The semiconductor industry, as the core of the information technology sector, directly reflects the pulse of global technological development. According to the latest data from the Semiconductor Industry Association of America, global semiconductor sales are expected to reach $179.7 billion in the second quarter of 2025, representing a year-on-year increase of nearly 20% and a quarter-on-quarter increase of 7.8%. This data not only confirms the strong recovery trend of the global semiconductor industry but also highlights the continuous optimization of the industry’s supply-demand structure. Meanwhile, domestic semiconductor companies are making breakthroughs in key areas such as advanced packaging and chip design, accelerating the process of domestic substitution and injecting strong momentum into the high-quality development of China’s semiconductor industry.
The Core Logic Behind the Recovery of the Global Semiconductor Industry
Comprehensive Recovery of Downstream Demand
From the demand side, the recovery of the global semiconductor industry is attributed to the explosive demand across multiple application scenarios. On one hand, the rapid development of the artificial intelligence industry has become a core driving force. The demand for high-performance chips in areas such as AI model training, intelligent driving, and data center construction is growing exponentially, with high-end GPU products from companies like NVIDIA and AMD remaining in short supply, directly boosting the overall sales of the semiconductor industry. For instance, in the data center sector, the global market size for data center chips is expected to grow by 45% year-on-year in the second quarter of 2025, making it one of the fastest-growing segments in the semiconductor industry.
On the other hand, the recovery of the consumer electronics market also provides significant support for the semiconductor industry. With the ongoing wave of 5G smartphone upgrades and the proliferation of wearable devices and smart home products, the demand for mid-to-low-end chips in the consumer electronics sector is steadily rebounding. According to market research firm IDC, global smartphone shipments are expected to grow by 8% year-on-year in the second quarter of 2025, with the proportion of mid-to-high-end models equipped with advanced process chips rising to 60%, further driving demand growth in the semiconductor market. Additionally, the rapid development of the new energy vehicle industry has also become an important growth point for the semiconductor industry, with the market size for automotive semiconductors (especially automotive-grade MCUs and power semiconductors) expected to grow by 28% year-on-year in the second quarter of 2025, making it the second-largest growth engine after data center chips.
Optimization of the Supply-Demand Structure in the Industry Chain
On the supply side, the tight capacity situation in the global semiconductor industry chain is gradually easing, while the capacity structure is continuously optimizing. During the period from 2023 to 2024, major global semiconductor manufacturers have increased investments in mature process capacities, with companies like TSMC, Samsung, and Intel continuously releasing capacity in mature processes such as 28nm and 40nm, effectively alleviating the previous chip shortages in the consumer electronics and automotive electronics sectors. Meanwhile, the research and production processes for advanced processes are also steadily advancing, with TSMC’s 3nm process achieving mass production, and new generation chip products from companies like Apple and Qualcomm adopting this process technology, further enhancing the performance and added value of semiconductor products.
Furthermore, the inventory adjustment cycle in the semiconductor industry chain has basically ended, and industry inventory levels have returned to a reasonable range. Since the second half of 2024, the inventory turnover rate of global semiconductor companies has continued to improve, with the average industry inventory turnover rate in the second quarter of 2025 having restored to pre-pandemic levels, indicating that the supply-demand relationship in the industry chain is tending towards balance, laying a solid foundation for sustained industry growth.
Breakthroughs and Opportunities in Domestic Semiconductor Substitution
Key Breakthroughs in Advanced Packaging
As an important means of enhancing chip performance in the post-Moore’s Law era, advanced packaging technology has become a key area for breakthroughs by domestic semiconductor companies. In recent years, domestic companies such as JCET, Tongfu Microelectronics, and Huahai Qingshi have made continuous breakthroughs in advanced packaging technologies such as Chiplet packaging and System-in-Package (SiP), with product performance approaching international leading levels. For example, JCET’s self-developed Chiplet packaging technology has achieved large-scale application, allowing multiple chips with different functions to be integrated together, significantly enhancing the chip’s computing power and energy efficiency. This technology has been applied in domestic AI chips and high-end processors, breaking the technological monopoly of foreign companies in the field of advanced packaging.
According to data from the China Semiconductor Industry Association, the domestic advanced packaging market size is expected to reach 18.6 billion yuan in the second quarter of 2025, a year-on-year increase of 35%, with the market share of domestic companies rising to 42%, an increase of 8 percentage points compared to the same period in 2024. Breakthroughs in the advanced packaging field not only enhance the core competitiveness of domestic semiconductor companies but also provide more cost-effective packaging solutions for domestic chip design companies, promoting the collaborative development of the entire semiconductor industry chain.
