Group 1: Overview of the Computer Sector - The computer sector is experiencing a recovery in fund allocation, with a 4.46% holding ratio in Q3 2025, an increase of 1.93 percentage points from Q2 2025 and 2.24 percentage points year-on-year from Q3 2024 [7][12] - The computer sector's market capitalization accounts for 5.27% of the total A-share market, indicating a low allocation that presents upward potential [7][12] - The computer index has risen by 27.62% as of December 1, 2025, outperforming the CSI 300 index by 11.32 percentage points [12] Group 2: Domestic Substitution Trends - The domestic substitution trend is clear, with significant replacement opportunities in the computer industry, particularly in EDA, electronic measurement instruments, and cybersecurity [3][21] - The EDA market is projected to reach $14.5 billion by 2025, with domestic firms increasing their competitiveness through self-developed and acquired technologies [26][31] - The electronic measurement instrument market is expected to grow rapidly, driven by technological advancements and increased R&D investments [63][75] Group 3: Artificial Intelligence Applications - The AI sector is expanding across various industries, with demand for GPU, servers, IDC, power supplies, and liquid cooling systems driving growth [3][21] - The domestic and international AI model iterations are ongoing, with a focus on world models and physical AI as future trends [3][21] - End-side AI applications, including smart glasses, robotics, and intelligent driving, are emerging as key areas for implementation [3][21] Group 4: Future Industries and Innovations - Quantum technology is anticipated to bring disruptive innovations in computing, communication, and measurement, creating new opportunities [3][21] - The satellite internet sector is accelerating constellation construction, with potential releases in measurement and simulation demands [3][21] - The integration of technology and finance is expected to yield significant dividends through innovative disruptions [3][21] Group 5: Investment Recommendations - Recommended investment targets in the EDA sector include Huada Jiutian, GY Electronics, and Broadcom [53][90] - In the CAD sector, focus on Zhongwang Software and Haocen Software [53][90] - For CAE, consider Zhongwang Software and Holley Technology [53][90]

Investment Rating - The report maintains an "Outperform" rating for the computer sector [4] Core Insights - The industrial software sector is experiencing robust growth driven by policy support and technological advancements, with a projected market size of CNY 354.14 billion in 2024, reflecting an 11.2% year-on-year increase [2][21] - The integration of AI with industrial software is accelerating, enhancing capabilities in design, production control, and operational management, which is crucial for achieving the "Made in China 2035" goals [3][49] - The market structure shows a significant presence of foreign companies in high-end segments, while domestic firms are gaining ground in production control and management software due to localized services and cost advantages [25][38] Summary by Sections Policy Support - The "14th Five-Year Plan" emphasizes the importance of intelligent manufacturing, aiming for over 70% digital penetration in large manufacturing enterprises by 2025 [2][18] - Recent policies indicate a sustained commitment to upgrading industrial software and operating systems as core technologies for high-quality development [19][20] Industrial Software Market Growth - The industrial software market is projected to reach CNY 765 billion by 2029, with a compound annual growth rate (CAGR) of 19.1% [2][21] - The market is characterized by a high share of foreign companies in high-end sectors, while domestic firms are making strides in embedded software and management solutions [25][26] AI Integration - AI is transforming industrial software, enabling generative design in CAD and enhancing simulation capabilities in CAE, which improves efficiency and reduces costs [41][42] - The combination of AI with production control systems like DCS and PLC is creating closed-loop intelligent systems that optimize decision-making and enhance production efficiency [44][47] Future Outlook - The report anticipates that industrial software will be a key focus area in the upcoming "15th Five-Year Plan," with policies likely to support breakthroughs in critical areas of design and production control [20][21] - The integration of physical AI is expected to drive advancements in various industries, enhancing simulation and predictive capabilities [66][69]

Group 1: Core Insights - The industrial software market is gaining attention due to multiple macro factors including policy support, industrial demand, external environment changes, and technological integration [1][2][3] - The Chinese government has set a target to update approximately 2 million sets of industrial software by 2027, providing a clear growth space for the market [1] - The strategic importance of industrial software has increased due to global manufacturing competition, technology blockades, and the need for data-driven innovation [1][2] Group 2: Impact of AI on Industrial Software - AI large models are accelerating the development of industrial software and lowering application barriers, with domestic models like DeepSeek shortening iteration cycles [2] - Investment opportunities are concentrated in multi-dimensional AI applications and product service systems, with generative design and quality root cause analysis being top investment directions [2] Group 3: Industrial Software Lifecycle - The industrial software industry is currently at a stage of uneven development across different categories, with a focus on high-end breakthroughs [3] - Embedded software has a large market size but faces challenges in competing with foreign products, while domestic management and production control software need further development to capture high-end markets [3] Group 4: Categories of Industrial Software - Industrial software can be categorized into four main types: R&D design software, production control software, digital management software, and embedded software, each serving distinct roles in the industrial process [4] Group 5: Technical Barriers in EDA, CAD, CAE - The high technical barriers in EDA, CAD, and CAE software are built on complex algorithms, engineering challenges, knowledge and data limitations, and ecological dependencies [5][6] Group 6: Investment Logic in Industrial Software - The core investment logic in the industrial software sector includes domestic substitution and demand release, product capability enhancement, and new opportunities brought by AI [7]

