China's A-Share Compute Hardware Sector Surges: CPO, PCB, Diamond Thermal Solutions, and MLCCs Hit Daily Limits
A-Share AI Compute Hardware Chain Ignites Across the Board: Deconstructing the Industrial Logic Behind the Surge in CPO, PCB, Diamond Thermal Management, and MLCC Stocks
On the morning of May 28, the A-share market displayed pronounced structural characteristics: the ChiNext Index surged nearly 2%—significantly outpacing the Shanghai Composite Index’s modest 0.47% gain. The primary catalyst behind this robust performance was the broad-based breakout across the AI compute hardware supply chain. Over a dozen stocks—including Sifangda (CVD diamond thermal management materials), Tiancheng Technology (high-frequency, high-speed PCB substrate), and Fenghua Advanced Technology (premium MLCCs)—hit their daily trading limits. Sub-sectors such as CPO optical modules, advanced packaging substrates, thermal management solutions, and passive components collectively formed a “limit-up matrix.” This is no short-term speculative frenzy or isolated theme-driven rally; rather, it reflects an industry-level upswing, driven by the accelerated capital expenditure (CAPEX) on AI infrastructure, deepening domestic substitution, and converging technological generational upgrades. Its sustainability and cross-market linkage are markedly stronger than previous thematic investments.
CAPEX Execution Pace Exceeds Expectations: The Critical Leap from “Expectation” to “Orders”
The most fundamental driver behind this rally lies in the transition of AI compute infrastructure investment from macro-level narrative to micro-level execution. While the market had broadly anticipated 2024 as the peak bidding season for AI servers and optical interconnect equipment, actual deployment has accelerated significantly. According to industry channel checks, domestic leading cloud service providers increased server procurement volumes by over 40% quarter-on-quarter in Q2—with orders for intelligent computing clusters equipped with 800G CPO solutions already entering mass delivery. Meanwhile, in Phase II of the national “East Data, West Computing” initiative, tender volumes for high-frequency PCBs and high-capacitance MLCCs doubled year-on-year. This reality—where “expectation realization far outpaces model projections”—has directly reversed market pessimism regarding near-term earnings visibility for the hardware chain. For instance, Sifangda announced that its CVD diamond heat spreaders have passed verification for Huawei’s Ascend 910B chip modules and entered small-batch supply; Tiancheng Technology disclosed that its high-frequency copper-clad laminates have completed qualification for NVIDIA’s GB200 liquid-cooled server supply chain. CAPEX is no longer confined to PowerPoint slides—it has materialized into tangible orders and capacity ramp-ups, forming the most solid fundamental underpinning for share price appreciation.
Multi-Link Synergistic Resonance: Three-Dimensional Breakthroughs in Domestic Substitution, Advanced Packaging, and High-Frequency Materials
Notably, this wave of limit-ups is not an isolated surge in any single segment, but rather a systemic breakthrough arising from deep integration across three critical technological dimensions:
Dimension One: Optical Communication Infrastructure Reconfiguration — CPO and the Rise of Domestic Optical Modules. At the pivotal juncture of transitioning from 800G to 1.6T optical interconnects, traditional pluggable optical modules face insurmountable bottlenecks in power consumption and bandwidth. Co-Packaged Optics (CPO) has thus become the inevitable next step. Domestic players such as New Bright Optoelectronics and ZTE’s Zhongji Xuzhao are rapidly expanding silicon photonics chip design and micro-assembly production lines; their CPO prototypes have already been submitted for testing at leading AI companies. Crucially, the domestic localization rate for optical chips has risen from under 15% in 2022 to 35% today. Companies like Yuanjie Technology and Changguang Huaxin have achieved volume production breakthroughs in EML laser diodes, breaking long-standing overseas monopolies—and reducing overall CPO costs by more than 30%, clearing key obstacles to large-scale commercialization.
