Citibank: National AI Blueprint Benefits Semiconductor Manufacturing International Corporation (00981) and other AI chip domestication targets can be achieved with over 80% localization.

Citibank released a research report stating that foreign media reports that the mainland government is preparing to invest approximately 2 trillion yuan in the next five years to build national-scale data centers to support the local AI industry. Mainland telecommunications operators will be responsible for operating these data centers and will use at least 80% of domestically produced AI accelerators. The bank believes that this new initiative is positive for semiconductor companies such as Semiconductor Manufacturing International Corporation (00981), HUA HONG GRACE (01347); testing and packaging companies like JCET Group Co., Ltd. (600584.SH), TongFu Microelectronics (002156.SZ); equipment providers like ASMPT (00522), Shanghai Vital Deeptech (600641.SH); and AI accelerator suppliers. This provides a clearer roadmap for the localization of AI in China. The bank believes that the goal of over 80% localization of AI chips can be achieved, as domestic AI chip manufacturers have effectively captured the majority of the Chinese AI accelerator market this year, while imports of NVIDIA Corporation's (NVDA.US) H200 have essentially stagnated. The bank believes that this is also more advantageous for small and medium-sized AI chip manufacturers, as state-owned data centers are more willing to purchase from a wider range of suppliers.