CITIC SEC: The trend of rising prices for power devices has been established, opening up long-term growth opportunities for AI power supplies.

CITIC SEC released a research report stating that the power device sector is entering a confirmed second round of price increase cycle, driven by the dual catalysts of AI power demand explosion. In the short to medium term, based on various company announcements, domestic and foreign power device manufacturers will gradually initiate the second round of price increases, further clarifying the upward cycle. Looking ahead in the medium to long term, it is expected that AI power demand will continue to strengthen the pull on power devices, and the long-term incremental space under the HVDC/SST trend will gradually open up. We believe that this round of price increase trend is expected to continue until 2027, with related companies expected to embark on a new round of rapid revenue growth and significant profit recovery, optimistic about the overall upward opportunities in the power device sector. Short-term: Cost and demand resonate, second round of price hikes fully implemented The first round of price increases for power devices was concentrated from the end of 2025 to the first quarter of 2026, driven by cost pressures and marginal demand recovery. Overseas, according to company announcements, companies including Rohm Semiconductor, Infineon, AOS, and ON Semiconductor started the first round of price adjustments around March-April 2026, with increases of around 10%. Domestically, companies such as China Resources Microelectronics, Jiangsu Jiejie Microelectronics, Yangzhou Yangjie Electronic Technology, and Wuxi Nce Power followed suit and initiated price increases for some products. In June 2026, due to continued tense supply-demand relationships, domestic and foreign power device manufacturers have initiated the second round of price increases: according to Infineon's performance meeting disclosure, Infineon plans to increase prices by 15% across the board on July 1st. According to various company exchanges, more domestic power device manufacturers are choosing to follow the price increases of overseas companies in this round. Medium-term: AI and non-AI demand resonate, expected to continue this round of price increases until 2027 Demand side: Traditional demand recovery + explosion of AI incremental demand. Currently, the overall industrial sector is fully recovering, while the explosion of AI power demand brings substantial incremental demand. Supply side: Si-based power devices are no longer the focus of wafer factory expansion, coupled with global mature process capacity being squeezed by AI, leading to supply shortages in the power device field, with mainstream power device wafer factories/IDMs running at full capacity. Overall, the supply-demand relationship in the power device field is tense (especially for medium and low voltage power devices), product lead times are continuously lengthening, customers are generally starting to lock in orders early, and acceptance of price hikes is increasing. We expect this round of the power device sector to officially enter an upward phase, and the trend of price increases is expected to continue until 2027. In particular, the supply-demand situation for medium and low voltage power devices is tighter, and the pace of price increases is earlier. According to company announcements, as of the end of June 2026, some manufacturers have accumulated price increases of 10-20%. We expect at least 1-2 more rounds of price increases in the second half of 2026. Long-term: Explosion of AI power demand, opening up the long-term growth ceiling for power devices AI algorithm construction continues to advance, data center single cabinet power continues to rise, new power architectures such as 800V and SST are rapidly penetrating, significantly increasing the amount of GaN, SiC, and other power devices per unit. According to data calculated on the Infineon official website: in a representative AI server rack power supply segment, the comprehensive value of power semiconductors per kilowatt has reached $175, and with the increasing share of third-generation semiconductors and the popularization of 800V new architectures, the value per kilowatt will continue to grow. For example, in data center high-voltage direct current energy storage systems (ESS), the average semiconductor value budget for every 1MW ESS power is $35,000, with the majority coming from high-performance SiC modules, GaN FETs, solid-state relays and other arrays. The amount of power devices used in a single AI server is 3-5 times that of a traditional server, with demand growth exhibiting significant nonlinear characteristics, corresponding to a market size of 300-500 billion yuan for power device manufacturers for every unit of GW computing power. We expect the value per GW of computing power to increase to 1 billion yuan by 2030, representing a threefold increase from the current level. According to the annual reports of various companies, the exposure of China's power sector to AI-related businesses is currently only in the single digits, and with the continuous strengthening of global AI algorithm construction, power device manufacturers are expected to open up the long-term growth ceiling.