Summary of Key Points from Conference Call Records Industry or Company Involved - The discussion revolves around the "Fifteen Five" plan and its implications for various industries in China, particularly focusing on technology, advanced manufacturing, and service consumption sectors. Core Insights and Arguments 1. **Economic Growth Target**: The "Fifteen Five" plan aims for an average GDP growth rate of 4.7%-5% to double the economic output by 2035, transitioning from scale-driven to innovation-driven growth [1][2][4] 2. **Focus on Technological Innovation**: Emphasis on technological innovation as a national strategy, with sectors like broad technology, new energy, nuclear power, and energy storage expected to benefit significantly [1][4][6] 3. **Supply and Demand Balance**: The plan highlights the need for both supply-side optimization and demand-side stimulation, including the elimination of outdated production capacity and enhancement of advanced manufacturing levels [1][4][5] 4. **Service Consumption Growth**: Increased focus on service-oriented consumption, particularly in finance, healthcare, tourism, and dining, as part of the economic recovery strategy [1][4][6][7] 5. **High-Level Opening and Domestic Market**: The plan promotes high-level foreign investment and the establishment of a unified domestic market, aiming to attract international investment while mitigating risks in real estate and local government debt [1][5] 6. **Strategic Metals Investment**: Strategic metals such as copper, aluminum, and rare earths are identified as key investment areas due to their importance in the new economic landscape [1][7] Other Important but Possibly Overlooked Content 1. **Aging Population and Fiscal Policy**: The fiscal policy will increasingly address issues related to an aging population and declining birth rates, focusing on improving living standards and social security [3][9] 2. **High-End Manufacturing and Software Development**: High-end manufacturing is seen as a core driver of the economy, with industrial software becoming crucial in the context of US-China competition [12][17] 3. **Emerging Technologies**: The development of humanoid robots and embodied intelligence is expected to play a significant role in enhancing productivity and driving economic transformation [15][17] 4. **Investment Trends**: Recent capital expenditures are focused on domestic equipment procurement, particularly in the semiconductor industry, which is crucial for achieving self-sufficiency [16][20] 5. **New Consumption Trends**: The new consumption landscape is shifting towards emotional value-driven and quality consumption, with significant potential in offline retail reform and online interest-based consumption [19][20] 6. **Military Modernization**: The "Fifteen Five" plan includes goals for military modernization, with a focus on defense information technology, which is expected to see increased investment starting in 2026 [23] This summary encapsulates the key points discussed in the conference call, highlighting the strategic directions and potential investment opportunities within the context of China's "Fifteen Five" plan.

Core Insights - The article highlights the emergence of "hidden champions" in the industrial software sector, which, despite their smaller size and lower visibility, dominate specific niches with core technologies [1][2] - These companies are pivotal in driving the digital transformation of Chinese manufacturing, especially in the context of increasing domestic software independence [2][4] Industrial Software ETF Launch - The first industrial software ETF (159108) will be publicly offered from October 27, providing investors with a new tool to invest in "hidden champion" companies [3] - This ETF tracks the National Certificate Industrial Software Theme Index, covering the industrial software value chain [18] Market Dynamics and Policy Support - The current international environment has elevated the strategic importance of self-sufficient industrial software, with a gradual shift away from foreign monopolies [4][5] - The Ministry of Industry and Information Technology has set a target to complete approximately 2 million sets of industrial software updates by 2027, providing strong support for industry growth [6] Economic Indicators - Recent economic data indicates a gradual recovery in the manufacturing sector, with profits of large industrial enterprises reaching 46,929.7 billion yuan, a year-on-year increase of 0.9% [7] - The demand for industrial software is closely linked to the digital transformation of downstream manufacturing, with signs of improvement in the performance of industrial software companies [8] Performance Metrics - In the first half of 2025, the average revenue growth rate for industrial software index constituents rose to 2.15%, while net profit growth averaged 141.21% [9] - The industrial software index has shown strong historical performance, with a cumulative return of 251.95% since 2013, outperforming the China Securities Software Index [22][24] AI Integration and Innovation - The integration of artificial intelligence is revolutionizing the industrial software landscape, with a projected compound annual growth rate of 19% for the core industrial software market from 2024 to 2029 [13] - AI is enhancing software performance and changing business models, making subscription-based services more acceptable to users [13][15] Company Developments - Domestic software companies are transitioning from "usable" to "user-friendly," with significant improvements in product functionality and performance [15] - Mergers and acquisitions are becoming a key strategy for technological advancement, as seen with Huada Jiutian's acquisition of Chipda Technology and Chiphe Semiconductor [16] Investment Landscape - The ETF's composition includes a significant proportion of small to mid-cap stocks, with over 70% of the total market capitalization being below 50 billion yuan, which maintains growth potential while reducing concentration risk [19] - The top ten weighted stocks in the index account for 58% of the total weight, featuring companies like Huada Jiutian and Zhongwang Software, which are recognized as hidden champions [18][19]

