This article focuses on summarizing the recent updates from institutions regarding the popular sectors in the semiconductor industry.
1. Core Insights
The overall perspective of analysts has not changed significantly since the beginning of the year, with investment strategies primarily revolving around one keyword: valuation expansion. Analysts believe that the current electronics industry is at a point where three cycles are resonating: the macro policy cycle, the industry inventory and corporate profit cycle, and the AI innovation cycle.
At the same time, the semiconductor industry is facing an upward shift in valuation due to rapid expansion of funds such as ETFs. During the mild recovery of the semiconductor fundamentals, the market capitalization space may be much larger than the potential for EPS revisions (as seen this year).
Key recommended stocks include: memory segment companies such as Demeili, Jiangbolong, Baiwei Storage, and Zhaoyi Innovation; analog segment companies like Naxinwei, Sirepu, Shengbang, and Jiewate; as well as SMIC. The core computing power remains focused on two companies: Aojie Technology and Xinyuan Co.
2. Anti-Dumping Investigation on Analog Chips
The Ministry of Commerce announced that starting from September 13, 2025, it will initiate an anti-dumping investigation on imported analog chips originating from the United States. In January 2025, a spokesperson from the Ministry mentioned the possibility of legally investigating related products imported from the U.S., and this announcement marks the formal implementation.
From an analyst’s perspective, this anti-dumping investigation is actually beneficial for improving the previously fierce price competition environment in the domestic analog chip market. It is also expected to accelerate the localization process of related product lines.
From the fundamental perspective of analog chips, the sector has entered an upward cycle. TI and ADI have seen their revenues decline year-on-year for nine and seven consecutive quarters, respectively, but have recently entered a phase of positive year-on-year growth for two consecutive months. Both companies are relatively optimistic about the recovery of the global analog chip industry and the trend of orders, especially in the industrial sector.
Additionally, domestic companies like SMIC and Huahong Semiconductor have also mentioned a significant increase in demand for analog chips during their recent earnings announcements, particularly for BCD platforms used in power management chips.
Therefore, whether it is the cyclical recovery of the industry itself or domestic substitution, the logic is very smooth, and the entire anti-dumping investigation is a positive trend for prices.
From both volume and price perspectives, analog chips are currently a sector worth investing in. In the short term, domestic analog chip companies have made significant R&D investments in recent years and have launched many new products, which now have the opportunity to enter a rapid growth phase.
In the long term, analog chips are fundamental chips in electronic terminal products, and their relevance to AI, whether in data centers or future AI edge applications, can bring incremental growth.
From a spatial perspective, the domestic substitution space for analog chips is very ample. According to 2024 data, China accounts for about 35% of the global analog chip market and is a major source for several overseas manufacturers. The combined annual revenue from TI, ADI, and MPS from China is approximately $6.3 billion.
Looking at the domestic analog chip leader, Shengbang’s revenue in 2024 is expected to be only 3.35 billion RMB, indicating a significant gap that represents a high ceiling for domestic substitution.
From the downstream perspective, industries such as industrial, automotive, and AI are key areas for these overseas manufacturers and are also focal points for future localization. Domestic chip companies are particularly concerned about the improvement of profit margins.
The improvement of profit margins is a natural process. As revenues recover and gross margins stabilize, along with some cost controls, net profit margins will also recover. The speed of profit margin improvement is expected to be more optimistic than revenue growth.
Considering the product layout of domestic analog chip companies and the relevance of their products to the anti-dumping investigation, along with the current stock prices of these companies, the key recommendations are Naxinwei, Sirepu, and Shengbang Co.
3. Memory Sector
After Micron suspended its pricing, the market’s expectations for subsequent price increases have become increasingly certain. Therefore, this weekend, there was a noticeable increase in market sentiment, following last week’s price increase by SanDisk, and the overall attention to memory is gradually rising.
We believe the logic of the memory sector has three layers: the first layer is the cycle, the second layer is localization, and the third layer is the diversification of packaging processes, moving from a previously singular path to a multi-faceted approach.
First and foremost, for memory, the most important factor is the cyclical recovery of the industry. Based on this recovery, the valuation expansion brought by future growth potential is significant. The trend of cyclical recovery remains unchanged, and the performance of all memory-related manufacturers will show quarter-on-quarter improvement.
In terms of space, it can be divided into two layers. From the localization perspective, in the global $250 billion memory market, enterprise applications account for about 30%, and mobile devices also account for nearly 30%. Domestic manufacturers have previously had limited opportunities in these mid-to-high-end applications.
For example, in enterprise-level products used in servers, the domestic market space exceeds 100 billion RMB, but domestic manufacturers only hold 10% to 20% of the market share, leaving over 80 billion RMB of localization space.
Therefore, during the phase of increasing downstream storage demand, the capital expenditures of Alibaba and Tencent are rising, which will gradually enable domestic manufacturers to capture this market segment. From the perspective of enterprise-level storage localization, domestic storage module manufacturers have relatively high revenue elasticity in this field.
On the other hand, in advanced packaging, there are also two layers. The first layer is that localization has brought many opportunities, whether in terminals like mobile phones and PCs or in cloud enterprise applications, which are gradually maturing. This market accounts for 60% to 70% of the entire memory sector.
In this market, the gross margins of mid-to-high-end products are significantly higher than those of ordinary products. Therefore, on one hand, the market space is vast, and on the other hand, there is an opportunity for gross margin increases. Advanced packaging is expected to bring substantial incremental space in the next three to five years.
