1. Core Viewpoint: Supply and demand resonance drives the “Davis Double Click,” establishing a golden cycle during the 14th Five-Year Plan
The Shenwan Military Industry team has continuously released key judgments through multiple conference calls since the beginning of the year – military semiconductors will usher in a certain golden cycle during the “14th Five-Year Plan,” supported by multiple in-depth reports. From the current industrial situation, military semiconductors have formed a dual favorable pattern of strong demand from both military and civilian sectors and technological breakthroughs on the supply side: On the demand side, the upgrading of national defense informatization, intelligence, and unmanned systems has generated incremental demand, while the acceleration of military-to-civilian transitions and domestic replacements in high-end civilian products is synchronized; on the supply side, leading enterprises continue to break through technological barriers in core areas such as FPGA, ADDA, and T/R components, significantly accelerating the domestic replacement process. Against this backdrop, relevant targets with technological advantages and production capacity reserves are expected to experience a “performance growth + valuation uplift” Davis Double Click, among which Unisoc, Fudan Microelectronics, Chengdu Huamai, Zhenlei Technology, and Guobo Electronics are core enterprises worth paying attention to.
2. Demand Side: Dual military and civilian demand drives a trillion-level market space
2.1 National Defense Sector: Transformation driven by “Three Modernizations” leads to explosive demand growth
The form of modern warfare is deeply evolving towardsinformatization, intelligence, and unmanned systems, with military semiconductors serving as the “core engine” for equipment performance upgrades, showing a rigid growth trend in demand.
In the field of informatization, the demand for “high-speed data processing + large-capacity storage” in combat command systems and radar communication equipment has surged. For example, new integrated command platforms rely on high-performance processor chips to achieve real-time analysis and decision-making responses for massive battlefield data, driving the annual growth rate of military-grade CPUs and storage chips to exceed 20%; in the field of intelligence, smart munitions and UAVs have significantly increased their reliance on high-precision sensor chips and AI computing power chips – for high-end UAVs, the image recognition chips they carry need to achieve millisecond-level target locking in complex environments, and it is expected that by the end of the “14th Five-Year Plan,” the semiconductor demand scale in the UAV field will exceed 5 billion yuan; in the field of unmanned systems, the mass deployment of unmanned vessels and combat vehicles has driven the demand for highly reliable control chips and anti-jamming communication chips, becoming an important growth pole in the military semiconductor market.
2.2 Civilian Sector: Military-to-civilian transitions empower high-end scenarios, and domestic replacements enter an acceleration phase
Military semiconductors, with their technological advantages of “high reliability and high stability,” are penetrating high-end civilian scenarios at an accelerating pace, especially ininstruments, measurement equipment, and automotive electronics, where the domestic replacement process has entered a critical breakthrough period.
In the field of instruments and measurement equipment, high-precision AD/DA chips are core components – previously, China’s high-end scientific research instruments (such as mass spectrometers and oscilloscopes) had an import dependency of over 90% for AD/DA chips. However, with technological breakthroughs from companies like Chengdu Huamai and Zhenlei Technology, domestic AD/DA chips have now caught up with international counterparts in sampling accuracy and conversion rates, and have already replaced imports in some university research equipment and industrial testing instruments. It is expected that the domestic replacement rate will increase to over 30% in the next three years; in the automotive electronics sector, the demand for military-grade power management chips and high-performance FPGA chips has significantly increased due to battery management systems (BMS) and domain controllers for intelligent driving in new energy vehicles – Unisoc and Fudan Microelectronics have reached cooperation with leading automotive companies, and their automotive-grade chips have outstanding advantages in high and low-temperature resistance and electromagnetic interference, which are expected to gradually break the monopoly of international manufacturers like Infineon and Texas Instruments, capturing market share in high-end automotive electronics chips.
3. Supply Side: Core enterprises break through technology, accelerating domestic replacements
3.1 FPGA: Unisoc + Fudan Microelectronics lead technological iteration
FPGA (Field Programmable Gate Array), as the “programmable brain” of military equipment, is widely used in key scenarios such as signal processing, data encryption, and communication protocol conversion, and the domestic market has long been dominated by international manufacturers like Xilinx and Altera. In recent years,UnisocandFudan Microelectronicshave achieved technological surpassing and market breakthroughs through continuous R&D investment.
Unisoc has a deep layout in the FPGA field, with shipments of the new generation of FPGA and RF-SOC chips expected to grow by over 30% year-on-year in the first half of 2025, with inventory sufficient to cover annual demand. On the evening of August 20, 2025, Unisoc disclosed relevant announcements for its 2025 semi-annual performance briefing, reporting a revenue of 3.047 billion yuan in the first half of the year, a year-on-year increase of 6.07%; net profit attributable to the parent company was 692 million yuan, a year-on-year decrease of 6.18%; and net profit excluding non-recurring gains and losses was 653 million yuan, a year-on-year increase of 4.39%. The company continues to increase R&D investment, reaching 687 million yuan in the first half of the year, a year-on-year increase of 1.41%, obtaining 26 invention patents and 6 utility model patents. Its radiation-resistant FPGA chip has a logic resource scale exceeding 1 million gates and a computation speed of 2GHz, successfully applied in the new generation of phased array radar, achieving a 40% improvement in radar detection accuracy. In the emerging commercial aerospace market, the company has launched a series of products including aerospace-grade FPGAs, read-back refresh chips, memory, and bus interfaces, providing complete aerospace system solutions, which have been applied in bulk by core users.
