Against the backdrop of the reshaping of the global supply chain and the complexity of geopolitics, the localization of semiconductor equipment is not only an intrinsic demand for industrial development but also a strategic consideration for national security. The government's policy support, collaborative innovation among the upstream and downstream of the industrial chain, and the continuous growth of market demand are jointly driving Chinese semiconductor equipment enterprises to accelerate technological breakthroughs and market expansion, with the localization substitution process entering a fast lane. 

Domestically, there have been numerous policy enhancements this year. In June, the China Securities Regulatory Commission (CSRC) issued the "Eight Measures for Deepening the Reform of the STAR Market to Serve Technological Innovation and the Development of New Quality Productivity." On May 24, 2024, the third phase of the National Integrated Circuit Industry Investment Fund was established. According to official disclosures, the registered capital of the third phase of the National Integrated Circuit Industry Investment Fund has reached 344 billion yuan, exceeding the combined total of the first two phases. The recently concluded meeting also proposed "deepening the reform of the science and technology system," urging the rapid establishment of an independent and controllable industrial chain and supply chain, and improving the development mechanisms and systems for key industrial chains such as integrated circuits, industrial mother machines, medical equipment, instruments and meters, basic software, industrial software, and advanced materials. It aims to promote technological breakthroughs and the application of achievements throughout the entire chain. With the strong push of national policies, the semiconductor industry is expected to embrace new development opportunities. 

Particularly worth noting is that with the accelerated expansion of domestic wafer fabrication plants and the emphasis on supply chain security, domestic semiconductor equipment enterprises are presented with development opportunities. Additionally, with the rapid advancement of artificial intelligence technology, the demand for upstream infrastructure, including optical modules and their supporting optical chips, is growing rapidly. The construction and expansion cycle of optical chip production lines is relatively long, which restricts the rapid expansion of production capacity. Therefore, under the current export control policies, domestic optical chip manufacturers have the opportunity to seize market opportunities, expand production scale, and enhance technological levels to meet the growing market demand. 

Data shows that after several quarters of continuous weakness, the semiconductor market has shown signs of stabilization and recovery. Global customers' willingness to stock up has increased, and the price war is coming to an end. It is expected that prices will start to rise in the next few quarters. The current market valuation is at a low level, and it is expected that the downside of the market in the future will be limited. September or so may be a key time point for the market to rise. In terms of "Kotani Estimation", the overall valuation of the domestic technology industry is currently significantly lower than that of overseas, and there may be significant revaluation space in the medium term.