Surging demand driven by AI computing power accelerates the pace of domestic substitution in semiconductors

Recently, multiple semiconductor equipment companies at home and abroad released their 2025 annual reports and Q1 2026 reports. Driven by the strong wave of AI computing power, the industry’s overall profitability is positive, with significant profit increases for many companies.

Currently, AI is becoming the core growth engine of the industry. Driven by the dual forces of surging AI computing power demand and accelerating domestic substitution, the supply-demand structure of the industry continues to improve. On one hand, the demand in the AI computing power industrial chain remains in a high-growth cycle, with leading companies’ financial reports confirming a recovery in profitability; on the other hand, with the domestic supply chain achieving self-reliance and controllability, the domestic production expansion wave provides vast substitution opportunities for local industrial chains. The progress of China's semiconductor industry has exceeded expectations. In 2026, whether in memory chips or advanced processes, the expansion of semiconductor equipment production may significantly increase, with domestic substitution expected to accelerate.

The outstanding performance of multiple companies directly reflects the robust downstream demand. Particularly, the explosive demand for AI servers and high-performance computing chips has driven an expansion wave in advanced logic and memory chips. The latest data released by the International Semiconductor Industry Association (SEMI) shows that global semiconductor manufacturing equipment sales reached 135.1 billion USD in 2025, increasing by 15% from 117.1 billion USD in 2024, marking a record high for the third consecutive year. This figure was revised upwards from the December 2025 forecast of 133 billion USD, reflecting that AI-driven demand remained stronger than expected towards the end of Q4 2025.

Among these, mainland China’s semiconductor equipment expenditure remains close to historical highs, reaching 49.3 billion USD, accounting for 36.5% of the global share. With the scaling up of domestic memory and advanced process production, China’s semiconductor market still holds strong growth potential, with its global market share expected to further expand to around 40%.

The semiconductor industry is approaching a potential turning point in its fundamentals, with the catalytic effect of the third phase of the major fund and the listing of leading companies expected to accelerate the flow of capital and industrial resources into core sectors.

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