The surge in AI computing power demand activates the electronics industry chain.

Securities Daily reporter Jia Li

The National Bureau of Statistics has recently released data showing that from January to May this year, profits of industrial enterprises above designated size nationwide totaled 31,439.6 billion yuan, up 18.8% year on year, which is 0.6 percentage points faster than from January to April.

Among them, the electronics industry has played a notably significant supporting role. The global AI (artificial intelligence) technological transformation has spurred a surge in demand for high-end computing chips and storage chips, driving rapid growth in electronics industry profits. From January to May, profits in the electronics industry increased 103.9% year on year, and the sector’s contribution rate to profit growth of all industrial enterprises above designated size reached 43.1%.

Xiao Xu, a council member of the Capital Enterprise Reform and Development Research Association, said in an interview with Securities Daily reporter that the growth momentum in the electronics industry is undergoing a profound shift: it has moved from being driven by traditional industries to being led by the electronics and high-tech manufacturing sectors powered by technology waves such as AI technological transformation and demand for high-end computing. The explosive growth of this high–value-added industry provides strong and sustainable support for the recovery of the industrial economy.

Clear divergence across all links

According to data from the National Bureau of Statistics, profits in high-tech manufacturing have maintained double-digit growth. From January to May, profits of high-tech manufacturing enterprises above designated size increased 44.7% year on year, driving an 8.0 percentage-point increase in profits of all industrial enterprises above designated size, and the leading role continues to stand out.

Looking at the development trajectory of the electronics industry in the first half of 2026, the divergence trend across different links has become even more evident.

Sheng Lebiao, a senior engineer at the High-Performance Computing Center of Nanjing University, told Securities Daily reporter that since the beginning of this year, AI-driven growth and structural divergence have become key keywords for the development of the electronics industry. Unlike the steady rebound in previous years that relied on the replacement cycles of smartphones and PCs, this round of growth carries a strong imprint of technological transformation.

On the one hand, investment in AI infrastructure has been growing exponentially. Since the beginning of this year, demand for large-model training, inference services, and AI cloud has continued to rise. Jibang Consulting is forecasting that in 2026, the combined capital expenditures of the world’s top nine cloud providers will total approximately $830 billion, with the year-on-year growth rate revised upward from the previously estimated 61% to 79%.

According to data from Qinke Research Center, in the first quarter of 2026, the equity investment market in China disclosed an investment amount of approximately 234.425 billion yuan, of which total investment in the AI sector exceeded 110 billion yuan, accounting for nearly half; this was up 185.4% year on year. The flow of funds shows structural divergence, with capital concentrated injections into areas such as computing power, large models, and embodied intelligence.

Sheng Lebiao believes that such huge investments directly translate into rigid demand for high-end computing chips, HBM high-bandwidth memory, AI servers, and high-frequency high-speed PCBs.

On the other hand, profits across the industrial chain are highly concentrated in upstream key links. In this round of explosive growth, upstream material and equipment suppliers that control pricing power have become the biggest winners. According to data from the National Bureau of Statistics, from January to May, in the manufacturing of electronic components and electronic specialty materials, profits in electronic specialty materials manufacturing and in electronic circuit manufacturing increased 665.4% and 19.7% year on year, respectively. Specifically, profits in the optoelectronic devices and the manufacturing of semiconductor discrete devices increased 53.8% and 40.6% year on year, respectively.

Wan Zhe, a professor at Beijing Normal University, proposed that electronic specialty materials have high technical barriers and long certification cycles, making it difficult to expand capacity in the short term. However, manufacturers hold very strong pricing power and can effectively pass costs on to downstream tiers.

By comparison, traditional consumer electronics end products are facing dual pressure from both cost squeeze and demand decline. According to data from Jibang Consulting, in 2026, global smartphone production may experience an annual decline of 10% under the impact of soaring memory prices, with the total volume dropping to about 1.135 billion units.

Frequent capacity-expansion moves by companies

Judging from the performance forecasts disclosed by A-share listed companies in the electronics industrial chain, many companies have seen profit surges.

Semiconductor equipment and packaging/testing leaders were the first to break through. Hangzhou Changchuan Technology Co., Ltd., a domestic testing equipment leader, released an announcement stating that it expects net profit attributable to shareholders of the listed company for the first half of 2026 to be between 900 million yuan and 1,000 million yuan, representing a year-on-year increase of 110.76% to 134.18%. The change in performance is mainly due to the results of earlier R&D investments and the release of demand in high-end downstream markets.

AI computing power demand is shifting from chip design to the entire manufacturing process. Packaging and testing companies such as Jiangsu Changdian Technology Co., Ltd. (hereinafter referred to as “Changdian Technology”) and Tongfu Microelectronics Co., Ltd. have also seen orders become fully booked due to the surge in demand for chiplets and advanced packaging. Among them, Changdian Technology has recently significantly raised its 2026 fixed asset investment budget to about 10 billion yuan, with a focus on construction of advanced packaging production lines. In addition, Shenyang Xinyuan Microelectronics Equipment Co., Ltd., a domestic equipment leader, disclosed that it has recently received intensive research visits from more than 200 institutions. The company said that as downstream client companies accelerate capacity expansion in the advanced packaging field, signing of orders and revenue trends for related products are improving.

At the same time, in the electronics industry, both the volume and the prices of circuit boards and storage modules are rising. Shenzhen JEBP Electronics Co., Ltd. recently disclosed that it plans to raise 4.882 billion yuan through a private placement to further invest in an AI computing power high-end circuit board project. During the storage chip price increase cycle, module makers such as Shenzhen Jiangbo Long Electronics Co., Ltd.‌ and Shenzhen Bavei Storage Technology Co., Ltd. have continued to revise upward their profit expectations. Xiao Xu believes that AI-driven increases in circuit board layers and material upgrades are pushing up the volume and prices of electronic products, and copper-clad laminate manufacturers have begun to adjust prices upward in a concentrated manner.

However, Wan Zhe reminded that the order cycle of some links in the electronics industrial chain determines that the current shortage may gradually turn into oversupply. As global wafer fabs significantly expand production capacity, newly added capacity will be released in a concentrated fashion no earlier than the second half of 2027. By then, if AI application demand fails to meet expectations, the industry may face the risk of excess capacity. Meanwhile, the pressure on traditional consumer electronics demand caused by the massive capital expenditures in the AI sector is weighing on the traditional electronics manufacturing industry, leading long-tail brands to exit faster.

She believes that in the first half of 2026, the electronics industry is in a super-boom cycle brought about by AI computing power infrastructure, with profits concentrated in upstream hard-core segments that master core technologies. With the continued release of technology dividends and the strengthening of policy support, China’s industrial economy is expected to maintain a favorable momentum of growth in both quantity and quality. However, how to get through the cycle and prevent a capacity bubble will be the test facing the industry in the next stage.