China IT Sector Weekly Report (2026/02/23-03/01): AI Models and Semiconductors Lead Gains, Strong Momentum in Domestic Substitution and Ecosystem Expansion

Bottom Line

This week delivered clear core signals for China's IT sector: the commercial application of domestic AI models and the autonomous advancement of the semiconductor supply chain are accelerating simultaneously, with significant improvements in profitability. Investors should immediately increase allocations to software companies achieving scaled revenue at the AI application layer (e.g., via API integration) and to leading semiconductor hardware firms with clear pricing power and high-end manufacturing capabilities, particularly those in power semiconductors, testing equipment, and AI computing power.

Key Developments

1. Domestic AI Models Top Global Usage Charts, Commercial Integration Accelerates — According to the latest data from OpenRouter, Chinese AI company MiniMax's M2.5 large model ranks first with a 61% share, followed by Kimi K2.5 in second place. Concurrently, Alibaba Cloud's "Bailian" platform launched "Coding Plan," a low-cost programming toolkit integrating the aforementioned models. Portfolio implication: Leading domestic large models have entered the phase of large-scale commercial application, with cloud platform integration being a key monetization path. Focus on AI software companies with deep partnerships with public cloud platforms like Alibaba Cloud and Tencent Cloud, as well as those whose own models are widely integrated (e.g., affiliates or suppliers of MiniMax, Moonshot AI). The valuation logic for Software-as-a-Service (SaaS) companies with embedded AI capabilities will be reassessed.

2. Domestic Semiconductor Companies Announce Collective Price Hikes, Profit Forecasts Significantly Revised Upwards — Multiple local semiconductor companies including Hongwei Technology, Xinjieneng, China Resources Microelectronics, and Silan Microelectronics announced price increases of at least 10% for key products like power semiconductors, effective March 1. Simultaneously, over 11 semiconductor companies forecast net profit growth exceeding 100% for 2025. Portfolio implication: Smooth cost pass-through indicates robust downstream demand and solid domestic substitution logic, enhancing industry pricing power. This directly benefits power semiconductor (MOSFET, IGBT) IDMs and design companies that have issued price hike notices. Focus should be on companies shifting their product mix towards high-end segments like automotive and industrial, and those with high-growth 2025 earnings forecasts. Semiconductor equipment and materials companies, as upstream players, will also benefit indirectly from capacity expansion.

3. Huawei HarmonyOS Surpasses 40 Million Terminals, Showcases Top-Tier AI Computing Cluster Overseas for First Time — Huawei Chairman Liang Hua announced that the number of terminal devices equipped with HarmonyOS 5/6 has exceeded 40 million, with over 75,000 devices connected to the ecosystem. Meanwhile, at MWC26, Huawei debuted the Atlas 950 super node equipped with 8192 Ascend chips overseas for the first time. Portfolio implication: The HarmonyOS ecosystem has crossed a critical threshold, entering an accelerated growth phase, benefiting software, solution, and IoT hardware partners within Huawei's ecosystem. The high-profile overseas launch of Huawei's Ascend computing cluster signifies its AI hardware system has achieved top-tier international competitiveness, solidifying its core position in the domestic AI computing infrastructure layer. This directly benefits the Ascend chip supply chain and server partners.

4. Leading Semiconductor Testing Equipment Firm Announces Massive Private Placement, Capital Continues Flowing into Hard Tech — Semiconductor testing equipment company Jingzhida announced plans for a private placement to raise up to 29.59 billion RMB for the R&D and industrialization of storage testing equipment and high-end SOC testing equipment. Additionally, NIO's chip subsidiary "Anhui Shenji" completed a 2.257 billion RMB first-round financing, and robotics company "Zhipinfang" secured over 1 billion RMB in Series B+ funding. Portfolio implication: Massive financing highlights strong capital market support for "bottleneck" segments like semiconductor equipment, but risks of significant equity dilution warrant caution. Jingzhida's fundraising direction (storage, SOC testing) points to the next key battleground for semiconductor equipment localization. Investors should follow the "increased capex - rising equipment demand" chain to screen companies achieving technological breakthroughs in specialized testing and metrology equipment segments.

Sector Pulse

Risk Watch

• Risk of Overheated Semiconductor Financing and Overcapacity — Multiple semiconductor companies initiating large-scale equity financing (e.g., Jingzhida's 29.59 billion RMB), coupled with high industry景气, may trigger a new round of capacity expansion competition. If downstream demand growth falls short of expectations, it could lead to overcapacity and price wars in certain segments in the coming years. Probability: Medium. Impact: High.

• Intensifying AI Model Competition Eroding Profits — Fiercer competition among domestic large models at the application layer (e.g., Alibaba Cloud's low-cost integration package), while driving adoption, may accelerate the commoditization of API service prices, squeezing the long-term profit margins of pure model suppliers. Probability: High. Impact: Medium.

Outlook

Key events and indicators to monitor next week:

• Market Feedback Following Semiconductor Price Hike Implementation: Monitor downstream customer acceptance and channel inventory changes after domestic semiconductor companies' price increases take effect on March 1, which will verify the industry's true supply-demand dynamics.
• Release of More 2025 Corporate Earnings Reports: As of March 1, 1023 A-share companies have released results. Continued focus is needed on specific revenue and gross margin data for semiconductor equipment and AI hardware supply chain companies to validate high-growth expectations.
• Market Response Following Huawei Ascend Super Node Overseas Launch: Observe international customer inquiries and feedback on Huawei's Atlas 950 super node, a crucial test for measuring the international competitiveness of domestic AI hardware.

Positioning consideration: Given strong industry news flow, improving sentiment, and frequent positive fundamental signals (price hikes, high growth), a tactical overweight stance on the IT sector should be maintained. However, holdings should be further concentrated in leading sub-sector players that demonstrated strong commercial momentum this week (AI model usage, product pricing power), utilizing potential market volatility for portfolio restructuring.