China Galaxy Securities (CGS) released a research report stating that the semiconductor industry has demonstrated relatively strong performance, driven by multiple factors including the AI wave, domestic substitution, and technological innovation. The long-term growth logic supporting the semiconductor sector remains intact. Against the backdrop of external uncertainties, supply chain security and self-sufficiency are long-term trends. Equipment and materials exhibit the strongest fundamentals under the domestic substitution strategy, digital chips serve as the core carrier for computing power autonomy, and advanced packaging benefits from technological upgrades. CGS's key views are as follows:

**Semiconductor Equipment** The U.S. House of Representatives officially proposed the H.R.6207 bill—Chip Equipment Quality Act—which prohibits chip factories receiving U.S. subsidies from using 12 categories of semiconductor equipment from China. The bill indirectly confirms China's rapid progress in semiconductor equipment and further reinforces the self-sufficiency narrative, acting as a key sentiment catalyst for the sector's rally.

**Semiconductor Materials & Electronic Chemicals** Rongda Photosensitive disclosed on an interactive platform that some of its photoresist products have replaced certain Japanese counterparts in critical performance metrics and achieved batch applications among select clients. Domestic substitution remains the dominant theme, particularly in key bottleneck areas like photoresists and electronic specialty gases. Breakthroughs or mass adoption by domestic firms have boosted market sentiment.

**Integrated Circuit Packaging & Testing** The extreme demand for computing power and bandwidth in AI chips has turned advanced packaging from an option into a necessity. Whether it’s TSMC’s latest fully integrated optical I/O engine or Intel’s outsourcing of AI-focused packaging to Amkor Technology, both underscore advanced packaging as a critical bottleneck and enabler for AI chips, elevating its strategic value. Meanwhile, rising demand for memory chips has directly driven packaging and testing needs, providing stable support for industry performance.

**Analog Chip Design** The analog chip design segment remained relatively stable this week, with domestic efforts advancing across capacity building, technological breakthroughs, and capital support. Long-term, under the trends of intelligence and electrification, analog chips—as critical components—retain vast market potential. Companies making progress in automotive electronics, industrial control, and high-end power management amid domestic substitution warrant sustained attention.

**Digital Chip Design** Nvidia announced a $2 billion investment in Synopsys, a leading EDA firm, potentially reshaping chip design workflows and intensifying the tech race. Moore Threads officially listed on the STAR Market on December 5, 2025, marking domestic capital’s endorsement of high-end GPU designers and reinforcing growth expectations for AI computing and domestic chip substitution.

**Risk Warning**: Risks include slower-than-expected technological iteration, international trade uncertainties, and heightened market competition.