The ongoing artificial intelligence race has predominantly spotlighted advanced semiconductor development. However, a growing number of companies listed in mainland China are crucial contributors to the essential components that support data centers. According to a report by analysts Michael Hirson and Houze Song at 22V Research, nearly 30% of the United States’ imports of AI-related products come from China. While the country does not yet possess the capability to manufacture advanced chips at scale, it plays a pivotal role in less glamorous sectors of the data center supply chain—specifically in energy storage, transformers, critical minerals, and chemicals.
This nuanced narrative is gaining traction among investors. The report underscores that AI-related exports have significantly boosted China’s overall exports this year, with these products accounting for about half of the annual growth. The report highlights the robust performance of Shenzhen-listed companies, particularly within the ChiNext index, which tracks these stocks. Over the past year, this index has seen a dramatic doubling in value, driven largely by hardware firms.
Within the larger context of the CSI 300 index, which includes the foremost companies trading in both Shenzhen and Shanghai, 22V Research identified ten major players in the AI supply chain by market capitalization. Notably, battery manufacturer CATL stood out, with the remaining nine firms also experiencing substantial market growth. Companies like Victory Giant, which supplies printed circuit boards to Nvidia, along with Dongshan Precision and Shengyi Technology, all listed in Shenzhen, have seen their share values at least double in the last year. Similarly, Sanhuan Group, a producer of multilayer ceramic capacitors (MLCC) crucial for energy storage in chips, has benefited from increased demand, particularly as reports indicate that Nvidia has significantly upped its MLCC inclusion in recent AI systems.
On the server front, Foxconn Industrial Internet, a subsidiary of the well-known Apple supplier, emerged as one of the top ten companies noted in the report, alongside energy company Sungrow Power. Foxconn projected a remarkable surge in cloud computing, predicting a growth of 88.7%, reaching 602.68 billion yuan ($88.67 billion) by 2025, cementing its position as a key growth driver.
The report also listed three companies specializing in optical and networking technologies: InnoLight, Eoptolink, and TFC. Optical technology is integral as it enables semiconductors to process signals at near-light speeds, which is essential for the efficiency of AI data centers. Analysts at JPMorgan emphasized the importance of optical fiber components, noting that AI data centers require significantly higher amounts of fiber—reportedly 5 to 10 times that of traditional server rooms. Current demand is so strong that some international order backlogs extend into 2027-2028, even as export values for fiber and cables have surged to nearly four times the levels of the previous year.
While Chinese technology companies typically trade at lower valuations compared to their U.S. counterparts, local investor interest has surged, mirroring the rising stock values. Companies like InnoLight and Foxconn Industrial Internet, along with CATL, have recently crossed the milestone of one trillion yuan in market capitalization, reflecting the increasing significance of these firms in the global AI supply chain landscape.
