Jefferies Financial Group Inc. notes that AI-driven advancements in packaging complexity and chip size are fueling increased demand for integrated circuit substrates. The firm is optimistic about the rising market share and potential earnings beats from Chinese manufacturers, naming Shennan Circuits Co.,Ltd. as its top pick, followed by Xingsen Technology.

Substrates serve as the interconnection base between a chip and its external systems, falling into two main categories: ABF substrates, used in high-performance computing, and BT substrates, for conventional chips. In a report authored by analyst Jacky He and colleagues, projections indicate that from 2026 to 2028, Shennan Circuits and Xingsen Technology are expected to achieve net profit compound annual growth rates of 62% and 132%, respectively. The firm has set target prices of 520 yuan and 48 yuan, implying upside potential of roughly 31% and 22%.

Thanks to capacity expansion and a broader scope of customer certifications, the combined global share of Shennan Circuits and Xingsen Technology in the BT substrate segment has climbed from about 5% in 2020 to over 10% by 2025. Analysts anticipate this upward trajectory will persist, as Chinese players invest more aggressively than many overseas rivals, benefit significantly from the domestic semiconductor localization wave, and actively branch into optical module SLP (substrate-like PCB) applications. While achieving substantive localization of ABF substrates will take time, the chronic global supply-demand imbalance is likely to accelerate the customer qualification process for these manufacturers.