Fudan Microelectronics has also achieved remarkable results in the FPGA field. As a professional company engaged in the design, development, production (testing), and provision of system solutions for ultra-large-scale integrated circuits in China, it has developed the country’s first billion-gate FPGA, the first heterogeneous fusion billion-gate PSOC chip, and the first reconfigurable chip FPAI (FPGA + AI) chip for artificial intelligence applications. In 2024, the company achieved a revenue of 3.59 billion yuan, a year-on-year increase of 1.51%; net profit attributable to shareholders of the listed company was 573 million yuan, a year-on-year decrease of 20.43%. In the first quarter of 2025, it achieved a revenue of 888 million yuan, a year-on-year decrease of 0.54%; net profit attributable to shareholders of the listed company was 136 million yuan, a year-on-year decrease of 15.55%. The company focuses on the low-power field, with its FPGA chips consuming 25% less power than international counterparts, achieving bulk applications in satellite communications and avionics. Currently, the domestic military FPGA market’s domestic replacement rate has increased from 15% in 2020 to 35% in 2025, with the “dual leaders” collectively occupying over 60% of the domestic military FPGA market share.
3.2 AD/DA: Chengdu Huamai + Zhenlei Technology break through “bottleneck” technology
AD/DA (Analog-to-Digital and Digital-to-Analog) chips are the key bridge connecting “analog signals and digital signals,” and are indispensable in military communications, electronic countermeasures, and radar systems, with high-end products previously relying on imports. Currently,Chengdu HuamaiandZhenlei Technologyhave achieved core technological breakthroughs, breaking foreign technological monopolies.
Chengdu Huamai focuses on the R&D and production of high-performance AD/DA chips, completing its IPO in 2024 with a transaction amount of 1.5 billion yuan. The high-speed, high-precision AD chip developed by the company has a sampling rate of 5GHz and a conversion accuracy of 16 bits, matching the top products of ADI (Analog Devices), and has been applied in a new type of electronic countermeasure equipment, helping improve the precision of capturing enemy electromagnetic signals to the nanosecond level. The company has a deep technical accumulation, with an office area of nearly 3,500 square meters, and is one of the national “909” engineering construction projects. Through continuous technological innovation, it is constantly consolidating its advantageous position in the AD/DA chip field.
Zhenlei Technology achieved impressive performance in the first half of 2025, with a revenue of 205 million yuan, a year-on-year increase of 73.64%; net profit attributable to the parent company was 62.3196 million yuan, a year-on-year increase of 1006.99%, with basic earnings per share of 0.29 yuan. The company focuses on terminal RF front-end chips, high-density packaged microwave modules, and microsystems, integrating design, development, manufacturing, and sales as a private technology enterprise. Its main focus is on low-noise AD/DA chips, with a dynamic range of over 80dB in its developed products. After application in military shortwave communication systems, the communication signal’s anti-jamming capability improved by 30%, effectively ensuring smooth communication in complex battlefield environments. Currently, the AD/DA chips from both companies cover over 70% of domestic military equipment models, with the domestic replacement rate increasing by 20 percentage points compared to 2022.
3.3 T/R Components and GaN Power Modules: Guobo Electronics promotes industrial upgrades
T/R components are the “core unit” of phased array radars, while GaN (Gallium Nitride) power modules are the next-generation semiconductor power devices, both determining the performance ceiling of radar and communication equipment. Guobo Electronics, as a leading enterprise in this field in China, continuously promotes technological upgrades and industrial scaling.
Guobo Electronics has mature technology in the R&D and production of T/R components, with excellent product performance. In China’s new generation of shipborne radars, the use of Guobo Electronics’ T/R components has improved radar detection range by 50%, and its anti-jamming capability has reached international advanced levels. In the GaN power module field, Guobo Electronics has achieved breakthroughs in mass production, with product power density reaching 8W/mm² and efficiency exceeding 85%, doubling the performance compared to traditional GaAs modules. These have been applied in military communication base stations and radar transmission systems, promoting a generational leap in the performance of China’s military equipment. The company continues to expand its market share and consolidate its leading position in the T/R components and GaN power module fields through technological and scale advantages.
In summary, military semiconductors are currently in a golden development period of “demand expansion + supply optimization.” Core tracks such as FPGA, ADDA, T/R components, and GaN power modules, under the technological leadership of leading enterprises, will continue to accelerate the domestic replacement process, and relevant core targets are expected to fully enjoy the industrial dividends and achieve long-term value growth.
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