Huatong Securities' investment outlook for the second half of the year in the electronic sector: Focus on the continued prosperity of computing power, increase in domestic manufacturing rate, and implementation of AI applications.

Huatai Securities outlook on the investment in the electronic sector in the second half of 2025: 1) Large-scale architecture will continue to iterate, with the Scaling Law expected to accelerate the growth of reasoning demand, potentially continuing the boom in computing power; 2) In terms of autonomy and controllability, domestic manufacturing advanced process capacity continues to advance, with a focus on new capacity opening opportunities for domestic equipment manufacturers to improve localization rates, analog chips are also expected to accelerate localization under the stimulation of downstream replenishment; 3) On the AI side, AI glasses are expected to reach a turning point in the second half of the year, and the autonomous driving field is expected to accelerate industry trends as prices continue to decline.