The semiconductor sector has relied on the strong market since the end of September, and the annual growth of the index has outperformed major stock indexes such as the CSI 300.

The

growth rate of non-net profit deducted by 42 semiconductor companies in the first three quarters reached 100%, and the sector index rose tenth in the wind secondary industry. In 2024, the global semiconductor will gradually recover, and A-share semiconductor companies will reap a lot of benefits.

However, the demand performance of different downstream of the semiconductor industry has also been significantly differentiated this year. After more than a year and a half of inventory digestion of consumer electronics, the terminal demand has risen moderately, and the demand for AI has become the biggest attraction and the mainstream direction of market speculation, while industrial control products are still in a state of destocking.

The industry believes that the prosperity of this round of semiconductor cycle is far from the peak, and the revenue growth rate of A-share semiconductor listed companies is significantly higher than the profit growth rate, reflecting that there is still room for profit growth.

In 2025, the biggest attraction of the semiconductor industry will undoubtedly be the prosperity of AI terminal applications, and the penetration rate of which products will accelerate and drive the performance of related companies is the focus of market attention. In addition, with the gradual recovery of the semiconductor cycle, the independence and controllability of China's semiconductor industry is also a major investment attraction in 2025.

The profit growth rate of semiconductor companies still needs to be repaired upward

In 2024, the pace of recovery of the domestic semiconductor market will be synchronized with the world, in addition to the suppression of demand for high-end chips such as AI processors, the overall market growth is more obvious, and the domestic demand for overseas chips is also increasing rapidly. Customs data show that in October, China's integrated circuit imports were 34.319 billion US dollars, a year-on-year increase of 10.28%; Among them, the growth rate of imports of microprocessors and storage products was 9.69% and 20.61% respectively.

The performance of listed companies in the semiconductor industry chain has recovered this year, and the monthly revenue has continued to hit a new high. According to the financial report statistics, the growth rate of non-net profit deducted by 42 semiconductor companies in the first three quarters reached 100% or more, and the leading stock Goodix Technology (603160. SH), Weir shares (603501. SH) growth rate was as high as 20.41 times and 16.65 times, which was significantly repaired compared with the previous two years.

The median year-on-year growth rate of the operating income of the entire semiconductor sector in the first three quarters was 18.62%, and the median growth rate of non-net profit was 6.6%, a difference of 12 percentage points, that is, the revenue scale of most semiconductor companies has recovered significantly, but under the influence of the cycle prosperity has not been significantly improved and some products are still in the destocking stage, the profitability of enterprises still has room for improvement.

However, in the first nine months of this year, the semiconductor index performed relatively sluggishly for most of the year. Until the end of September, semiconductors came out of the strongest market in the past two years, and market funds repeatedly made a fuss about AI, independent and controllable core targets. As of the close of trading on December 19, the Wind Semiconductor Index was reported at 3709.29 points, an annual increase of 18.19%, ranking tenth in the Wind secondary industry index. During the same period, the Philadelphia Semiconductor Index of U.S. stocks rose by 19.05%.

The

total market value of the 197 stocks in the semiconductor sector totaled 4.83 trillion yuan, with a cumulative increase of 1.08 trillion yuan during the year. There are 70 semiconductor stocks that have risen by more than 20% during the year, outperforming major indices such as the Shanghai Composite Index and the CSI 300. Among them, 45 semiconductor stocks have risen by more than 30% annually, and 8 stocks have doubled their stock prices. Cambrian (688256. SH), Runxin Technology (300493. SZ), Shanghai Belling (600171. SH) ranked among the top three, reaching 371.26%, 249.65%, and 180% respectively. Leading SMIC (688981. SH) hit an all-time high of 109.5 yuan in early November.

All kinds of semiconductor sub-sectors, including logic chips, materials, equipment, wafer manufacturing, packaging and testing, have performed well, but the analog chip sub-sector has been left out in the cold. As of December 19, the Shenwan Analog Chip Design Index has fallen by 5.06% this year, performing at the bottom of all sub-sectors of semiconductors. Leading stock Zhuo Sheng Wei (300782. SZ) fell 30.94% for the year.

"In the past two years, the number of domestic analog chip listed companies has grown rapidly, intensifying industry competition, and many categories have appeared in low-price competition, especially in the consumer electronics market, the homogenization of analog chips is serious, and Texas Instruments once lowered the chip price in the Chinese market last year to cope with the intensified competition, and low-price competition has eroded the profits of enterprises." A person in charge of a listed semiconductor company told reporters: "With the improvement of the industry's prosperity and policy support for mergers and acquisitions, large-scale listed companies are expected to acquire small and medium-sized enterprises and accelerate the integration of industry resources." ”

Continue to "dance with AI" in 2025

"Dancing with AI" is one of the main themes of the semiconductor market in 2024, and the core target of the industrial chain has performed brilliant 688256 ly. SH) rose 371.3% for the year, leading the gainers. On December 19, the stock hit a record high of 636.02 yuan, with a total market value of 265.5 billion yuan, and more than 10 stocks including Sugon (603019.SH) rose by more than 50%. In the face of high valuations, a considerable number of investors expressed concern: Cambrian has supported a market value of 260 billion yuan with an operating income of 710 million yuan (2023), and the stock price rise is "all due to imagination".

According to third-party forecasts, the total capital expenditure of the three major US cloud vendors (Microsoft/Google/Amazon) and Meta will grow by 42% in 2024 and another 18% to $250 billion in 2025. In addition, Apple's iPhone 16 released this year is a "small test" of AI functions, and some analysts expect that Apple's iPhone 17 planned to be released in 2025 will have a substantial breakthrough, including local AI processing capabilities, adaptive learning functions, and intelligent scene recognition, which is expected to bring a wave of AI mobile phone replacement. The large-scale investment and R&D capabilities of these overseas leaders are expected to kick off the prelude to strong AI end-side intelligence in 2025, and product innovation is expected to promote cycle interpretation.

When looking forward to the semiconductor industry in 2025, CMBI said that it maintains a positive outlook for the long-term growth of artificial intelligence and seizes opportunities in multiple rounds of investment cycles, and there are still investment opportunities in the core beneficiary targets of the industrial chain, including the iteration of AI GPUs, the explosion of AI applications, and the realization of monetization strategies.

CMB International also said that it is optimistic about the opportunities for increasing the domestic share brought about by the independent and controllable trend of China's semiconductor industry chain in the long term. The intensification of geopolitical risks has driven major economies to shift the primary goal of industrial chain development from improving production efficiency to ensuring supply chain security. The independent and controllable semiconductor industry chain can be seen as the second main line of investment in 2025.