Goldman Sachs is bullish on Chinese technology stocks! The fundamentals are still constructive, and the 11 major circuit segments welcome opportunities
The Zhitong Finance App learned that Goldman Sachs said in a research report released on October 19 that the bank sorted out 11 sub-industries of the Chinese technology industry in the context of current market fluctuations and seasonal factors, and focused on its core investment logic. The bank believes that the fundamentals are still constructive, mainly reflected in the following aspects:
(1) Generative AI drives the increase in AI server shipments and specification upgrades, benefiting leading global companies in the fields of semiconductors (such as TSMC), optical communications (such as Xinyisheng), PCB (such as Shenghong Technology), and ODM (such as Hon Hai/IFF);
(2) AI spending is expanding from leading cloud service providers (CSPs) to new cloud (NeoCloud) /enterprise customers, supporting AI infrastructure to continue in the upward cycle;
(3) In the consumer electronics sector, leading brands and high-end models are relatively less affected as memory costs remain high.
Geopolitical tensions and policies remain key variables in the AI server supply chain. However, the AI server rack's platform transition is coming to an end, which will support growth over the next few quarters. After separately evaluating demand, supply and investment opportunities in each segment, the bank confirmed the following target “buy” ratings:
(1) Semiconductors: TSMC.US, MediaTek, SMIC (00981,688981.SH), Huahong (01347), Changxin Technology (688825.SH), China Micro (688012.SH), North China Huachuang (002371.SZ);
(2) Optical Communications: Xinyisheng (300502.SZ), Robotec (03757), VPEC, Lante Optics (688127.SH), FOCI;
(3) AI servers: Hon Hai/Industrial Wealth Federation (601138.SH), Wiwynn/Wistron (Wistron), AVC/FosiTek, Jinpan Technology/King Slide, Lixun Precision (02475);
(4) PC: Lenovo, Huaqin;
(5) Smartphones and iPhones: SZS, Lingyi Intelligent Manufacturing (002600.SZ);
(6) PCB/CCL/ABF: Shengyi Technology (600183.SS), Shenghong Technology (300476.SZ), Shanghai Electric Power Co., Ltd. (002463.SZ), Shennan Circuit (002916.SZ), Taiwan Power (Elite Material);
(7) Satellites: UMT, Qiqi Technology (WNC), Tongyu Communications;
(8) Autonomous driving/Robotaxi: My Little Pony (02026), Wenyuan Zhixing (00800), Horizon Robotics (09660);
(9) Electricity: Delta Electronics (Delta), Innosecco (02577).
Below are the details of each segment.
1. Semiconductors
Goldman Sachs anticipates that as generative AI simultaneously drives the upgrading of AI server shipments and specifications, and the “local for local demand (local for local supply)” strategy promotes supplier diversification and ensures supply, capital expenditure on memory chips and semiconductors with advanced manufacturing processes will continue to grow in the future.
Goldman Sachs anticipates that advanced manufacturing processes and memory chip production capacity expansion will benefit aspects such as foundry, memory chips, AI chips, semiconductor production equipment (SPE), and advanced packaging in the semiconductor supply chain. In terms of memory chips, the bank expects strong growth in China's DRAM and HBM, mainly due to strong growth in AI server shipments and a continued increase in the number of AI models. At the same time, the company is expanding production capacity to meet customer needs and promoting supply chain diversification.
Purchases: TSMC, MediaTek, SMIC, Huahong, Changxin Storage, China Micro.
2. Optical communication
Goldman Sachs is optimistic about the future growth of the optical module market. The main driving factors include continued growth in AI spending, product structure upgrades to 800G/1.6T and higher speed transmission rates, and the continuous increase in the application rate of optical communication in the interconnection field.
The bank expects shipments of 800G/1.6T optical modules to reach 45 million/33 million units respectively in 2026, and further increase to 49 million/71 million units by 2027; at the same time, 3.2T optical modules will gradually be released in 2027/2028, and shipments are expected to reach 23 million/68 million units (link to report).
As the AI infrastructure continues to expand and the computing capacity of each link continues to improve, the bank expects the overall serviceable market (TAM) to expand from scale-out to scale-up, thereby benefiting products such as pluggable optical modules, NPO, and CPO (report link).
Purchases: Xinyisheng, Robotechnik, Eoptolink, Landmark, VPEC, Largan, FOCI.
3. AI server
Goldman Sachs anticipates that AI servers will be further expanded, mainly driven by continued growth in generative AI infrastructure investment and specification upgrades brought about by the migration of new platforms. The bank expects the year-on-year growth rate of AI server rack shipments from 2026 to 2028 to reach 238%, 75%, and 49%, respectively, and the world's leading cloud service provider is expected to become the main customer.
Based on 8-GPU equivalent AI servers, Goldman Sachs expects shipments to reach 2.7 million units and 3.3 million units in 2027 and 2028, respectively, mainly driven by increased demand for ASIC-based AI servers, because customized designs can make ASIC AI servers more efficient.
Purchases: Hon Hai/IFF, Wiwynn/Wistron, AVC/FosiTek, King Slide, Lixun Precision.
