Lyon: Rapid growth of AI and storage industry, increasingly significant local substitution effect

Lyon released a research report stating that the expected emerging AI applications will drive rapid growth in global and Chinese storage demand. In unprecedented memory shortages, the bargaining power of the entire supply chain has increased, and capital expenditures have also increased accordingly. The bank forecasts that the shipment volume of the Chinese semiconductor storage market will grow at a compound annual growth rate of 12%, and revenue will rise at a compound annual growth rate of 22%, reaching $111 billion from 2024 to 2029. Memory manufacturers Montage Technology (06809) and GigaDevice Semiconductor Inc. (03986) are benefiting from the AI adoption and price upturn cycle. Equipment suppliers such as SMIC (688012.SH) and ASMPT (00522) are benefiting from the expansion of DRAM and advanced logic production capacity, as well as localization trends. In the field of AI chips and hardware, domestic substitutions along with high-end optical interconnect demand favor BIREN TECH (06082) and Zhongji Innolight (300308.SZ). Wafer foundry factories Semiconductor Manufacturing International Corporation (00981) and HUA HONG SEMI (01347) will benefit from the increasingly localized proportion of AI chipsets.