Emerging Trends in High-End Manufacturing and Strategic Industries: Supply and Demand Dynamics Strengthen

Preview for Tomorrow’s Theme: The Core Resources of High-End Manufacturing and Strategic Emerging Industries – Institutions Indicate a Resonating Supply and Demand Pattern in the Industry

Key Highlights:

• SEMI forecasts that total equipment expenditure in the storage sector will reach $136 billion over the next three years.
• Orders for energy storage cell companies have been scheduled through next year.
• Microsoft’s data center resource shortages are expected to persist until 2026.
• Xpeng Motors announces a patent for human-like robot posture generation.
• The “Figure03” humanoid robot is set for a comprehensive upgrade.

Industry Overview:

The sector of high-end manufacturing and strategic emerging industries is currently experiencing a resonating supply and demand dynamic. Jinli Permanent Magnet has announced that it expects a net profit of 505 million to 550 million yuan attributable to shareholders in the first three quarters of 2025, representing a year-on-year increase of 157% to 179%. A report from Ping An Securities indicates that the resurgence in rare earth prices has led to an increase in the company’s gross profit margin compared to the previous year.

Debang Securities has highlighted that rare earths, as core resources for high-end manufacturing and strategic emerging industries, are witnessing a resonating supply and demand pattern. On one hand, China’s quota management and export controls have strengthened the strategic autonomy of its supply chain, ensuring that resources are directed towards high-end applications. On the other hand, the global green transition and the dual carbon goals continue to drive demand for critical elements such as praseodymium and neodymium, fostering rapid expansion in new applications like permanent magnetic materials. Against the backdrop of increased supply concentration and upgraded demand structure, the strategic position of the rare earth industry is expected to be further solidified, injecting long-term momentum into high-end manufacturing development.

Among listed companies, Baotou Steel offers products such as steel, rare earth concentrates, fluorite concentrates, and coal chemical products. In 2024, the company is projected to sell 419,800 tons of rare earths and 673,800 tons of fluorite, marking year-on-year increases of 20.99% and 115.49%, respectively. North Rare Earth reported significant growth in the second quarter of 2025, with rare earth oxide output increasing by 225% year-on-year to 9,430.15 tons, while sales reached 9,603.47 tons, a decrease of 10.46% from the previous year.

SEMI has reported that global equipment expenditure for 300mm wafer fabs is expected to reach $374 billion between 2026 and 2028. This robust investment reflects a shift towards regionalization of fabs and a surge in demand for AI chips from data centers and edge devices. The report states that in 2025, global equipment expenditure for 300mm wafer fabs will exceed $100 billion for the first time, with a 7% growth to $107 billion, and a further 9% increase to $116 billion in 2026. Over the next three years, total equipment spending in the storage sector is projected to reach $136 billion.

Tianfeng Securities notes that the AI storage revolution is upon us, with “storage instead of computation” creating core opportunities that significantly reduce computational power consumption and accelerate AI inference, leading to higher growth in SSD demand compared to traditional projections. They recommend focusing on storage module manufacturers and storage chips.

In the listed companies segment, Zhichun Technology primarily provides wet process equipment, high-purity processing equipment and systems, electronic materials, components, and related professional services to clients in the domestic integrated circuit sector. Their semiconductor wet process equipment can be utilized in the production of HBM high-bandwidth storage chips. Kexiang Co., Ltd., leveraging its long-standing expertise in high-density printed circuit board development and production, has begun limited production of certain standard density IC substrates, including micro-electromechanical system packaging substrates and storage chip packaging substrates, mainly used in sensors, memory devices, and other small electronic devices.

Demand for energy storage cells has surged, with orders extending into next year, and project bidding scales have increased significantly year-on-year. The shortage of energy storage cells is attributed to the explosive global demand and a relatively slow response from supply. According to An Guangyong, an expert from the All-China Federation of Industry and Commerce, domestic energy storage demand has exceeded expectations this year, driven by the full market entry of new energy sources, widening peak-to-valley electricity price differences, and highlighting the commercial value of energy storage projects.

Changcheng Securities believes that 2025 will mark a year of value reconstruction for the energy storage industry, with core drivers stemming from dual policy and market transformations. The global demand for energy storage is set to explode, driven by increased penetration of new energy sources and reductions in energy storage system costs, leading to a synchronization of domestic and international energy storage demand and ushering the sector into a new cycle.

