CITIC Securities: AI supply chain to post strongest Q3 earnings; autonomous control sector benefits from order transfers

Hong Kong, China — CITIC Securities has released a research report forecasting that the electronics sector will maintain strong overall performance in 2026Q3, driven by the AI trend. Looking ahead to 2026Q4 and 2027, the firm believes the sector's investment主线 will continue to revolve around two key directions: self-reliance/autonomous controllability and AI computing power.

On one hand, domestic computing chips, wafer fabrication, equipment, and advanced packaging are accelerating toward an integrated industrial闭环, with related companies expected to see sustained order and earnings delivery. On the other hand, demand for AI server supporting components remains robust, promising continued performance delivery for supply chain firms. CITIC Securities remains bullish on sub-sectors with strong fundamentals, high earnings visibility, and room for domestic substitution, including:

1. AI-related sectors
2. Self-reliance/autonomous controllability
3. Price-increase beneficiaries
4. Others

26Q3 Earnings Preview: AI Supply Chain Leads; Domestic Equipment & Components Face Tight Delivery; Self-Reliance Momentum Continues

CITIC expects AI supply chain-related segments to post strong results in 2026Q3. The North American AI chain and optical communications segments remain in a high景气 cycle, while PCB/CCL, memory, and AI power supply continue to show high earnings growth certainty. AI demand has strained overseas capacity, driving a回流 of orders to domestic players, sustaining momentum in manufacturing, packaging, and testing. Orders for domestic semiconductor equipment and components are growing rapidly, though material shortages may cause short-term delivery tightness—without altering the long-term growth trajectory. Downstream consumer electronics terminals are expected to remain subdued,延续 Q2 trends.

1) AI Supply Chain

• PCB/CCL: Expected to see both volume and price increases in 2026Q3.
• Memory: NAND/DRAM manufacturers see volume-price gains;利基 memory design firms benefit.
• MLCC: Price hikes are the most certain to materialize, with Q3 results reflecting the impact.
• Power & Analog Chips: Gradual earnings elasticity from price increases.

2) Self-Reliance Chain

• Domestic manufacturing/packaging/testing orders are full due to AI order crowding and overseas order transfers, with high utilization rates.
• Domestic memory and logic fab expansion expectations continue to rise, sustaining equipment/component order景气.
• Downstream computing power shortages persist; upstream supply chain issues are being resolved. Domestic computing power companies maintain leapfrog revenue/order growth.

3) Consumer Electronics

• Memory price hike effects persist; downstream terminals will延续 Q2's subdued trend.
• Midstream companies with AI or other new business exposure are expected to perform better.
• Upstream IC design firms with memory合封 business or new product ramps show stronger results.
• Automotive electronics supply chain performance remains relatively stable.

4) Other Sectors

• LCD: Relatively stable.
• OLED: Under pressure.
• LED: Stable景气.
• Companies with price-increase logic outperform.

Overall, sub-sectors expected to shine in 2026Q3 include: PCB/CCL, memory manufacturers &利基 memory design, AI power supply, CPU chain, fab leaders, equipment leaders, IC design firms with合封 memory, and companies with new product ramps.

AI Supply Chain: 26Q3 PCB/CCL to Maintain High Growth; Memory Volume-Price Up; MLCC Price Hikes Certain

PCB/CCL

• AI PCB: Orders grow rapidly with next-gen computing chip shipments; new capacity gradually comes online. Demand-supply共振 supports high earnings growth.
• Traditional PCB: Manufacturers with material procurement capabilities raised prices mid-year; price hike effects strengthen, significantly improving 26Q3 profitability.

Memory

• Memory manufacturers: Volume-price up, earnings likely to beat expectations.
• CPU chain: Pull-in accelerates; memory interface and配套 chips show strong sequential growth.
• 利基 memory design: Prices continue rising, capacity modestly increases; gross margins and profits move higher.
• Module segment: Begins to diverge.

Passive Components

• MLCC: Price hike most certain and fastest to materialize; Q3 results will reflect impact.
• Inductors, aluminum electrolytic, film capacitors benefit more significantly from AI demand.

Power Devices

• Companies show profit elasticity from price increases; some reflected in Q2; new energy-efficient products expected to show further impact in Q3.

Analog Chips

• Price increases relatively moderate; companies with high AI exposure maintain strong revenue growth.

Self-Reliance: 26Q3 Benefits from Overseas Order Transfers + Domestic Computing Power & Expansion Demand

Semiconductor Manufacturing / Packaging & Testing

• Domestic orders remain full due to AI order crowding and overseas order transfers.
• Utilization rates stay high; prices continue to rise sequentially.
• However, ongoing investment in advanced assets keeps depreciation pressure high.

Semiconductor Equipment / Components

• Benefiting from rising domestic memory and logic fab expansion expectations, overall chain orders remain景气.
• Front-end equipment companies see faster order intake; 2027 order growth outlook is optimistic.
• Back-end optical equipment accelerates shipments; tester delivery times are tight.
• However, upstream component delivery pressure causes阶段性 fluctuations in equipment shipment schedules—long-term trend remains positive.
• R&D investment in advanced process equipment continues; scale effects pending.
• Upstream component capacity is tight in 26Q3, lead times lengthen; production ramp-up accelerates; medium-to-long-term capacity may be brought forward.

Domestic Computing Power

• Downstream computing power shortage persists.
• Upstream supply chain issues are being resolved.
• Related companies maintain leapfrog revenue/order growth; further acceleration expected once supply chain issues are fully resolved.

Consumer Electronics: 26Q3 Memory Price Impact Continues; Terminal Demand Subdued; Focus on AI Transition, New Product Ramps & Automotive Electronics Supply Chain

Downstream (Handsets)

• CITIC expects global handset shipments to be weak in 26Q3, declining 10%–20%.
• Apple shows relatively stronger resilience.
• Huawei benefits from new product launches, standing out in the Chinese market.
• Android overall shipments decline more than the market average.
• Due to persistent memory price hikes, traditional consumer electronics pull-in momentum is insufficient in Q3. Combined with negative FX effects, supply chain companies generally show mediocre performance. Terminal brands see significant revenue growth but face year-on-year margin pressure.

Midstream

• Component companies with AI or other new business exposure expected to perform better in 26Q3.

Upstream

• IC design firms with memory合封 business or new product ramps expected to perform better in 26Q3.
• Automotive electronics supply chain performance expected to remain relatively stable.

Risk Factors

• Global macroeconomic downturn risk
• Changes in international political environment and intensified trade frictions
• Downstream demand falling short of expectations
• AI innovation falling short of expectations
• AI commercialization progress falling short of expectations
• Android supply chain innovation falling short of expectations
• Domestic substitution progress falling short of expectations
• Domestic wafer fab expansion falling short of expectations
• Advanced process technology development falling short of expectations
• Intensified competition among downstream manufacturers
• Raw material price hike risk due to inflation
• Risk of escalated sanctions
• Significant exchange rate fluctuations