Hong Kong Stock Concept Tracking | DeepEP Open to Public Drives Surge in Chip Demand Domestic Substitutes Benefit from Local AI Wave (with Concept Stocks)

On February 25, according to media reports, DeepSeek plans to release its new generation AI model R2 ahead of schedule. The company had originally planned to launch in May, but is now working hard to release it as soon as possible. DeepSeek stated that the new model will have improvements in programming capabilities and multilingual reasoning. In response to this, a relevant person from Fantom Quantitative told reporters to "refer to official announcements." After the Chinese company launched the low-cost artificial intelligence model DeepSeek, demand for NVIDIA artificial intelligence chips in the Chinese market has significantly increased. According to informed sources, many internet giants have seen a surge in orders for the same H20 chip. At the same time, smaller companies in sectors such as healthcare and education in China have also begun to purchase servers equipped with the DeepSeek artificial intelligence model and NVIDIA H20 chips. Before this, only financially strong companies in the financial and telecommunications sectors would purchase artificial intelligence computing systems. Market research firm CounterPoint Research reports that due to the surge in demand for AI, global semiconductor revenue is estimated to reach $621 billion by 2024, a 19% year-on-year increase. Guotai Junan Research believes that as the AI competition intensifies and the industry accelerates its development, chip manufacturing is currently a major bottleneck in the Chinese AI industry, and is expected to gradually break through as the industry chain matures. Guosen believes that through compatibility with domestic large models like DeepSeek, the support capability of domestic full-function GPUs for complex AI tasks will be validated and optimized, helping the development of the entire domestic AI industry chain. They continue to recommend related semiconductor companies such as Semiconductor Manufacturing International Corporation. Related Hong Kong-listed companies in the domestic chip industry chain: HUA HONG SEMI (01347): According to Hua Hong's prospectus, within three years from the date of listing on the Sci-Tech Innovation Board, Huali Micro will be integrated into Hua Hong. It is recommended to follow up on developments. Semiconductor Manufacturing International Corporation (00981): The company's capacity utilization rate reached its low point in 1Q23, reaching 90.4% in 3Q24, and the supply-demand situation continues to improve. The demand for advanced manufacturing processes driven by AI is expected to benefit Semiconductor Manufacturing International Corporation as a leading mainland contract manufacturer. AI era cloud computing chips (such as NVIDIA H100, 4nm) and terminal SoCs (such as Qualcomm Snapdragon 8Elite, 3nm) are continuously increasing their demand for advanced manufacturing processes due to their faster processing speeds and better power consumption. In terms of supply, according to TrendForce, Semiconductor Manufacturing International Corporation developed the N+1 process in 2021 and the N+2 process in 2022, making it one of the few mainland enterprises capable of mass producing advanced manufacturing processes. The company has strong bargaining power in advanced manufacturing processes in mainland China, and institutions believe that the future demand for domestic computing chips is expected to benefit from domestic substitution, with Semiconductor Manufacturing International Corporation expected to fully benefit from the local AI wave.