Core Viewpoint - The semiconductor industry is crucial for modern technology and national strength, with China's market being the largest globally, accounting for nearly one-third of the market share. The need for self-sufficiency in semiconductor technology has become increasingly urgent due to external pressures and export controls from the U.S. [1][2][3] Group 1: Industry Development - China has been the largest semiconductor market for several years, with sales reaching nearly $190 billion in 2021 and expected to remain above $180 billion from 2022 to 2024, despite a downturn in 2023 [2] - The domestic semiconductor equipment sales are projected to exceed $49.5 billion in 2024, with a compound annual growth rate of over 28% from 2012 to 2024 [2] - The market share of Chinese semiconductor equipment is expected to surpass 40% in 2024, an increase of nearly 8 percentage points from the previous year [2] Group 2: Urgency for Self-Sufficiency - Since 2022, the U.S. has implemented significant export controls on semiconductor technology, creating both short-term shocks and long-term challenges for China's semiconductor industry [3] - The concept of self-sufficiency has become a key focus for China's technological development, particularly in the semiconductor sector, to reduce reliance on external supply chains [3][4] Group 3: Decreasing Import Dependency - China's integrated circuit exports have consistently exceeded $100 billion since 2019, with chips projected to become the largest export item in 2024, valued at approximately 1.2 trillion yuan [5][6] - The growth rate of integrated circuit imports has slowed, with a compound annual growth rate of 4.77% from 2019 to 2024, down from 1.4 percentage points compared to the previous period [6] - The import dependency on specific regions is decreasing, with the share of imports from the U.S. dropping below 20% in 2024, while imports from Singapore and Malaysia have increased [6] Group 4: Technological Breakthroughs - External restrictions have led to a surge in demand for domestic equipment, prompting technological advancements in the semiconductor industry [7] - Companies like Zhongwei Semiconductor have achieved self-sufficiency in MCU chips, particularly in consumer electronics, while new entrants like Xinkailai have showcased significant product lines at industry exhibitions [7][8] Group 5: Capital Market Support - The number of semiconductor companies listed on A-shares has increased, with their proportion rising to 10% in 2024, up from below 5% in previous years [9] - The fundraising amount for semiconductor companies has consistently exceeded 10% of the total A-share fundraising since 2022, with a peak of over 20% in 2023 [9] - A series of supportive policies have activated the M&A market, with 20 semiconductor-related M&A events disclosed in 2024, most of which are in the planning stages [9][10] Group 6: Industry Performance Recovery - After a downturn in 2022 and 2023, semiconductor companies are expected to see a significant recovery in 2024, with net profit growth approaching 30% [12] - Companies like Stowe-W and Demingli are projected to have net profit increases exceeding tenfold in 2024, with Stowe-W leading in the image sensor market [12][13] - Analysts predict that 14 companies in the semiconductor sector will achieve over 40% net profit growth in 2025 and 2026, indicating strong growth momentum [12]