Core Insights - The article discusses the emergence of "invisible champions" in the industrial software sector, which, despite their smaller size and lower visibility, hold significant market shares and core technologies in niche areas [1][2][22] - The launch of the first industrial software ETF (159108) on October 27 provides investors with a new tool to invest in these "invisible champions" [3][19] Group 1: Industrial Software Landscape - The industrial software sector is crucial for the digital transformation of manufacturing in China, with a focus on domestic alternatives due to international market dynamics [2][5] - The EDA (Electronic Design Automation) field is highlighted as a key area where domestic companies are gaining ground due to increased U.S. restrictions on technology exports to China [6][7] - Recent economic data indicates a gradual recovery in the manufacturing sector, with profits from large industrial enterprises reaching 46,929.7 billion yuan, a year-on-year increase of 0.9% [8][9] Group 2: Market Trends and Performance - The demand for industrial software is closely linked to the digital transformation of downstream manufacturing, with signs of recovery in production activities enhancing this demand [10] - The average revenue growth rate for industrial software index constituents reached 2.15%, while net profit growth saw a significant increase of 141.21% [11] - The industrial software index has shown strong historical performance, with a cumulative return of 251.95% since 2013, outperforming the broader software index [20][21] Group 3: AI Integration and Innovation - The integration of artificial intelligence (AI) is revolutionizing the industrial software market, with a projected compound annual growth rate of 19% from 2024 to 2029, expanding the market size from 31.86 billion yuan to 76.5 billion yuan [13] - AI is not only enhancing software performance but also transforming business models, making subscription-based services more appealing to users [12][14] - Domestic software companies are experiencing a significant shift from "usable" to "user-friendly" products, driven by long-term R&D investments and strategic acquisitions [16][17][18] Group 4: ETF and Investment Opportunities - The industrial software ETF (159108) is positioned as a window to observe the digital transformation of Chinese manufacturing, coinciding with a critical period for industry upgrades and self-sufficiency [19][22] - The ETF tracks the National Certificate Industrial Software Theme Index, with a diversified structure that includes vertical application software (35.01%), IT services (15.54%), and industrial control equipment (12.93%) [20] - The index's composition is heavily weighted towards small to mid-cap stocks, with over 70% of stocks having a market capitalization below 50 billion yuan, which supports growth potential while mitigating concentration risk [20]

Core Viewpoint - The current external environment and increasing policy risks highlight the urgency for China's technological self-reliance, accelerating the replacement process and creating new opportunities in industries such as trusted computing and industrial software [1] Industry Summary - From January to August 2025, China's software business revenue grew by 12.6% year-on-year, indicating a positive industry performance [1] - Policy initiatives include the establishment of a unified service platform for AI large models in the government sector, promoting resource consolidation [1] - Global demand for AI computing power continues to expand, as evidenced by strategic partnerships like OpenAI with Broadcom and Microsoft's deployment of superclusters on Azure [1] Focus Areas - In the trusted computing sector, attention should be given to opportunities in domestic hardware, foundational software (databases, operating systems, middleware), and application software [1] - The industrial software sector should focus on technological breakthroughs in product design and production control, including areas such as EDA, CAD, and CAE [1] Investment Vehicle - The Computer ETF (512720) tracks the CS Computer Index (930651), which selects listed companies in software development and IT services from the Chinese A-share market to reflect the overall performance of the computer industry [1] - The index emphasizes companies with high technological content and strong innovation capabilities [1]

Core Viewpoint - China has essentially completed its 2025 manufacturing goals and is progressing towards achieving a medium-level status among global manufacturing powers by 2035 [1] Industry Summary - The industrial sector has become a core driver of GDP growth in China [1] - High demand is observed in advanced fields such as equipment manufacturing, high-tech manufacturing, and digital products [1] - The manufacturing PMI continues to improve, indicating a positive trend in the sector [1] Technology and Innovation - The acceleration of industrial AI implementation is noted as a significant development [1] - The importance of technological self-reliance is emphasized in light of the U.S. plans to increase tariffs on China and restrict key software exports [1] - Key areas such as CAD, CAE, and industrial operating systems are expected to see continuous breakthroughs [1]

