Core Viewpoint - The semiconductor sector is experiencing significant activity due to the merger announcement between Haiguang Information and Zhongke Shuguang, marking the first absorption merger transaction following the revision of the major asset restructuring management measures on May 16 [1][2]. Group 1: Merger and Market Impact - Haiguang Information plans to issue new shares to all A-share shareholders of Zhongke Shuguang, completing a stock swap absorption merger [1]. - Following the announcement, semiconductor ETFs showed positive performance, with the Chip ETF (512760) rising over 0.5% and the Semiconductor Equipment ETF (159516) increasing by 1.3% [1]. - Haiguang Information is a significant holding in the Chip ETF (512760), accounting for 7.32% of the index, and 9.79% in the National Science and Technology Chip ETF (589100) [1]. Group 2: Industry Trends - The semiconductor industry is witnessing a recovery driven by demand for upgraded smart terminal products, with a projected global semiconductor sales increase to $627.6 billion in 2024, representing a 19.1% year-on-year growth [3]. - The integration of Haiguang Information and Zhongke Shuguang is expected to optimize the industry layout from chips to software and systems, enhancing the overall resource allocation within the information industry chain [2]. Group 3: Financial Performance - The semiconductor sector is entering a recovery cycle, with revenue and net profit expected to show year-on-year growth in 2024 and the first quarter of 2025, driven by AI demand and domestic substitution [5]. - Despite being at the bottom of the cycle in 2024, profitability is anticipated to improve in the second half of the year, with a positive growth trend expected in Q1 2025 [6]. - The semiconductor equipment sector is particularly benefiting from ongoing domestic substitution, with expected revenue and net profit growth in 2024 and Q1 2025 [7].