EB SECURITIES: DeepSeek helps accelerate the rapid development of the AI industry. The future of AI materials and applications is promising.

EB SECURITIES released a research report stating that recently, domestic AI company DeepSeek launched a new generation of large models, demonstrating significant commercial potential with its efficient computing performance, low training costs, and multi-scenario adaptability. It is expected to lead the industry transformation. The rise of DeepSeek not only highlights the rapid development of AI technology in China but also opens up new ideas for the global AI industry. AI drives demand for chips, data centers, etc., focusing on the localization process of core materials. Some key points from EB SECURITIES are as follows: DeepSeek is helping to accelerate the development of the AI industry and is expected to empower process industries and intelligent manufacturing comprehensively. Recently, domestic AI company DeepSeek launched a new generation of large models, demonstrating significant commercial potential with its efficient computing performance, low training costs, and multi-scenario adaptability. It is expected to lead the industry transformation. DeepSeek's rise not only highlights the rapid development of AI technology in China but also opens up new ideas for the global AI industry. With its powerful reasoning ability and low-cost advantage, DeepSeek-R1 quickly gained wide attention in the market. In the field of intelligent manufacturing, DeepSeek is expected to effectively solve control optimization problems in complex scenarios by integrating industrial mechanics with AI technology. The deployment of large models in the industrial field mainly revolves around aspects such as classification or recognition, system optimization, empirical knowledge reasoning decision-making, knowledge precipitation, and management. The widespread adoption of DeepSeek models is expected to reduce the intelligence expenditure of industrial enterprises, decrease reliance on foreign AI models, and help companies improve efficiency and reduce costs. AI drives demand for chips, data centers, etc., focusing on the localization process of core materials. With the continuous expansion of AI application areas and its penetration into end consumer electronic products, the demand for high-performance chips will increase rapidly to meet the rapid expansion of the market size and the computational support for AI applications in end electronic products. In order to ensure the stability and security of the supply chain of China's AI-related industries, the importance of localizing relevant chips is becoming increasingly prominent. Therefore, in the AI chip manufacturing sector, it is recommended to focus on leading companies in areas such as domestic photoresist (Red Avenue New Materials Group, Crystal Clear Electronic Material, Jiangsu Nata Opto-electronic Material), electronic special gases (Guangdong Huate Gas Co., Ltd, Suzhou Jinhong Gas Co.,Ltd., Jiangsu Yoke Technology, Jiangsu Nata Opto-electronic Material), precursors (Jiangsu Yoke Technology, Jiangsu Nata Opto-electronic Material), CMP (Hubei Dinglong, Anji Microelectronics Technology, Red Avenue New Materials Group), wet electronic chemicals (Crystal Clear Electronic Material, Zhongju Semiconductor, Xingfu Electronics, Jiangyin Jianghua Micro-electronic Materials), ABF materials (Epoxy Base Electronic Material Corporation, Shengyi Technology, Zhejiang Wazam New Materials) etc. In addition, with the increasing demand for high-performance computing and cloud computing services by AI, as well as the need for data storage management for large training data, the scale and number of global data centers will increase rapidly. However, considering the increase in energy consumption due to server computing power enhancement, data centers face higher challenges in heat dissipation. Based on this consideration, liquid cooling technology is becoming a hot industry topic, and the market size for cooling liquids is expected to expand rapidly. Therefore, in terms of materials required for data centers, it is recommended to focus on companies that have products related to liquid cooling fluids such as Shenzhen Capchem Technology and Zhejiang Juhua. Zhejiang Supcon Technology Co., Ltd.: Deeply cultivating industrial AI, fully adopting DeepSeek's large models, products successfully applied to Saudi Aramco, "Two Barrels of Oil", and other companies. Zhejiang Supcon Technology Co., Ltd., as a leading company in China's process industry automation, launched the "ALL in AI" strategy 24 years ago, forming two major product systems for enterprise operation automation (BA) and production process automation (PA). In May 24, the company successfully won the bidding for Petrochina and China Petroleum & Chemical Corporation's DCS system purchase, and the company's products have been successfully applied to large petrochemical enterprises such as Saudi Aramco and the National Petroleum Company of Indonesia. Also originating from Hangzhou as a startup point, in May 24, Zhejiang Supcon Technology Co., Ltd. chose DeepSeek's V2 version as the core base large model for the company's heavy industrial AI product development in the BA field, which is expected to be released in mid-25. With the updates of DeepSeek- V3, R1, and other models, Zhejiang Supcon TTechnology Co., Ltd. quickly updated the large model of the base, taking the lead in achieving intelligent leapfrogging from production operation to enterprise operation. Relying on the "Industrial BA Super Intelligent System" built by DeepSeek, it has achieved five major breakthroughs: multimodal perception central system, industrial-grade BA graph data and graph neural networks, intelligent construction of industrial APPs, multi-intelligent agent collaboration across all business links, and industrial-grade analytical decision-making brain.Risk analysis: 1) Risk of rapid decline in raw material prices and maintaining high levels: Chemical product prices fluctuate in sync with corresponding raw material prices. A rapid decline in raw material prices can lead to significant inventory losses for companies; maintaining high raw material prices can narrow the price difference for chemical products, leading to decreased profits. 2) Risk of lower-than-expected downstream demand: The downstream demand for chemical products is mainly related to the overall economic outlook. If the growth rate on the demand side is lower than expected, there is a risk of industry downturn.