Galaxy Securities expects the mainland semiconductor sector to welcome a structural market driven by rising prices and the strengthening logic of domestic substitution

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China Galaxy Securities recently released a semiconductor industry report, predicting that the global semiconductor manufacturing equipment market will reach a new high of USD 133 billion by 2025, growing 13.7% year-on-year. Driven by demand for AI and HBM, the semiconductor manufacturing equipment market is expected to grow again to USD 145 billion by 2026. Major storage manufacturers in the mainland are accelerating capacity expansion, creating opportunities for domestic equipment in core process segments, with expectations for market share increases.

The report indicates that the mainland analog chip design sector is gradually ending its silence, with several overseas leaders signaling price increases. At the same time, demand for AI server power chips and high-end intelligent driving chips is surging, suggesting a potential cyclical reversal for the industry. From the domestic market perspective, price increases in overseas markets will create more opportunities for the introduction of domestic chips and will somewhat restore gross margins.

Digital chip design: In December last year, the digital chip design sector performed relatively steadily, with AI computing power chips remaining the core growth engine. The strategic value and urgency of domestic substitution for AI computing power chips have become prominent, maintaining attention in the high-end chip design field. AI continues to penetrate the end-user market, with innovative products like AI PCs and AI smartphones bringing incremental opportunities to some design companies.

China Galaxy Securities states that by December 2025, the semiconductor sector will experience a structural market driven by the price surge across the industry chain, sustained AI demand, and strengthened domestic substitution logic. In the context of the external environment, supply chain security and self-control are long-term trends. Under the top-level design of domestic substitution, the logic for equipment and materials is the strongest, digital chips are the core carriers of computing power autonomy, and advanced packaging and testing will benefit from technological upgrades