4. PC
Goldman Sachs expects the year-on-year growth rate of global PC shipments from 2026 to 2028 to be -14%, -5%, and 0%, respectively, with shipments reaching 255 million, 243 million and 244 million units, respectively. This forecast takes into account the pressure brought about by rising memory and CPU costs in the short term, as well as the effects of the easing of the switching cycle after the end of the Windows 10 life cycle. The bank is still optimistic that the AI PC penetration rate will increase further in the future, and continuing to launch new AI applications and AI application scenarios will be an important driving force.
Purchases: Lenovo, Huaqin.
5. Smartphones and iPhones
Goldman Sachs expects global smartphone shipments to grow at a year-on-year rate of -10%, 2%, and 2%, respectively, from 2026 to 2028, mainly considering that market saturation and rising memory costs will put pressure on consumers to buy. As cost pressure continues, the bank expects the revenue contribution of high-end smartphones to continue to increase, as high-end models are relatively less sensitive to price increases.
Goldman Sachs is still optimistic that the penetration rate of folding screen phones will increase in the future. Leading brand manufacturers will continue to launch new products, such as the folding screen iPhone DUO. At the same time, new forms and features will also bring new usage scenarios and improve the user experience.
Purchases: SZS, Linyi Intelligent Manufacturing, Fositek.
6. PCB/CCL/ABF
Goldman Sachs expects that demand for AI server PCB/CCL will continue to grow, and specification upgrades will bring higher stand-alone value driven by increased demand and technological progress. At the same time, the industry's production capacity will continue to expand, and capacity utilization will remain at a high level.
Overall, the bank expects the global AI server PCB/CCL market to reach 38 billion US dollars/22 billion US dollars respectively in 2027, up from 27 billion US dollars/19 billion US dollars; by 2028, it will further reach 84 billion US dollars/48 billion US dollars. This means that from 2026 to 2028, the AI PCB/CCL Total Service Market (TA) compound annual growth rate will reach 148%/161%, respectively.
Purchases: Shengyi Technology, Shenghong Technology, Shanghai Electric Power Co., Ltd., Shennan Circuit, Taiwan Power Company.
7. Low Earth Orbit Satellite (LEO)
Goldman Sachs has seen an acceleration in low-orbit satellite launches, while the number of low-orbit satellites in orbit continues to grow, and it is expected that this trend will continue. Under its benchmark scenario, the number of global low-orbit satellites in orbit is expected to reach 24,000 and 305,000, respectively, by 2028 and 2031, thereby benefiting operators, ground stations, user terminals, and components in the satellite industry chain. Global satellite operators are actively updating satellite launch plans and expanding satellite applications, including in-flight communications and space data centers, to promote the commercialization process.
Purchases: UMT, WNC, Tongyu Communications.
8. Autonomous Driving/Robotaxi
Goldman Sachs sees that fleet deployment in the Chinese and overseas Robotaxi markets continues to advance. The driving factors include lower costs, expanded service coverage, improved software capabilities, and increased public acceptance. The bank expects China's Robotaxi fleet to grow from 5,000 vehicles in 2025 to 705,000 vehicles in 2030, and 3.1 million vehicles in 2035; the Robotaxi penetration rate is expected to increase from 0.1% in 2025 to 12% in 2030, and 36% in 2035. Overall, the bank is still optimistic that the popularity rate of autonomous driving will increase, and more cost-effective solutions and specification upgrades will further enhance consumer interest.
Purchases: My Little Pony Zhixing, Wenyuan Zhixing, Horizon Robot.
9. AI software
The growth rate of China's software industry in the first 8 months of 2026 (8M26) was 8.8%, down from 12.6% in the first 8 months of 2025 (8M25). Although Goldman Sachs sees that software spending is still under pressure as more capital is allocated to AI basic models and computing platforms, the bank believes that the acceleration of the commercialization process of AI agents and the continuous expansion of application scenarios will gradually drive customer IT spending growth.
As AI functions continue to improve and AI efficiency continues to improve, Goldman Sachs sees that corporate customers are increasingly willing to use AI, such as using AI for interviews and using AI manufacturing to improve production site efficiency.
10. Telecom
In the first 7 months of 2026 (7M26), 5G base station deployments and the number of new 5G base stations continued to decline year on year. As China's 5G infrastructure capital expenditure investment declines, Goldman Sachs expects to add 540,000 5G base stations in 2026, while the number of 5G base stations will be added in 2025 (according to data from China's Ministry of Industry and Information Technology).
In addition to the slowdown in 5G base station deployment, Goldman Sachs has also seen Chinese telecom operators facing pressure to increase VAT rates. Since January 2026, the VAT rate has been raised to 9% from the previous 6%. However, the bank expects operators to develop new apps to partially offset this impact. In addition, China Telecom operators have recently launched AI Token packages for ToC (consumer) and ToB (enterprise) users, charging customers through subscription fees or token consumption.
11. Electricity
Goldman Sachs expects to gradually expand 400VDC and 800VDC solutions as AI servers migrate to more computationally capable platforms and place higher demands on power efficiency and power density. Overall, the bank believes that there are significant incremental opportunities for HVDC (HVDC) solutions, and that the value of stand-alone machines will also increase. The bank is also seeing increasing adoption of GaN products, which can achieve higher switching frequencies to meet 800V HVDC power density requirements and help customers reduce power loss.
Purchases: Delta Electronics, Innoseco.