Core Insights - The Chinese pan-technology sector is experiencing significant growth driven by AI computing power, with a clear differentiation among various segments and leading companies outperforming [1][2]. Industry Overview - The high demand for AI computing power is leading to a full-chain growth pattern from upstream infrastructure to downstream applications [2]. - The global semiconductor market reached $346 billion in the first half of 2025, showing an 18.9% year-on-year increase, with logic semiconductors growing by 37% [2]. - China's semiconductor market demonstrated resilience, with total investment down 9.8% year-on-year, a significant improvement from a 41.6% decline in the previous year [2]. Company Performance - Industrial Fulian reported a revenue of 360.8 billion yuan, a 35.6% increase, and a net profit of 12.11 billion yuan, up 38.6%, driven by AI server shipments [5]. - Cambrian-U achieved a revenue of 2.881 billion yuan, a staggering 4347.82% increase, and a net profit of 1.038 billion yuan, marking its first profitable half-year since its listing [6]. - Zhongji Xuchuang reported a revenue of 14.789 billion yuan, a 36.95% increase, and a net profit of 3.995 billion yuan, up 69.40%, benefiting from increased capital expenditure from key clients [7]. Market Trends - The light module market is expected to grow by 45% in 2024, driven by AI industry demand, with a forecast of 4.7 million units shipped in 2025 [3]. - The AI chip sector is seeing breakthroughs in performance and cost, with domestic products like Cambrian's chips showing competitive advantages [9][10]. - Traditional hardware companies like Hikvision and Luxshare Precision are adjusting their structures to find new growth points, with Hikvision's innovative business growing by 13.92% [8]. Policy and Technological Support - The Chinese government is implementing supportive policies, including the "Artificial Intelligence +" initiative, aiming for deep integration of AI across six key sectors by 2027 [3][10]. - The domestic semiconductor industry is increasing R&D investments to reduce reliance on imports, with breakthroughs in key materials and equipment expected to enhance competitiveness [10].

Investment Strategy - The recovery of H20 supply is expected to drive the AIDC hardware industry chain, alleviating domestic AI computing power shortages. The H20 chip has a peak FP16 computing power of 148 TFLOPS, significantly lower than the nearly 2000 TFLOPS of the H100, but its 96GB HBM3 memory and 4.0TB/s memory bandwidth make it suitable for applications requiring large memory capacity and high bandwidth, outperforming previous A100/A800 series [12][13] - The trend towards domestic chip replacement and technological self-sufficiency is irreversible. The Chinese government aims for a 70% self-sufficiency rate in chips by 2025. Domestic products like Huawei's Ascend 910 series and Haiguang's Deep Computing No. 3 are continuously improving their performance, with the Ascend 910C matching NVIDIA's H200 [13] - High demand for edge-side applications is expanding growth opportunities for H20 and RTX PRO. AI application monthly active users in China grew rapidly, with AI plugin applications increasing by 106% year-on-year. The high bandwidth characteristics of H20 are accelerating the large-scale implementation of AI inference scenarios [14][15] Industry News - The initial lifting of overseas computing chip restrictions allows H20 and MI308 to re-enter the Chinese market, which is expected to significantly accelerate domestic IDC construction progress. NVIDIA plans to resume sales of H20 and introduce a new compliant GPU, RTX PRO, suitable for digital twin AI applications [16] - T-Mobile's NTN service, T-Satellite, will officially launch on July 23, focusing on satellite direct-to-cellular networks to address communication challenges in areas without ground network coverage. This service has attracted over 1.8 million users during testing, indicating strong market demand [17] - OpenAI announced the launch of a general-purpose AI agent within ChatGPT, capable of assisting users with various computer-based tasks. This development is expected to drive further growth in AI applications and increase computing power demand [18][19] - The Ministry of Industry and Information Technology released the 2025 work priorities for the integration of information technology and industrialization, emphasizing the need for 5G and 6G technology investment and the development of industrial internet platforms [20] - SpaceX plans to launch its third-generation Starlink satellites in the first half of 2026, aiming to provide significantly higher downlink and uplink capacities compared to previous generations, potentially competing with ground cellular networks [21][22] Weekly Review and Focus - The communication sector saw a 7.02% increase this week, outperforming major indices. The IDC, optical modules, and optical communications sectors led the gains, with increases of 11.83%, 9.71%, and 6.10% respectively [23][24]

Core Viewpoint - The recent phase agreement in US-China trade negotiations has led to mixed market reactions, with A-shares experiencing a pullback while the Nasdaq has shown an upward trend, particularly in technology stocks [1][2][3]. Market Reactions - A-shares indices showed a volatile downward trend from May 12 to May 19, with the Shanghai Composite Index remaining flat, while the Shenzhen Component and ChiNext Index saw slight declines. Northbound capital exhibited a net outflow during this period [2]. - In contrast, the Nasdaq experienced a significant upward trend, with an overall increase of over 7.18% during the same timeframe, and a single-day increase of 4.35% on May 12, driven by strong performances from tech giants like Tesla, Amazon, and Nvidia, which saw gains of over 5% to 8% [3]. Investor Sentiment - Investors expressed confusion regarding the lack of upward movement in the A-share market, with some attributing this to profit-taking by domestic institutions and concerns over ongoing negotiations before the 90-day pause ends [4]. - The market has shifted focus towards small-cap stocks, particularly following new regulations from the China Securities Regulatory Commission that support mergers and acquisitions [4][5]. AI Sector Performance - Despite the overall market hesitation, the ChiNext AI Index recorded a cumulative increase of 17.50% from April 8 to May 19, indicating strong confidence in the AI sector [6]. - The US's recent adjustments to AI chip export rules, particularly targeting China, have intensified competition in the AI industry, suggesting a continued focus on the AI supply chain [7][8][10]. Domestic AI Industry Developments - Chinese companies are accelerating the self-sufficiency of the AI supply chain, with notable advancements in chip performance and application development. For instance, the Cambrian SiYuan 590 chip achieved 82% of the inference performance of Nvidia's A100 at one-third of the cost [10]. - Companies like Huawei and Jingjia Micro have made significant strides in AI applications and hardware, with substantial growth in orders and user coverage in various sectors [11][12]. Investment Opportunities - The AI sector's price-to-earnings ratio (PE-TTM) stands at 86, higher than the market average, but with a projected compound annual growth rate (CAGR) of 55% over the next three years, the PEG ratio of 1.56 remains attractive compared to semiconductors and new energy sectors [14]. - The launch of the ChiNext AI ETF (code: 159363) provides investors with a convenient way to gain exposure to leading companies in the AI industry, covering the entire supply chain from hardware to application [15][17].