Dehydrated Research Report | Deepseek makes a strong debut, will the industry landscape change in the future?
PS: Driven by DeepSeek, the AI boom continues and propels the semiconductor industry to thrive. Source: Tianfeng Securities.
$NVIDIA(NVDA.US) The company's market value recently plummeted by $60 billion, indicating the significant impact DeepSeek has on the industry. Although Nvidia has established a reputation for leading AI hardware development with advanced chips, DeepSeek has proven that significant progress can be made even without substantial computing resources. This achievement challenges the long-held belief that "hardware advantages determine market success." So how will DeepSeek's strong entry affect the overall industry's future development?
From a long-term perspective, we have now entered a new cycle led by AI, with AI driving major cloud vendors to increase capital expenditures and enhance computing power, which in turn boosts semiconductor demand. By 2025, AI applications may experience an explosion. As the availability of effective data hits a bottleneck, the iteration speed of large models is gradually slowing down. Applications spawned by generative AI will become mainstream in the future, primarily manifested as AI + products, such as AI smartphones, AIPC, AI glasses, AI headphones, etc. These terminal upgrades and innovations will increase chip demand and drive the semiconductor industry into a significant upward cycle.
Image source: Trend Force
In this new iteration, traditional terminal products may also face a new replacement cycle, including smartphones, PCs, and IoT products. The last cycle was from 2020 to 2021, driven by concentrated procurement of electronic products for remote work. This segment may gradually enter a replacement cycle over the next two years, coinciding with innovations at the AI edge, which will also enhance chip value.
Image source: Industrial Securities
Currently, the average inventory months of global semiconductor companies remain low. Since peaking in the first quarter of 2023, it has been on a downward trend. The inventory decline among Chinese semiconductor design companies is even more pronounced. By category, except for FPGA and RF chips, which have slightly higher inventories, all other segments maintain an average inventory level of around 6 months. According to channel data, the delivery times across various segments have stabilized after a decline, and with improving demand and increased stocking, there is an expectation for rising delivery times in the future
Image source: trend force
The utilization rate of wafer foundries in 2025 may gradually increase. Some chips may see price increases. According to estimates from consulting firms, as chip design companies deplete their inventories and end-user demand warms up, the demand for customers to replenish inventories will accelerate transmission to the upstream wafer factories. It is expected that starting from the second quarter of 2025, the utilization rate of wafer factories will begin to rise. If we consider the sales of semiconductor equipment in conjunction with the overall sales of semiconductors, changes in equipment sales often lead overall sales by 1 to 2 quarters, meaning peaks or troughs may be seen earlier. However, as of the third quarter of 2024, the growth rate of equipment sales continues to show an upward trend, which indicates that the growth rate of overall sales may not have peaked yet.
Image source: Kaiyuan Securities
In summary, this round of the AI super cycle may have just begun, with this year set to welcome the inaugural year of AI applications. Currently, inventories across various companies are still at relatively low levels, and there is an expectation for the utilization rate of wafer factories to gradually recover in the future. The global semiconductor sales growth rate has not yet shown signs of peaking, coupled with the logic of domestic substitution in China. Therefore, this round is in a trend that is just beginning to flourish. However, the semiconductor sector is also quite volatile and is significantly influenced by the competition among major powers. Thus, positions should not be too heavy or overly aggressive. More importantly, patience is required, as the current situation of China's semiconductor industry is not only an economic issue but also a strategic one. Therefore, in the short term, there may not be much performance support, and the focus will primarily be on land grabbing and gaining market share. This will inadvertently increase the volatility of the entire semiconductor industry. $DeepSeek(DPSK.NA)
Tianfeng
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