected ad and game biz. Kuaishou can deliver 4Q ad revenue in-line with street expectation propelled by solid streaming eCommerce growth and growing advertisers; and saw robust ad spending from gaming in Jan. They are positive on all three names, given recent sharp ad spending rebound from several verticals and further consumer / ad spending recovery in 2023.
Edition: 154
- 17 February, 2023
Baidu (9888 HK) & Tencent (700 HK)
Communications
From Westlake's primary research, they observed 4Q online ad spending fared better than offline and grew modestly Q/Q despite Covid disruptions, while industry professionals are cautiously optimistic about their ’23 ad spending outlook. Baidu can meet 4Q online marketing revenue growth expectation given budget shift from branding ads to performance ads and offline ads to online. Tencent likely saw 4Q revenue growth in-line with consensus forecasts. Its game biz remained weak, but can meet street estimates and return to growth in ’23 propelled by new game approvals and international game launches. They also saw strong growth momentum from WeChat Channels ads.
Edition: 152
- 20 January, 2023
China eCommerce primary research report
Consumer Discretionary
Westlake observed online discretionary spending (except for cosmetics) recovered gradually in Jul & Aug, but softened slightly in Sept & Oct given rising community lockdowns. They expect Alibaba, JD, Pinduoduo, Vipshop and Kuaishou will meet 3Q Street expectations. Given modest improvements in business and consumer confidence, they anticipate further 4Q sales recovery for leading Chinese eComm players driven by 11.11 promotions and likely continued government consumption coupons. If Covid restrictions gradually ease after the 20th party congress, a broad-based recovery will help boost consumer spending.
Edition: 146
- 14 October, 2022
Chemicals: Natural gas price spike concerns overblown
Materials
This decade could see US ethylene margins even stronger than last decade's lofty margins - in addition to discussing how the crude oil-to-natural gas price ratio remains squarely in the US chemical industry’s favour, Hassan Ahmed contends that higher margins are sustainable, particularly keeping in mind that 79% of all ethylene capacity expected to come online between 2021-2026 will be based in the cost-disadvantaged regions of Asia and Europe. His analysis suggests that as much as 21% of this incremental capacity is at risk of being cancelled or delayed, which bodes well for Dow Inc (TP $75), LyondellBasell (TP $120) and Westlake (TP $140).
Edition: 134
- 29 April, 2022
Chemicals: Macro stars aligned
Materials
Global economic stimulus, a weakening USD, rising vaccination rates and lean inventories are perfectly aligned for continued commodity chemical strength, with higher oil prices providing an additional tailwind. Multiple compression at Olin, Chemours, Huntsman and Tronox seems excessive, particularly when compared to earnings growth prospects. FCF yields at Venator, Braskem and Trinseo are very attractive. For 2022, Hassan Ahmed prefers companies that may benefit from activism/M&A-like catalysts (Braskem, Huntsman and Tronox), secular changes within their markets (Olin), or have underappreciated proforma earnings power (Trinseo and Westlake).
Edition: 126
- 07 January, 2022
Consumer Discretionary
Given antitrust rules, BABA has offered more free traffic resources to younger & medium sized brands and encouraged merchants to participate in Taobao Live streaming by giving more weights to promotional streaming / short video content for this year’s 11.11. Weaker consumption in China lowered sell-side consensus estimates, but expect BABA to likely deliver inline with Q3 China retail revenue, driven by strong appliance, home food and healthy FMCG.
Edition: 121
- 15 October, 2021
Westlake Chemical (WLK)
Materials
Boral acquisition to trigger positive valuation re-rating - the $2.15bn purchase will take WLK’s Building Products revenues to $3.1bn (from $2bn in 2020). US building products companies currently trade at a 2021 EV-to-EBITDA multiple of 16x vs. commodity chemical companies at 6.5x. On a post-acquisition basis WLK could breakout its Building Products business as a separate segment and get a commensurate multiple re-rating, thereby making an already earnings accretive acquisition highly valuation accretive as well. Given current secular and structural tailwinds in the housing market this looks like a well-timed acquisition. TP $135 (~50% upside).
Edition: 113
- 25 June, 2021
China Handset Semi Checks
Technology
Westlake's report includes detailed analysis and data on semi shortages, handsets and components inventory and lead times - Qualcomm, MediaTek, Skyworks, Qorvo and Broadcom saw very strong pricing and better-than-guided 1Q demand at Chinese OEMs. Their OEM contacts also observed lower phone inventory in 1Q vs. 4Q, with some indicating 6-7% inventory-to-sales ratio (normal level is 10-12%). Based on fab wafer sizes and technology nodes, the most severe shortages were seen in basebands / SoCs, MCUs, CIS sensors, display ICs and PMICs.
Edition: 109
- 30 April, 2021