Core Viewpoint - Foreign capital is increasing its investment in the photoresist sector despite a downturn, indicating confidence driven by government policies, technological advancements, and significant demand gaps [1]. Group 1: Policy Support - The core confidence for foreign capital to increase holdings is the strong support from national policies, with the Ministry of Industry and Information Technology and the National Development and Reform Commission launching the "Semiconductor Material Industry Development Action Plan (2024-2029)", which identifies photoresist as a key area for breakthrough [3]. - The National Integrated Circuit Industry Investment Fund Phase III has allocated over 50 billion yuan to support key materials like photoresist, with 15 billion yuan specifically for technological research and development [3]. - Tax incentives have been established, allowing photoresist companies to benefit from R&D expense deductions and tax reductions, thereby lowering their R&D costs [3]. Group 2: Technological Breakthrough and Demand Surge - The photoresist industry is experiencing a dual turning point with technological breakthroughs and surging demand, with domestic 12-inch wafer production capacity expected to reach 1.2 million pieces per month by 2025, a year-on-year increase of 14%, leading to an annual demand for 6,000 tons of photoresist, a 55% increase [4]. - The domestic photoresist localization rate is currently below 5%, with high-end ArF photoresist localization rate below 1%, indicating a supply-demand gap exceeding 25 billion yuan and significant room for replacement [4]. - Due to overseas export restrictions, the delivery cycle for imported photoresist has extended to 4-6 months, prompting downstream wafer manufacturers to accelerate the adoption of domestic products, making domestic replacement a necessity [4]. Group 3: Investment Opportunities in Low-Priced Stocks - Foreign capital is focusing on undervalued stocks with strong technological foundations, with four major foreign institutions holding 18.6 million shares of a 3.3 billion yuan photoresist company, accounting for 12.3% of its circulating shares [5]. - Despite some companies showing short-term performance declines, they possess significant technological capabilities, with some holding 68 patents related to photoresist and being among the few capable of developing ArF photoresist, which is expected to achieve large-scale production by 2026 [5]. - Foreign investors prioritize companies with strong technological barriers and replacement potential, focusing on those with core patents, validation from leading wafer manufacturers, and gradually increasing production capacity, which are expected to see both valuation and performance improvements during the industry recovery [5]. Group 4: Verification Channels - To follow foreign capital's investment strategies, it is essential to verify information through official channels, including checking policy support on the Ministry of Industry and Information Technology and National Development and Reform Commission websites [6]. - Technological progress can be verified through announcements on the Shanghai and Shenzhen Stock Exchanges, confirming the validation progress and yield data of photoresist products [6]. - Industry data can be accessed via the National Bureau of Statistics and SEMI (International Semiconductor Industry Association) websites to assess wafer production capacity, photoresist market size, and localization rates [6].