Galaxy Securities: Expects Structural Rally in Mainland Semiconductor Sector Driven by Price Hikes and Strengthened Domestic Substitution Logic

Galaxy Securities released a semiconductor industry research report, citing a forecast from SEMI (Semiconductor Equipment and Materials Institute) that the global semiconductor manufacturing equipment market is projected to reach a new high in 2025, growing 13.7% year-on-year to $133 billion. Driven by demand for AI and HBM, the semiconductor manufacturing equipment market is expected to expand further to $145 billion by 2026. Mainland memory manufacturers are accelerating capacity expansion, creating opportunities for domestic equipment in core process segments and enhancing expectations for market share gains. The report indicates that the mainland analog chip design sector is gradually emerging from a period of stagnation, with several overseas industry leaders signaling impending price increases. Concurrently, explosive demand for AI server power chips and high-end autonomous driving chips is expected to drive a cyclical rebound for the industry. From a domestic market perspective, price increases in overseas markets will create more opportunities for the adoption of domestic chips and contribute to a partial recovery in gross margins. In December of last year, the digital chip design segment demonstrated relative resilience, with AI computing chips remaining the core growth engine. The strategic value of AI computing chips and the urgency for domestic substitution have become increasingly prominent, sustaining high levels of attention on the high-end chip design field. The continuous integration of AI into end-user devices, exemplified by innovations like AI PCs and AI phones, is generating incremental opportunities for certain design companies. Galaxy Securities points out that, against a backdrop of industry-wide price increases, sustained AI demand, and a reinforced logic for domestic substitution, the semiconductor sector is poised for a structural rally in December 2025. Given the external environment, supply chain security and self-sufficiency represent a long-term trend. Equipment and materials present the most robust investment thesis under the top-level design for import substitution, digital chips serve as the core vehicle for computational self-reliance, and advanced packaging and testing stand to benefit from ongoing technological upgrades.