Policy Support and Collaborative Efforts in the Industry Chain
The accelerated promotion of domestic semiconductor substitution is inseparable from policy support and collaborative efforts within the industry chain. On one hand, the government continues to increase support for the semiconductor industry through various means such as tax incentives, R&D subsidies, and special funds, encouraging domestic companies to increase R&D investment and break through key core technologies. Since 2025, the National Integrated Circuit Industry Investment Fund (Phase III) has invested over 80 billion yuan, focusing on supporting leading companies in the chip design, manufacturing, and packaging testing sectors, promoting the high-end and large-scale development of the domestic semiconductor industry.
On the other hand, the collaborative effects within the domestic semiconductor industry chain are continuously strengthening. Chip design companies (such as Huawei HiSilicon and SMIC Design Services) have established close cooperative relationships with manufacturing companies (such as SMIC and Huahong Semiconductor) and packaging testing companies (such as JCET and Tongfu Microelectronics), forming a complete industry chain closed loop from chip design to mass production. This collaborative cooperation model not only shortens product R&D cycles and reduces production costs but also enhances the risk resistance capability of the domestic semiconductor industry chain, providing strong guarantees for domestic substitution.
Industry Development Trends and Investment Insights
Future Development Trends of the Industry
In the long term, the global semiconductor industry is expected to maintain a stable growth trend, while the process of domestic semiconductor substitution will continue to accelerate. In terms of technology, the competition for advanced processes (3nm and below) will become more intense, while new technologies such as Chiplet packaging and third-generation semiconductors (gallium nitride, silicon carbide) will become important directions for industry development. In terms of applications, fields such as AI, new energy vehicles, and industrial internet will continue to drive semiconductor demand growth, forming a multi-field and multi-level demand pattern.
For the domestic semiconductor industry, the process of substitution will shift from “mid-to-low-end substitution” to “high-end breakthroughs.” As domestic companies mature in advanced packaging and high-end chip design, domestic semiconductor products will gradually enter the high-end market and compete directly with international giants. At the same time, the self-controllable capability of the domestic semiconductor industry chain will further enhance, with the localization rate of key raw materials, equipment, and components continuously increasing, effectively reducing dependence on foreign sources.
Investment Recommendations
For investors, the recovery of the semiconductor industry and domestic substitution provide important investment opportunities, but attention must also be paid to industry risks. In terms of investment direction, the following areas can be focused on:
First, leading companies in the advanced packaging field. With the widespread application of Chiplet packaging technology, domestic advanced packaging companies are expected to enter a rapid development phase, with companies like JCET and Tongfu Microelectronics possessing strong technical advantages and market competitiveness, likely to benefit from industry growth.
Second, leading companies in the chip design sector. In sub-sectors such as AI chips, automotive-grade chips, and power semiconductors, domestic companies have formed certain competitive advantages, such as Huawei HiSilicon (AI chips), Zhongying Electronics (MCUs), and Starpower Semiconductor (IGBT), which can be monitored for technological breakthroughs and market share increases that present investment opportunities.
Third, domestic substitution companies in the semiconductor equipment and materials sector. Semiconductor equipment and materials are key links in the semiconductor industry chain, and the localization rate of domestic companies in areas such as photoresists, etching equipment, and deposition equipment remains relatively low. As domestic semiconductor manufacturing capacity expands, the demand for semiconductor equipment and materials will continue to grow, with companies like AMEC (etching equipment) and Anji Technology (polishing liquids) expected to achieve rapid development.
It is important to note that the semiconductor industry is characterized by being technology-intensive, capital-intensive, and subject to cyclical fluctuations, with intense competition and rapid technological updates. Investors should closely monitor industry technology development trends, market demand changes, and corporate R&D progress, reasonably control investment risks, and avoid blindly chasing high prices.
In summary, the recovery of the global semiconductor industry provides a favorable environment for industry development, while breakthroughs in domestic semiconductor companies’ substitution inject new momentum into high-quality industrial development. Driven by technological innovation and policy support, the domestic semiconductor industry is expected to achieve a leap from “catching up” to “keeping pace” and then to “leading,” laying a solid foundation for the development of China’s technology industry.