China Galaxy Securities has released a research report indicating that global AI infrastructure development is expected to remain robust through 2026, alongside China's continued push to increase domestic production rates. As a result, the firm maintains a positive outlook on investment opportunities in semiconductors and related components. These include domestically produced computing chips, the long-term price increase cycle for memory chips, PCBs, semiconductor manufacturing and equipment, advanced packaging, and semiconductor materials. Key points from the report are as follows:
Industry Data Tracking: 1) Semiconductors: In December 2025, global semiconductor industry sales reached $78.9 billion, increasing 2.7% month-over-month and 37.1% year-over-year. For the full year 2025, global semiconductor sales hit a new record high of $791.7 billion, representing a 25.6% year-over-year increase. Regionally, all areas except Japan, which saw a 4.7% decline, experienced year-over-year growth in semiconductor sales. 2) Semiconductor Equipment: SEMI forecasts that global sales of semiconductor manufacturing equipment by OEMs will reach a historic high in 2025, growing 13.7% to $133 billion, with continued growth expected in 2026 and 2027. Benefiting from the ongoing adoption of advanced packaging, the performance of back-end semiconductor equipment has been particularly strong. Sales in the test equipment and packaging equipment markets are projected to grow by 48.1% and 19.6%, respectively. 3) Memory: Driven by surging AI demand and supply constraints, memory prices are on an overall upward trend. DRAM, as a core component for AI servers, has seen particularly significant price increases. On the demand side, the market for HBM, which is essential for AI servers, is booming. On the supply side, DRAM manufacturers are allocating significant production capacity to HBM, leading to tight supply for standard DRAM like DDR4. This supply-demand imbalance is significantly driving up DRAM prices, with the upward trend for memory chip prices expected to continue throughout the year.
Industry News: 1) Strong Memory Demand: SK Hynix's DRAM and NAND inventory has decreased to approximately four weeks of supply. Major semiconductor foundry Powerchip Technology Corporation announced a resolution to sign a series of highly strategic contracts with global memory leader Micron Technology and its global subsidiaries and affiliates, establishing a long-term advanced DRAM packaging foundry relationship between the two parties. 2) Breakthroughs in Cutting-Edge Technology: Researchers at ASML have stated they have found a method to increase the light source power of key chip manufacturing equipment, potentially boosting chip production by up to 50% by 2030. SK Hynix recently unveiled a concept for an H3 architecture centered on high-bandwidth flash memory. The so-called "H3," or Hybrid HBM+HBF Architecture, integrates high-bandwidth memory within a unified design.
Sector Performance Tracking: 1) Semiconductor Index Performance (Past Month): The semiconductor industry index underperformed the CSI 300 Index by 3.86 percentage points and the electronic components index by 1.44 percentage points. Specifically, the semiconductor index declined 3.15%, the electronic components index declined 1.71%, while the CSI 300 Index gained 0.71%. 2) Semiconductor Index Performance (Past Year): The semiconductor industry index outperformed the CSI 300 Index by 27.08 percentage points and the electronic components index by 1.22 percentage points. Specifically, the semiconductor index gained 46.38%, the electronic components index gained 45.16%, while the CSI 300 Index gained 19.3%.
Risk Warnings: Risks include technology iteration falling short of expectations, international trade tensions, intensifying market competition, and uncertainties stemming from changes in the international political environment.
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