Investment Rating - The report maintains an "Overweight" rating for the computer industry, expecting the industry index to outperform the market index by more than 10% in the next six months [1]. Core Insights - The current external environment is causing disturbances, increasing policy risks and uncertainties, which highlight the urgency for technological self-reliance in China. This situation is expected to accelerate the domestic substitution process, presenting new development opportunities for the domestic software and industrial software sectors [2][27]. - The report suggests focusing on companies with competitive advantages in foundational hardware, foundational software (databases, operating systems, middleware), and application software within the domestic software sector. In the industrial software sector, attention should be directed towards companies excelling in product design, production control, and operational management [2][27]. Summary by Sections 1. Industry Performance Review - The Shenwan computer sector experienced a cumulative decline of 4.21% from October 9 to October 16, 2025, underperforming the CSI 300 index by 3.73 percentage points, ranking 28th among 31 Shenwan primary industries. Year-to-date, the sector has risen by 22.64%, outperforming the CSI 300 index by 5.27 percentage points [9][19]. 2. Valuation Situation - As of October 16, 2025, the Shenwan computer sector's PE TTM (excluding negative values) stands at 57.38 times, placing it in the 91.01 percentile for the past five years and the 84.33 percentile for the past ten years [19][21]. 3. Industry News - Key developments include the U.S. imposing export controls on critical software to China, a 12.6% year-on-year increase in China's software business revenue from January to August 2025, and strategic collaborations in AI technology between OpenAI and Broadcom [20][22]. 4. Company Announcements - Notable announcements include acquisitions and performance forecasts from various companies, indicating growth in sectors such as industrial software and smart logistics [23][24]. 5. Weekly Perspective - The report emphasizes the urgency for technological self-reliance in China, suggesting that the domestic software and industrial software sectors may see new growth opportunities due to increased policy risks and uncertainties [27]. 6. Recommended Companies - The report lists several companies to watch, including: - GuoDianYunTong (002152.SZ) for its stable growth in financial technology - Digital China (000034.SZ) as a core partner in the "Kunpeng + Ascend" industry chain - Inspur Information (000977.SZ) for its leadership in AI server markets [28].

Core Viewpoint - The U.S. government, led by President Trump, announced a 100% tariff on all Chinese goods starting November 1, along with export controls on key software, which will accelerate the domestic software replacement process in China [2][3]. Group 1: U.S. Trade Measures - The U.S. will impose a 100% additional tariff on all Chinese imports and export controls on key software starting November 1 [2]. - The U.S. measures are seen as a strategic move to pressure China ahead of the APEC summit, with potential implications for negotiations [2][3]. Group 2: China's Response and Industry Impact - China's Ministry of Commerce has implemented export controls on various technologies, including chip production equipment and lithium batteries, which are crucial for modern industries [2][3]. - China is expected to dominate the rare earth industry by 2025, holding 49% of global reserves and 69% of production, making it a critical resource for the U.S. [2][3]. Group 3: Domestic Software Development - The export controls on key software will accelerate the domestic replacement process in China, particularly in the fields of EDA, CAD, CAE, MES, and PLM [3][4]. - The shift towards domestic software is seen as essential due to China's heavy reliance on imported industrial software [3][4]. Group 4: Industrial Digital Transformation - The announcement of using WPS format in government documents marks a significant milestone for domestic software, indicating a breakthrough in the software replacement strategy [4]. - "Lighthouse factories," which utilize advanced technologies for efficiency, are expected to be prioritized in national strategic development plans, driving demand for industrial software [4]. Group 5: Investment Opportunities - Companies in the EDA, industrial software, operating systems, databases, network security, and industry IT sectors are highlighted as potential investment opportunities due to the ongoing shift towards domestic solutions [4]. - Specific companies to watch include: - EDA: Huada Jiutian, Guangliwei, Gai Lun Electronics [4] - Industrial Software: Dingjie Zhizhi, Nengke Technology, Suochen Technology, Zhongwang Software, Zhongkong Technology [4] - Operating Systems: China Software, Ruantong Power, Runhe Software, Chengmai Technology [4] - Databases: Dameng Data, Taiji Co. [4] - Network Security: Deepin Technology, Qilin Security, Sanwei Security, Guotou Intelligent, Qimingxing Chen [4] - Industry IT: Keda Xunfei, Hehe Information, Hengsheng Electronics, Kingsoft Office, Foxit Software, Tuolisi, Tax Friend Shares, Caixun Shares, Dingdian Software, Jiuyuan Yinhai, Jiahe Meikang, Guanglian Da, Kingdee International, Yonyou Network, Fanwei Network, Yuxin Technology, Newland [4].