The transition of operating systems to domestic alternatives is shifting from policy documents to tangible orders. With Microsoft officially ending support for Windows 10 in October 2025, combined with the approaching deadline set by the State-owned Assets Supervision and Administration Commission's Document No. 79, which requires central and local state-owned enterprises to complete the replacement of their IT systems with domestic alternatives by the end of 2027, the domestic operating system supply chain is entering a critical period of concentrated order releases. Cinda Securities estimates the market space for domestic IT innovation across government agencies, public institutions, and state-owned enterprises at approximately 632.5 billion yuan, while GF Securities' review of two previous rounds of IT innovation rallies suggests the combined market for PCs and servers in industry sectors could exceed one trillion yuan. The convergence of policy countdowns and external service discontinuations has firmly established the industry inflection point where domestic operating systems are evolving from "usable" to "highly functional".
Windows 10 End-of-Service Triggers Concentrated Migration Demand
Starting October 14, 2025, Microsoft ceased all support services for Windows 10, including technical assistance, feature updates, and security patches. According to StatCounter data, as of September 2025, Windows 10 still held a 45.65% global market share. The end of support means a vast number of existing devices will no longer receive official security updates, making them vulnerable targets for cyberattacks. For government and enterprise organizations required to comply with cybersecurity regulations such as the Multi-Level Protection Scheme, continuing to use unsupported systems would directly result in compliance failures, accelerating the urgency to migrate. Domestic operating systems including UnionTech, Kylin, and Deepin have already developed mature replacement solutions and technology ecosystems, and the Windows 10 end-of-service conveniently provides a realistic opportunity for large-scale adoption of domestic systems.
Document No. 79 Countdown Intensifies as 2027 Deadline Approaches
In September 2022, the State-owned Assets Supervision and Administration Commission issued Document No. 79, mandating that all central and local state-owned enterprises complete the full replacement of their IT systems with domestic alternatives by the end of 2027, achieving a 100% substitution rate across chips, basic software, operating systems, and middleware. According to this timeline, the period from 2026 to 2027 represents the critical phase for concentrated delivery and volume expansion. Huatai Securities notes that as this major milestone approaches, both government and industry sectors are expected to experience a peak in comprehensive replacement activity. The domestic IT innovation industry is expanding from pilot programs in government agencies to full penetration across eight key industries including finance, telecommunications, electric power, transportation, healthcare, and education, with substitution efforts moving from peripheral systems to core infrastructure, elevating both market scale and order quality.
Market Space Starting at 632.5 Billion Yuan
Cinda Securities estimates that the total market space for domestic IT innovation across government agencies, public institutions, and state-owned enterprises is approximately 632.5 billion yuan, providing a highly certain demand foundation for domestic software and hardware. With unit prices of approximately 5,000 yuan for domestic IT innovation PCs and 50,000 yuan for servers, combined with replacement demand for tens of millions of PCs in the government sector between 2025 and 2027, the potential industry scale is substantial. When adding the deepening substitution in core systems across key industries such as finance, telecommunications, and energy, along with application software demand, the overall market radius for domestic IT innovation expands even further.
Industry Sector Unlocks Trillion-Yuan Potential
After reviewing two historical rounds of domestic IT innovation rallies, GF Securities believes the combined market space for industry-sector PCs and servers could exceed one trillion yuan, significantly surpassing the government-only estimate. Looking at industry momentum, 2026 is widely regarded as the key year for large-scale volume expansion in domestic IT innovation. The substitution space for foundational software including domestic operating systems, databases, and middleware is vast, with investment logic shifting from "policy-driven" to "demand-driven". Based on aggregated institutional forecasts, the domestic IT innovation industry market size is expected to surpass 1.8 trillion yuan in 2026, with the industry growth engine transitioning from policy-driven procurement to a new cycle characterized by "policy empowerment and market leadership".
Domestic Operating Systems Form the Core of Self-Reliance
Operating systems serve as the central foundation in the domestic IT innovation supply chain, connecting chips and hardware above while supporting applications and security ecosystems below. Domestic operating systems including Kylin, UnionTech UOS, and HarmonyOS have achieved full coverage in government office scenarios. Domestic CPUs have established a landscape of six parallel technology routes, and the adaptation ecosystem between operating systems, chips, middleware, and other foundational software and hardware is increasingly mature, clearing technical obstacles for large-scale replacement. As domestic IT innovation progresses from "usable" to "highly functional", combined with AI's transformation of terminal devices, shipments of domestic AI PCs are expected to maintain a high annual growth rate of 30% from 2025 to 2027, becoming the most dynamic growth segment for domestic terminals.
Investment Vehicle for Positioning in This Theme
The target index of IT Innovation ETF Huabao (562030) selects leading companies across the domestic IT innovation supply chain, covering office software, cloud computing, chips, firmware, and security, with constituent stocks highly aligned with this round of domestic substitution. The top ten heavyweight stocks include representative companies from various domestic IT innovation segments such as Kingsoft Office, Inspur Information, and Hygon Information, providing comprehensive coverage and strong representation.
Rooted in Self-Reliance, Safeguarding National Security
IT Innovation ETF Huabao (562030) and its feeder funds (Class A: 024050, Class C: 024051) passively track the CSI IT Innovation Index, which focuses on independent and controllable information technology, covering core segments of the domestic IT innovation supply chain including foundational hardware, foundational software, application software, information security, and peripheral devices. Key holdings include storage chip leaders (Biwin Storage, Longsys), domestic computing power providers (Hygon Information, Dawning Information), and AI application companies (Hundsun Technologies, Kingsoft Office, 360 Security), all poised to benefit from accelerated software and hardware order fulfillment driven by the "2+8+N" policy framework.
Risk Disclosure: IT Innovation ETF Huabao passively tracks the CSI IT Innovation Index, which has a base date of December 29, 2017 and was published on December 21, 2012. The index constituent stocks are adjusted periodically according to the index compilation rules, and historical backtested performance does not predict future index performance. The index constituent stocks and individual stocks mentioned in this article are for demonstration purposes only and do not constitute investment advice in any form, nor do they represent the holdings or trading activities of any fund under the manager's management. The fund manager assesses the risk level of this fund as R3-medium risk, suitable for balanced (C3) and above investors; please refer to the sales institution for suitability matching opinions. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any forms of expression) is for reference only, and investors are solely responsible for their own independent investment decisions. Furthermore, any views, analyses, or forecasts in this article do not constitute investment advice to readers, nor do they bear any responsibility for direct or indirect losses arising from the use of the content herein. Fund investment carries risks; past performance of funds does not represent future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Please invest in funds with caution.
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