On this basis, the memory sector itself is also undergoing changes. The current computing architecture is shifting from a singular model to a multi-dimensional computing model catalyzed by AI, which will also lead to changes in the memory architecture.
In the next three to five years, we will see continuous changes in packaging solutions. Such ongoing changes will correspond to sustained catalysts in stock prices, with both broad market space and catalytic factors, along with gradual validation progress and volume increases in product lines.
Currently, the situation of cyclical price increases and the expectations of various companies in the coming quarters are noteworthy. Regarding price increases, if we look at the price index, aside from DDR4 and other products affected by the discontinuation of older processes, which have seen significant price increases, other products remain at low levels compared to the peaks of 2024. Therefore, original manufacturers have sufficient motivation to raise prices, as NAND prices are still relatively low compared to the highs of 2024.
Secondly, the gross margin situation of original manufacturers is crucial, as it determines whether they need to reduce production or have the motivation to raise prices. For instance, SanDisk is expected to break even in the second quarter of 2025, but overall net profit levels remain low.
Additionally, industry channels indicate that NAND original manufacturers have not yet reached ideal profit levels. Therefore, aside from high-margin products like HBM and DDR5, most memory products still have upward potential.
From the demand perspective, it can be divided into two layers: the first layer is in servers, and the second layer is in some edge applications. The price increases in servers will lag behind those of consumer products like PCs and mobile phones.
However, it can be observed that the overall demand for servers is on the rise, as evidenced by the increasing capital expenditures of Alibaba and Tencent.
From this perspective, including the market of non-listed companies, enterprise-level revenues are continuously increasing in the second half of the year. Overall, the products with the best price increases in the second half of the year are mainly concentrated in server NAND and server DDR products.
On the other hand, in the mobile phone market, the third quarter is also a seasonal transition period, and prices are expected to rise slightly. For domestic companies, due to long-term contracts, their prices typically lag behind the spot market prices by about two to three months.
Therefore, although we saw some recovery in module manufacturers’ gross margins in the second quarter, the price increases observed in April and May may reflect in the third quarter’s performance.
Thus, it is expected that gross margins will gradually recover in the third and fourth quarters. The mobile phone market is entering a traditional seasonal peak, and the capacity of new models is also increasing, leading to an overall price increase. Whether from consumer demand or enterprise-level demand, the current pull on storage is positive, and expectations for the fourth quarter remain optimistic.
4. ASIC Computing Power
ASIC computing power sector has seen significant changes in the industry, particularly following Broadcom’s third-quarter report, which exceeded expectations and brought considerable attention to AISC. Broadcom’s overall revenue in the third quarter of 2025 reached $16 billion, with semiconductor revenue reaching $9.2 billion, and AI semiconductor revenue reaching $5.2 billion, showing a further growth trend compared to previous quarters, with XPU-related business accounting for 65% of the entire AI business.
Moreover, the demand from Broadcom’s three major customers for ASICs continues to grow, and there is a potential new customer placing orders exceeding $10 billion. Overall, the company also expects the entire AI business outlook for 2026 to exceed expectations.
From a product perspective, Google’s seventh-generation TPU has released some performance parameters. In terms of computing power, the peak computing power of a single chip has reached 4614 Tflops, which is now comparable to NVIDIA’s GB200.
Therefore, from the perspective of learning from overseas, the ASIC semiconductor industry is showing a continuous positive trend in both performance realization and product capabilities, particularly in relation to NVIDIA’s GPU camp.
Conversely, looking at the domestic situation, from a regulatory perspective, in August 2025, CCTV media also pointed out that from both hardware and software perspectives, overseas NVIDIA-related H20 chips have backdoor risks.
Analysts believe that considering geopolitical and cybersecurity factors, or from the perspective of cloud vendors, cloud inference chips can now choose to adopt multiple parallel paths. However, among these various options, compliant self-developed ASIC projects are likely to become a necessary choice.
From the perspective of domestic cloud vendors, Alibaba’s second-quarter report for 2025 exceeded market expectations, and the company also mentioned preparing backup plans in response to global AI chip supply and policy changes.
According to overseas media reports, Alibaba is currently developing new AI chips that are in testing, which will be used for AI inference tasks and will be compatible with NVIDIA’s products. Additionally, from a foundry perspective, they are also using domestic wafer fabs for production.
Analysts believe that for cloud vendors, whether through self-development or collaboration with other ASIC manufacturers, utilizing domestic supply chains and self-developed designs is an inevitable trend.
In addition to CSP cloud vendors, Baidu’s Kunlun chip has recently been widely adopted by both internal and external customers. The Kunlun P800 has successfully deployed over ten thousand clusters in the domestic industry, with a cumulative deployment exceeding tens of thousands of units and a maximum cluster size of over thirty thousand units.
In the recent three centralized procurement projects for general-purpose AI computing devices by China Mobile for 2025 to 2026, AI servers based on Kunlun chips secured 70%, 70%, and 100% of the shares, ranking first in all three projects, with the total order amount reaching the billion level.
Overall, whether from the domestic perspective, regulatory aspects, cloud vendors, or chip design companies, there is a continuous push for localization. The entire development of AI in China and the Western semiconductor ecosystem is undoubtedly heading towards a decoupling trend.
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