One of several practical takeaways from China's big policy meeting last week was Beijing's interest in developing domestic technology. From an investment perspective, Goldman Sachs analysts pointed out on July 15 that there are significant catalysts for certain semiconductor and artificial intelligence Chinese stocks from August to December. These include new Chinese smartphones, artificial intelligence PCs and a new iPhone range heading into the holidays. According to data from the financial database Wind Information, among mainland Chinese stocks, semiconductor stocks had the largest inflows last week and had the largest gains on Friday. Earlier, China's main stock index closed only slightly higher on Friday. They were trading lower in the morning ahead of a press conference on China's policy meeting, known as the Third Plenum. Officials revealed to reporters plans to accelerate the development of “emerging and future industries” and expand the development of China's scientific and technological talent pool. Friday's IT outage also reminded many Chinese of the benefits of being less globally integrated. On Chinese social media platform Weibo, Microsoft users' interference briefly became the second most popular topic in the afternoon, before being replaced by new topics that night such as Xiaomi's live broadcast of its product launch event in Beijing. In contrast, the most popular project on X in Beijing on Friday night was CrowdStrike. U.S. restrictions on Nvidia's exports to China over the past two years and a report last week that the Biden administration was considering broader restrictions on exports of advanced chipmaking equipment to China have added to China's growing focus on self-sufficiency. Shares of ASML, Nvidia and TSMC have all fallen since the report was released. NVDA 2330-TW, ASML Mountain 2024-07-17 As of July 17, NVDA, ASML and TSMC Goldman Sachs analysts said they are “positive” on China’s semiconductor production equipment inventories as they expect “demand growth to mature from China” Driven by the continued expansion of node capacity. “In the SPE space, we prefer platform solution providers that have leading technologies among local peers and are committed to expanding their product portfolio to capture a larger share. ” Ways to participate in the sector The bank has a buy rating on at least two Chinese companies in the sector. One of them is U.S.-listed ACM Research, where analysts expect a price target of $39 per share, with about $90 remaining % upside. Another is Shanghai-listed AccoTest, part of Beijing Huafeng Measurement and Control Co. Ltd. Goldman Sachs analysts are also optimistic about the growth of Chinese fabless companies, which design chips but outsource the manufacturing process. Goldman Sachs said: “We expect third-quarter revenue of Chinese fabless companies to grow 8%-64% (quarter-on-quarter), supported by seasonal improvements in consumer electronics and a gradual recovery in demand after the market digests inventory. “We prefer market share gainers and companies focused on mature nodes with less geopolitical risk,” they said. ” Their two buy-rated picks for the Shanghai-listed shares are Montage Technology (expected to gain 27% from Friday’s closing price) and Will Semiconductor (with room for 19% upside). According to the Goldman Sachs report, almost all of Montage Technology All revenue comes from servers, while about half of Will Semiconductor's revenue comes from smartphones and one-third from cars.