Wanlian Securities Report Highlights Sustained Fund Interest in AI Computing and Semiconductor Self-Sufficiency within SW Electronics Sector, Notes Diversifying Portfolio Trends

According to a research report from Wanlian Securities, an analysis of fund heavy allocation preferences indicates that AI computing infrastructure development and semiconductor self-sufficiency are key focal points for fund institutions. 1) AI Computing and Storage Infrastructure: The development in AI computing and storage capacity is gaining momentum, driving improved performance for companies in related industrial chains such as PCBs and memory. It is advisable to focus on high-growth sub-sectors within the computing power industrial chain, including PCBs and memory. Concurrently, both the PCB and memory sectors are in an expansion phase of their business cycles, with manufacturers showing proactive capital expenditure, which is expected to boost demand for upstream equipment and materials. 2) Semiconductor Self-Sufficiency: Domestic wafer fabs are accelerating the adoption of upstream domestic equipment and materials. The market share of domestic semiconductor manufacturers is anticipated to gradually increase. It is recommended to pay attention to investment opportunities in semiconductor self-sufficiency. Wanlian Securities' key views are as follows: Core Industry View: The heavy allocation and overweight ratios for the SW Electronics sector in Q1 2026 showed a year-on-year increase but a sequential quarter-on-quarter decline. In terms of allocation ratio, the SW Electronics sector's allocation ratio in Q1 2026 was 11.40%, down 0.5 percentage points sequentially but up 2.31 percentage points year-on-year. Regarding the heavy allocation ratio, the SW Electronics sector's fund heavy allocation ratio in Q1 2026 was 19.67%, down 0.55 percentage points sequentially but up 2.64 percentage points year-on-year. For the overweight ratio, the fund heavy allocation overweight ratio for the SW Electronics sector in Q1 2026 was 8.27%, down 0.05 percentage points sequentially but up 0.33 percentage points year-on-year. Although the heavy allocation and overweight ratios for SW Electronics in Q1 2026 declined sequentially, they remain at relatively high levels in recent years. Focus Areas for Fund Institutions in Q1 2026: AI Computing Power and Semiconductor Self-Sufficiency. Based on the market value of holdings, the top ten stocks heavily allocated by funds in the SW Electronics sector for Q1 2026 were Cambricon Technologies Corporation Limited, Hygon Information Technology Co.,Ltd., Advanced Micro-Fabrication Equipment Inc. China, Montage Technology Co., Ltd., Semiconductor Manufacturing International Corporation, NAURA Technology Group Co., Ltd., Dongshan Precision Manufacturing Co., Ltd., Piotech Inc., Luxshare Precision Industry Co., Ltd., and GigaDevice Semiconductor Inc. From the perspective of institutional focus areas: 1) Concentration on AI Computing Infrastructure: Among the top ten stocks with increased holdings, AI computing power-related targets garnered significant attention. VeriSilicon Microelectronics Co., Ltd. is a leading domestic semiconductor IP and chip design service provider, benefiting from growing demand for AI chip design. Yuanjie Semiconductor Technology Co., Ltd. is a leading optical chip manufacturer; Tengjing Photoelectric Technology Co., Ltd. is a leader in precision optical components; and Chang Guang Optoelectronic Co., Ltd. is a leader in semiconductor laser chips. These companies benefit from the demand for optical interconnection and high-speed transmission driven by AI computing power. 2) Semiconductor Self-Sufficiency and High-Growth Expansion Cycle: Advanced Micro-Fabrication Equipment Inc. China is a leader in etching equipment; Hwatsing Technology Co., Ltd. is a leader in CMP equipment; Changchuan Technology Co., Ltd. is a leader in testing equipment; Piotech Inc. is a leader in thin film deposition equipment; and Jiangyin Jiangfeng Electronics Co., Ltd. is a leader in high-purity sputtering targets. These companies benefit from the acceleration of semiconductor supply chain self-sufficiency and domestic substitution processes. Simultaneously, the memory industry is in a prosperous cycle. Memory module manufacturer BIWIN Storage Technology Co., Ltd. saw increased institutional holdings. The capacity expansion by memory original equipment manufacturers is expected to stimulate demand for upstream equipment and materials. Sub-sector allocation remains focused on semiconductors, with electronic chemicals transitioning to an overweight position. The concentration of the top five heavily allocated stocks in the SW Electronics sector has declined sequentially for consecutive quarters. From a sequential quarterly perspective, using all A-shares as the denominator, the semiconductor overweight ratio has risen to its highest point in recent quarters. The Electronic Chemicals II industry shifted from underweight to overweight. The concentration of the top five heavily allocated fund holdings has declined sequentially since Q2 2025, indicating a trend towards diversification in fund allocations. Risk Factors: Escalation of Sino-US technology friction; slower-than-expected progress in technology R&D; underperformance of domestic product specifications; weaker-than-expected terminal demand; intensification of market competition; data statistical errors.