Shanxi Securities·2025-05-14 06:33Investment Rating - The report maintains an investment rating of "Outperform the Market" for the electronics sector [1][5]. Core Views - The electronics sector is experiencing a recovery in prosperity, focusing on two main themes: AI and domestic substitution [1][5]. - The sector is entering a new growth cycle driven by technological innovation and capital expenditure in AI, with significant product releases and breakthroughs in advanced processes expected [5]. Market Overview - During the week of May 5-9, 2025, the overall market saw an increase, with the Shanghai Composite Index rising by 1.92%, the Shenzhen Component Index by 2.29%, and the ChiNext Index by 3.27%. The semiconductor index, however, fell by 0.92% [11]. - The semiconductor sector's performance was mixed, with the Philadelphia Semiconductor Index up by 1.58% and the Taiwan Semiconductor Index up by 0.05% [11]. Sector Performance - The sub-sectors that performed best during the week included Other Electronics (+4.33%), Components (+3.96%), and Consumer Electronics (+3.73%) [11][12]. - Notable individual stock performances included Huiwei Intelligent (+41.00%), Dineike (+29.82%), and ST Yushun (+21.53%) [22]. Financial Results - Key companies reported significant growth in their financial results for Q1 2025. For instance, SMIC reported total revenue of 16.301 billion yuan, a year-on-year increase of 29.44%, and a net profit of 1.356 billion yuan, up 166.50% [4]. - Hua Hong reported total revenue of 3.913 billion yuan, an 18.66% increase, but a net profit decrease of 89.73% [4]. Industry News - Apple is making progress in its AI deployment in China, with its OS 18.6 system expected to utilize certain features for the first time in mainland China, supported by Baidu and Alibaba [3][61]. - The Trump administration plans to revoke Biden's restrictions on AI chip exports, which has led to stock price increases for companies like Nvidia and Oracle [3][62]. Investment Recommendations - The report suggests a long-term investment strategy focusing on AI and domestic substitution, particularly in areas such as AI chips, lithography machines, and advanced packaging [5].