The telecom sector has demonstrated consistent growth in overall performance during the first three quarters of 2025, with profitability showing steady improvement, according to a research report by East Money Securities. Among the subsectors, telecom operators maintained stable growth, while North America's AI sector, domestic computing power, IoT, and BeiDou navigation recorded higher growth rates. In contrast, segments like 5G, military communications, and submarine optical cables faced relative pressure.
Looking ahead to 2026, considering industry trends and corporate competitiveness, East Money Securities recommends focusing on optical modules, copper interconnects, switches, thermal and power equipment, IDC data centers, edge AI, robotics, and telecom operators. Key insights include:
### Strong Market Outperformance Led by North America’s AI Sector As of November 20, 2025, the Shenwan Communications Index surged 58.8% year-to-date, ranking second among 31 primary Shenwan industries and significantly outperforming the broader market. Subsector performances varied: North America’s AI (+265%), domestic computing power (+65%), IoT (+52%), submarine optical cables (+48%), 5G (+37%), and telecom operators (-1%).
### Sustained Revenue and Profit Growth In the first three quarters of 2025, the Shenwan Communications sector reported total revenue of ¥1.955 trillion (+3.3% YoY) and net profit attributable to shareholders of ¥194.3 billion (+9.0% YoY). Q3 revenue reached ¥631.3 billion (+3.7% YoY), with net profit at ¥56.7 billion (+12.1% YoY). Profit growth diverged more sharply than revenue across components.
### Subsector Performance Breakdown (Q1-Q3 & Q3 2025) 1. **Telecom Operators**: Revenue +0.6%/+1.1% YoY; net profit +4.3%/+2.1% YoY, with stable margin expansion. 2. **5G (ex-China Tower)**: Revenue +3.6%/+11.2% YoY; net profit -1.3%/+22.3% YoY, showing Q3 recovery. 3. **North America’s AI**: Revenue +71.5%/+71.1% YoY; net profit +129.5%/+137.3% YoY, reflecting robust profitability. 4. **Domestic Computing Power**: Revenue +22.0%/+3.2% YoY; net profit +38.8%/+60.6% YoY, with mixed supply chain performance. 5. **IoT**: Revenue +15.9%/+9.7% YoY; net profit +37.5%/+26.7% YoY, indicating steady growth. 6. **BeiDou Navigation**: Revenue +36.0%/+58.5% YoY; net profit +74.8%/+149.9% YoY, with some firms turning profitable. 7. **Military Communications**: Revenue -5.7%/+1.1% YoY; net profit -76.9%/-51.0% YoY, under significant pressure. 8. **Submarine Optical Cables**: Revenue +12.0%/+9.8% YoY; net profit largely flat.
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