Whereas the substitute intelligence race has centered largely on superior semiconductors, a slew of mainland China-listed firms produce lots of the components wanted to make information facilities work. “The USA depends on Chinese language corporations for nearly 30% of its imports of AI-related merchandise,” Michael Hirson and Houze Track at 22V Analysis wrote in a June 21 report, printed in partnership with Analyst Hub Securities. “China lacks the capability to make superior chips at scale however performs a central position within the much less attractive components of the info middle provide chain, together with vitality storage, transformers, important minerals, and chemical substances,” the analysts stated. “This quiet story is turning into more and more essential for buyers to observe.” AI-related exports have accounted for about half the expansion in China’s total exports this yr, the 22V Analysis report stated, noting lots of the firms are listed in Shenzhen. {Hardware} names have pushed vital progress in Chinese language shares this yr. The ChiNext index that tracks Shenzhen-listed firms has doubled during the last 12 months. The 22V Analysis report checked out shares within the CSI 300 index, which covers the biggest firms traded in each Shenzhen and Shanghai. Among the many 10 greatest AI provide chain firms by market cap, the report discovered that apart from battery big CATL , the 9 different names had all a minimum of doubled within the 12 months as of Might. The record included printed circuit board firms akin to Nvidia provider Victory Large , listed in Shenzhen and Hong Kong , as properly Dongshan Precision and Shengyi Know-how , each traded in Shenzhen. Sanhuan Group , additionally traded in Shenzhen, is a producer of multilayer ceramic capacitors, or MLCC , used to retailer and launch vitality in chips. Stories point out Nvidia has almost tripled the quantity of MLCCs included in its newest Vera Rubin AI system. On the server facet, Foxconn Industrial Web , a subsidiary of the Apple iPhone provider, was one other title on 22V’s high 10 record, together with vitality firm Sungrow Energy . Foxconn Industrial Web stated that in 2025, cloud computing surged by 88.7% to 602.68 billion yuan ($88.67 billion), turning into the biggest contributor to progress. Three of the businesses on the 22V record had been optical and networking names: InnoLight , Eoptolink and TFC . Optical know-how permits semiconductors to course of alerts at speeds near that of sunshine. JPMorgan analysts highlighted the optical fiber element in a June 12 report about China’s AI edge in legacy chips and information middle connectivity components. “Optics is the primary ‘picks and shovels’ channel,” the JPMorgan analysts stated. “AI information facilities require dense, high-speed hyperlinks and reportedly use 5-10x or much more fiber than conventional server rooms. Some abroad order books now prolong into 2027-28, and China Customs information present fiber/cable export worth rising to ~4x the year-ago stage, with common export costs up ~3x.” Whereas Chinese language tech firms usually nonetheless commerce at decrease valuations than their U.S. friends, native investor curiosity has risen on par. Latest share value positive factors have propelled InnoLight and Foxconn Industrial Web into the 1 trillion yuan market cap vary, together with CATL. —CNBC’s Michael Bloom contributed to this report.
