Investment Rating - The report maintains a "Recommended" rating for the industry [4] Core Insights - The report highlights the significant impact of U.S. tariffs and export controls on Chinese products, particularly in the software and hardware sectors, emphasizing the need for domestic innovation and self-reliance [1] - The Chinese government is actively promoting domestic products through favorable procurement policies, including a 20% price deduction for local products in competitive bidding [1] - The report indicates that the domestic chip industry is gaining traction, particularly in the financial sector, with major projects like the Industrial and Commercial Bank of China's procurement of Huaguang chip servers valued at approximately 3 billion yuan [1] - The report notes a substantial increase in domestic server procurement by China Unicom, with 90.1% of the servers being domestically produced, reflecting a strong trend towards localization [2] - The report anticipates a turning point for the domestic innovation industry (Xinchang) driven by supportive policies and improving performance of listed companies in the sector [2][3] Summary by Sections - Policy Support: The government emphasizes high-level technological self-reliance as a key development focus, aiming to enhance core technology research and innovation capabilities [2] - Market Performance: Several listed companies in the Xinchang sector have shown improved performance compared to the previous year, indicating a positive outlook for the industry [3] - Investment Recommendations: The report suggests focusing on key players in the Xinchang sector, including China Software, Dameng Data, and others, as well as leaders in specific sub-sectors like industrial software and the Harmony OS ecosystem [3]