1、 Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to Other Important Disclosures for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securitie

2、s does and seeks to do business with issuers covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment d

3、ecision.Refer to important disclosures on page 65 to 67.Analyst Certification on page 61.Price Objective Basis/Risk on page 58.12874600 China AI Frontier(H)China AI Backbone Handbook:AI Tech Innovations,Applications,Beneficiaries Industry Overview China AI:DC capacity+advances in chips,LLMs&apps We

4、have previously published reports to track Chinas tech innovations in semis(see link China semis primer)and AI models(see link DeepSeek model).Currently,we believe China is making more progress in AI chips,models,and applications,and we expect AI to become a new growth driver for various industries

5、over the next 5-10 years.This report analyzes Chinas AI tech progress and considers AI-driven growth opportunities in AI chips,data centers,public clouds,and software AI applications.AI chips:expect localization rate to 83%in 2027 AI accelerators reached US$18.5bn market size in China in 2024,which

6、we expect to expand to US$78bn in 2027,at a CAGR of 61%.Key growth drivers:(1)explosive AI computing demand from hyper-scalers(e.g.,Alibaba);and(2)policy tailwinds(Chinas“AI Plus”initiatives promoting the AI adoptions).With more product innovations by domestic AI accelerator providers(e.g.,Huawei),w