Dimension Two: Pushing Thermal Management to Its Limits — Industrial-Scale Breakthroughs in Diamond-Based Heat Dissipation. AI chip power consumption is rising exponentially: the NVIDIA H100 GPU alone consumes up to 700W, pushing conventional copper/heat-pipe solutions to their physical limits. CVD diamond heat spreaders—represented by Sifangda—offer ultra-high thermal conductivity of 2,000 W/m·K (five times that of copper), making them the only viable material capable of meeting next-generation AI chip cooling demands. Key technical barriers lie in large-diameter single-crystal growth and interfacial bonding processes. Domestically, wafer-scale production at Φ76 mm has been achieved, with yields exceeding 65% and costs reduced by 40% versus imports—marking China’s leap from “catching up” to “running alongside” global leaders in cutting-edge thermal management materials.
Dimension Three: Ensuring High-Frequency Signal Integrity — Autonomous Control over MLCCs and High-Frequency PCB Materials. High-speed SerDes interfaces demand MLCCs with ultra-low ESR (equivalent series resistance) and high Q-factors—a domain historically dominated by Japanese and Korean suppliers. Fenghua Advanced Technology has broken through with nano-scale nickel electrode technology and advanced stacking processes, enabling volume production of automotive-grade 01005-size, 100V-rated MLCCs with Q > 1,200. These are already integrated into BYD’s intelligent driving platform and are accelerating adoption in AI server power management modules. Simultaneously, Tiancheng Technology’s liquid crystal polymer (LCP) and modified polyphenylene ether (PPE) substrates resolve signal attenuation issues above 56 Gbps, lifting the domestic high-frequency PCB share in Huawei’s Atlas 900 AI cluster to 35%.
Cross-Market Narrative Reinforcement: Hong Kong Tech Hardware Leaders Rally, Confirming Global Consensus
The A-share hardware-chain breakout is no isolated island—it resonates powerfully with Hong Kong’s tech sector. On the same day, Lenovo Group surged over 16%, hitting a 24-year high, fueled primarily by explosive growth in its AI server business: its Q1 market share in China’s AI server market reached 35%, and its ZCube networking architecture has secured bulk procurement orders from large-model developers. Zhinao AI jumped over 20% intraday—the ZCube platform not only optimizes training efficiency but also dramatically lowers customer deployment barriers through standardized hardware interfaces. The Hang Seng Tech Index rose 2.1% in tandem, confirming that global investors now view “AI hardware capability” as a core competitive advantage of Chinese tech enterprises. This cross-market synergy reflects international capital’s re-pricing of China’s “full-stack autonomy” in AI infrastructure: when Lenovo delivers complete systems, Zhinao defines architectures, and A-share firms supply mission-critical components, the “China AI compute infrastructure closed loop” evolves from concept to verifiable commercial reality.
Sustainability Outlook: Industry Trends Remain Unfolding—Three Key Deepening Pathways to Watch
Looking ahead, the rally’s sustainability hinges on the continued depth and breadth of industrial evolution. We identify three critical developments warranting close attention:
First, quarterly continuity of CAPEX execution—monitor whether cloud providers’ Q2 earnings reports revise upward their CAPEX guidance;
Second, certainty of technological iteration—track progress on 1.6T CPO standardization and domestic vendors’ participation level;
Third, intensity of policy catalysts—assess implementation details of the third phase of China’s National Integrated Circuit Industry Investment Fund, particularly targeted support for semiconductor equipment and materials.
Currently, hardware-chain valuations remain near the 30th percentile of historical levels—far below the peak of the 2021 semiconductor bull market—while order visibility and technological breakthroughs have already meaningfully surpassed those earlier conditions. As “computing power equals national strength” becomes a global consensus, China’s hard-tech breakthroughs in optical interconnects, thermal management, and high-frequency materials are no longer merely stock-price catalysts—they constitute pivotal levers of sovereignty over the foundational infrastructure of the digital age.