Shenwan Hongyuan Group: DeepSeek accelerates AI edge deployment, focusing on material end investment opportunities.

Shenwan Hongyuan Group released a research report stating that DeepSeek is catalyzing the competition in AI from a competition based on computing power to efficiency optimization. The low cost and open source nature are accelerating the trend of AI towards scenarization. The industry chain is moving from the cloud infrastructure phase to the rapid phase of AI applications and edge AI. In terms of cost restructuring, the push for AI competition to shift from a competition based on computing power to efficiency optimization is underway. The combination of "computing power + algorithm + application" has remained unchanged. With the increasing penetration rates of AI in various industries, the trend of the demand for computing power as a foundation will continue. Secondly, acceleration at the edge, significant cost reductions and technology democratization after open sourcing will accelerate the faster move of AI towards scenarization, with AI applications and edge AI expected to accelerate. The embedding of AI will lead to widespread hardware upgrades, and close collaboration within the industry chain will bring investment opportunities. The focus for materials includes: Semiconductor Materials: 1) The continuous growth in demand for high-performance chips and advanced packaging technology, driven by AI smartphones, AIPC, and other end terminals, will revive the demand for general-purpose storage chips. With the background of domestic replacements for control, Semiconductor Manufacturing International Corporation, and other core semiconductor companies, suppliers like Jiangsu Yoke Technology, Hubei Dinglong, Guangdong Huate Gas Co., Ltd, Novoray Corporation will continue to benefit. 2) The upgrade of AI server structure will drive the innovation in demand for upstream components and materials. The performance of copper foil directly affects the speed and quality of signal transmission in PCBs. The electronic resin system is key to improving CCL performance. Resins such as BMI, PPO, and OPE have stood out, while materials like ODV, PTFE have become future directions for iteration. Recommended companies include Jinan Shengquan Group Share Holding, Sichuan Em Technology. Heat Dissipation Materials: With the accelerated edge AI in AI smartphones, AIPC, intelligent vehicles, etc., heat dissipation upgrades are particularly important to avoid series issues caused by overheating of core SoC chips during operation. The demand for heat dissipation materials such as heat pipes, heat sinks, thermal interface materials, graphite films continues to grow, especially the heat dissipation scheme penetration rate of heat sinks is expected to continue to increase. Recommended companies include Suzhou Tianmai Thermal Technology, J.Pond Precision Technology. Display Materials: In the short term, the subsidy for new purchases of digital products such as smartphones announced by the National Development and Reform Commission has activated the consumer electronics market, driving the growth in demand for upstream display materials. Looking ahead, the improvement in hardware performance and the gradual clarity of application scenarios have laid a solid foundation for a large-scale wave of upgrades for AI edge devices, and the panel display industry is expected to prosper. Recommended companies include 1) OLED materials: Xi'an Manareco New Materials, Shaanxi Lighte Optoelectronics Material; 2) Film materials: Jiangsu Sidike New Materials Science & Technology, Talant Optronics, among others. Siasun Robot&Automation Materials: With AI and DeepSeek intelligence promoting the significant progress of Siasun Robot&Automation algorithms, the integration of Siasun Robot&Automation with models is expected to kick off the intelligent upgrade of the latter half. As humanoid Siasun Robot&Automation gradually moves towards scene landing, upstream materials companies will also benefit. Recommended companies include: 1) Flexible sensors: Zhejiang Fulai New Material; 2) Lightweight materials: Jilin Joinature Polymer (PEEK); 3) Magnetic materials: Guangzhou Newlife New Material (Samarium Cobalt Nitride), among others. Key Recommendations: 1) Semiconductor Materials: Jiangsu Yoke Technology (002409.SZ), Jinan Shengquan Group Share Holding (605589.SH); 2) Heat Dissipation Materials: Suzhou Tianmai Thermal Technology (301626.SZ); 3) Display Materials: Xi'an Manareco New Materials (688550.SH), Shaanxi Lighte Optoelectronics Material (6881504.SH); 4) Siasun Robot&Automation Materials: Zhejiang Fulai New Material (605488.SH), among others. Risk Alerts: 1) The pace of implementation of AI at the edge is slower than expected; 2) Terminal demand is lower than expected; 3) Intensified industry competition.