Industry trend: The U.S. continues to strengthen export controls on AI chips, domestic alternatives once rose.

1. Background Overview

It has been about two years since the explosion of AI chips, and the U.S. has a very clear direction in terms of overall market control. Compared to the historical suppression of China's chip industry by the U.S., the escalating export controls on AI chips led by NVIDIA and AMD to China are quite expected. $Taiwan Semiconductor(TSM.US) $AMD(AMD.US) $NVIDIA(NVDA.US) $Broadcom(AVGO.US) $Tesla(TSLA.US)

This is both a crisis and an opportunity, stimulating the critical development moment of China's semiconductor chip industry. The domestic substitution sector once saw a significant rise.

2. Stock Analysis

If we talk about the top choice in China's semiconductor industry, SMIC, which focuses on advanced processes, is the first recommendation. $SMIC(00981.HK) $HUA HONG SEMI(01347.HK)

In terms of stock performance, SMIC's stock price has recently surged significantly, almost reaching a historical high in October.

In terms of financial performance, SMIC reported revenue of RMB 156.09 billion in Q3, a year-on-year increase of 32.5%, and net profit of RMB 10.6 billion, up 56.4% YoY. The strong growth was mainly driven by increased wafer sales and product mix changes—essentially, growth in product sales. Looking deeper into gross margin and capacity utilization, there are also positive trends, with overall capacity utilization rising to 90.4% and gross margin improving to 20.5%.

3. Personal Opinion

With increasing uncertainty in global supply chains, the demand for domestic substitution has become more urgent. Especially in high-tech fields, national security and economic independence have become focal points for countries worldwide. The growing demand for high-quality, localized products in the domestic market is accelerating the substitution process. The focus in the next two years will remain on AI chips, making domestic substitution inevitable. Investors should keep a close eye on related stocks.