On the corporate front, Pylon Technologies is one of the few domestic companies that independently develops and manufactures core components for energy storage, including cells, modules, battery management systems, and energy management systems. In the first half of 2025, the company achieved a shipment volume of 1,328 MWh, a year-on-year increase of 132.57%. In the second quarter, shipments reached 927 MWh, up 131.17% quarter-on-quarter, with approximately 60% of international shipments coming from commercial energy storage, which significantly increased to around 30% of the total overseas shipments. Penghui Energy currently possesses high-safety LFP platform technology and long-cycle life platform technology in the energy storage battery field, producing products with high safety, long cycle life, and high energy efficiency based on advanced technologies. The production rate for their large storage cells reached 100% in October. Nandu Power has approximately 7.8 GWh of unfulfilled orders on hand, with about 5 GWh domestic and 2.8 GWh overseas.

Microsoft’s data center resource constraints are expected to last longer than previously anticipated. Many data center regions in the U.S. will face shortages of physical space or servers. According to insiders, new subscriptions for Azure cloud services will be limited in some key server center locations, including Northern Virginia and Texas, until at least the first half of next year. The lack of rentable servers for clients has been a recurring concern for cloud providers, including Microsoft, Amazon, and Google, as they strive to balance customer demand with their data center fleets.

With the rapid advancement of AI technology, IDC is accelerating its transition to AIDC (AI Data Centers) to meet the growing demand for AI computing and enhance resource utilization efficiency. Tianfeng Securities comments that AI is propelling an upward trend in data center prosperity. Drawing from overseas experiences, Deepseek may lead to an improvement in the prosperity of China’s data centers. The emergence of ChatGPT in 2022, with its large model parameters, correlates directly with increased computational power demands.

From the corporate perspective, Shenghong Co., Ltd. is closely monitoring developments related to AIDC and established an AIDC division in June 2025. They are focusing on researching and developing new products to address emerging demands, building upon existing power quality products such as APF and SVG. Their industrial power supply products are suitable for use in data centers/intelligent computing centers. Keda specializes in data center infrastructure, providing core power supplies and related products to clients like Alibaba.

Xpeng Motors recently revealed a patent for a method of generating postures for humanoid robots. According to reports, on October 10, Guangzhou Xpeng Motors Technology Co., Ltd. applied for the patent, which pertains to robotic technology.

CITIC Construction Investment reports that Tesla’s Optimus project is accelerating industrialization, with the Figure robot having completed high-value financing, marking a period of continuous catalytic validation for the sector. Looking ahead to Q4, they maintain a bullish outlook as the release and mass production pace of the third-generation Optimus prototype appear promising. Recent indications suggest that the T-chain may soon initiate exchanges and inspections with domestic suppliers, encouraging optimism for the return of robots to the technology growth allocation.

Among listed companies, Hengli Hydraulic has stated in its 2024 annual report that it completed the development of dozens of products, including precision ball screws, planetary rollers, and linear guides during a two-year preparation period. Production trials and validation for some models began in the second quarter of 2024. By September 2024, their production line equipment will possess complete processing capabilities, and the company is actively engaging with domestic clients for sample submissions, with the project now entering mass production. Chaojie Co., Ltd. has indicated that it can provide various fasteners, PEEK material products, sensor bases, and high-precision machining products in the humanoid robot sector. They have already received small batch orders from clients, including Zhiyuan Robotics.

The humanoid robot field recently announced a significant development with FigureAI’s introduction of the new generation “Figure03” on October 9. This product, described by CEO Brett Adcock as “the most powerful humanoid robot to date,” has attracted significant attention in the industry due to its comprehensive upgrades in both appearance and functionality, including innovations such as a woven fabric exterior and a bionic charging foot module.

Notably, Figure completed over $1 billion in Series C financing in September of this year, achieving a post-investment valuation of $39 billion. This ample funding secures technological development and mass production capabilities. CEO Brett Adcock has confirmed that the cost of Figure humanoid robots has been reduced by approximately 90%, with plans for large-scale deployment within the next four years and a new factory capable of producing 100,000 robots annually. Huaxin Securities analyst Lin Zijian notes that Figure is a leading overseas humanoid robot manufacturer, and its significant investments in building data collection centers underscore the need for extensive real-world data training for humanoid robot models. The progress of real data collection can serve as a metric for evaluating humanoid robot manufacturers, with Figure currently leading the industry and presenting investment opportunities within the Figure chain.

In the listed company segment, Lingyi Technology has provided die-cut structural parts, metal structural components, cooling modules, and flexible structural parts for FigureAI robots. Changying Precision focuses on precision components for humanoid robots, such as joint gears and bearings, and has established partnerships with Figure AI and leading North American humanoid robot companies, receiving orders in the process.