CITIC Construction Investment: Computational power, hardware differentiation, and the localization of semiconductors are entering a period of acceleration

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that after explosive growth in computing power investment drove a round of prosperity in the hardware industry chain, the market began to worry about high capital expenditure that needed to be maintained through financing. The bank believes that opportunities for iteration with advanced technologies such as AIPCB and 800V are worth paying attention to. In terms of semiconductor localization, AI has raised global demand for storage, logic, and advanced packaging to a higher level. Boosted by both downstream manufacturing market share and upstream localization rate, the explosive power and sustainability of semiconductor equipment, materials, and components over the next three years has higher visibility, and is strongly optimistic about the opportunities for semiconductor localization. On the terminal side, the impact of component price increases represented by memory chips is nearing its end. Demand is expected to improve in the future. Embedding agents in terminals is accelerating, and we are waiting for explosions such as AI phones, AIPC, and AIoT to emerge.

CITIC Construction Investment's main views are as follows:

1. Domestic semiconductors: the original storage factory has entered the share redemption period, and the localization of equipment materials is accelerated

Currently, large models at home and abroad are still being iterated, and storage is still a common core mount for both training and inference; on this basis, the emergence and development of AIAgent has promoted further optimization of the storage tiered model. In addition to HBM/DDR, eSSD has also become the most scarce material on the server side. Looking back at the full year of 2026, the price of DRAM/NAND increased several times. Currently, the consumer side has been temporarily suppressed, but looking backwards, the evolution of end-side AI is expected to drive the continuous restoration of end-side storage demand. Combined with the AI side's still strong storage demand, the overall storage industry is expected to maintain a trend of undersupply, and the boom is expected to continue.

The boom in storage is driving the continuous expansion of production throughout the industry, compounding the development of advanced logic manufacturing processes and advanced packaging. Global investment in semiconductor manufacturing continues to grow, and semiconductor equipment and material segments are booming. For semiconductor equipment, the catch-up of the domestic semiconductor industry has opened up room for growth in terms of quantity and quality — wafer factory capacity construction and storage process upgrades are progressing simultaneously, providing opportunities for continuous verification and introduction of domestic equipment. At present, domestic equipment companies have formed a certain product base in etching, film deposition, cleaning, CMP and testing, etc., and are gradually shifting from single equipment breakthroughs to multi-category expansion and key process coverage. From the material side, since 2026, along with the contraction of mature overseas process supply and the expansion of domestic advanced manufacturing processes, the operating rate of domestic logic and specialty process wafer manufacturing has continued to be fully loaded, and the expansion of production of superimposed storage manufacturers and packaging and testing manufacturers has accelerated, and overall demand for semiconductor materials has entered a period of boom expansion. In the field of advanced packaging, global CoWOS production capacity is in short supply. On the basis of the continuous increase in sealing and testing boom, mainland OSAT manufacturers have increased their investment to seize advanced packaging opportunities, setting off a wave of production expansion.

2. Overseas computing power: High capital expenditure is accompanied by hidden concerns, and emphasis is placed on opportunities for technological iteration and upgrading

Along with the explosive growth in computing power investment, the hardware industry chain is booming. Since cash flow is already difficult to cover, the market is concerned about the sustainability of high capital expenditure that needs to be maintained through financing. The bank is optimistic about the demand for AI creation for a long time, and the industry chain suggests focusing on upgrade opportunities brought about by technological iteration. On the AIPCB side, the relationship between supply and demand remains tense. In order to meet high-speed transmission requirements with high computing power and low loss, ultra-high multi-layer, PTFE, and carrier boards are the main development trends. At the same time, as cabinet power continues to increase, the penetration rate of the 800V architecture is expected to increase, bringing huge incremental demand for power devices and analog chips.

3. End side: the trend of terminal AI industry is clear

AI is driving a new wave of content generation, search, and productivity-related applications, covering terminal categories including smartphones, PCs, robots, XR, and the Internet of Things, providing a new user experience. The bank believes that the end side can provide the differentiated value of privacy protection, immediate response, low cost, and active response, and is expected to become the next wave of AI. Embedding agents in terminals is a long-term trend, thereby driving the continuous upgrading of hardware such as SoC, acoustics, sensors, batteries, and heat dissipation.

IV. Relevant Targets

1. Domestic semiconductors

Storage: Lanqi Technology, Beijing Junzheng; Semiconductor Equipment and Materials: (1) Silicon Wafer: Shanghai Silicon Industry, Leon Micro, TCL Central; (2) CMP Materials: Dinglong Co., Ltd.; (3) Precursors and Targets: Yake Technology; (4) Lithography Consumables: Tongcheng New Materials, Dinglong Co., Ltd., Shanghai Xinyang, Luwei Optoelectronics, Polymeric Materials; Advanced Packaging and Testing: Changdian Technology, Huatian Technology, Weitsu Technology, Huicheng Co., Ltd.

2. Overseas computing power

PCB: (1) PCB: Shanghai Electric Power Co., Ltd., Shennan Circuit, Pengding Holdings, Jingwang Electronics; (2) CCL: Huazheng New Materials; (3) Upstream: Telford Technology, Honghe Technology, Dingtai Hi-Tech; AI power supplies: Xinjie, Chip Connect, Star Semiconductor, Silan Micro, Shengbang, Nanxin, Jingfeng Mingyuan, Xinpeng.

3. End side

AI mobile phone: (1) Apple industry chain: Lixun Precision, Lingyi Intelligent Manufacturing, Pengding Holdings, Dongshan Precision, Gaowei Electronics, Crystal Optoelectronics, Lante Optics, Lansi Technology, Ruisheng Technology, Suzhou Tianmai, Zhuhai Guanyu; (2) Android industry chain: Communication Holdings, Huaqin Technology, Longqi Technology, Howell Group, Shunyu Optical Technology, Zhuo Shengwei, Weijie Chuangxin, Shengbang Co., Ltd., Shunluo Electronics; AIPC: Huaqin Technology, Longqi Technology, Haopeng Technology, Chunqiu Technology, Chunqiu Everbright Tongchuang, Xinhai Technology; Robots: (1) Assembly OEM: Lansi Technology, Lingyi Intelligent Manufacturing; (2) Sensors: Core Motion Lianke, Suteng Juchuang, Obi Zhongguang; (3) Computing power: Rockchip, Quanzhi Technology; (4) Others: Fengyi Technology, Fuliwang, Zhaowei Electromechanical; AIoT: Lexin Technology, Ruixin Technology, Hengxuan Technology, Juxin Technology, and Jingchen Co., Ltd.

5. Risk Reminder

1. Trade frictions between China and the US may further intensify in the future. There is a risk that the US government will set import and export restrictions or other trade barriers; 2. The upstream AI infrastructure has invested a large amount of capital in R&D and construction, and there is a risk that AI applications will fall short of expectations on the end side; 3. Adverse factors in the macro environment may slow down the growth rate of the global economy, and residents' income, purchasing power and consumption intentions will be affected. There is a risk that downstream demand will fall short of expectations; 4. Commodity prices have not stabilized, the possibility of continuing to rise is not ruled out. Risk; 5. The global political situation is complicated, disputes between major economies intensify, and uncertainty in the international trade environment increases, which may slow down the growth rate of the global economy, thereby affecting the structure of market demand, and there is a risk of the international political and economic situation.