Guosen: AI computing power reshapes supply and demand patterns. Recommend the development group in the phosphorus chemical industry (600141.SH).

Guosen released a research report stating that AI computing power is driving the expansion of telecommunications networks and emerging applications such as automotive LiDAR, leading the global indium phosphide (InP) industry chain into a high boom cycle. China dominates the global high-purity indium market, and the domestic high-purity red phosphorus industry substitution process is accelerating. In response to the surge in AI demand, global indium phosphide manufacturers are initiating intensive capacity expansions. The industry chain is witnessing an explosion in demand and a reshaping of supply, with upstream scarce resources and companies with large-scale substrate production capabilities poised to benefit long-term from the industry's high prosperity. The bank recommends Xingfa Group (600141.SH), a core player in the phosphor industry with resource barriers and industry chain advantages. Guosen's main points are as follows: AI computing power driving demand explosion, InP ushering in high prosperity cycle Indium phosphide (InP) is a III-V compound semiconductor with a direct band gap and high electron mobility characteristics, perfectly suited for low-loss windows in optical fiber communication and is an irreplaceable core substrate material for high-speed optical chips. Currently, under the strong driving force of AI computing cluster expansion and data center optical interconnection upgrades, the comprehensive popularization of 800G optical modules and accelerated deployment of 1.6T optical modules are sparking a demand explosion for InP substrate materials. According to Lumentum, the compound annual growth rate (CAGR) of InP optical channel shipments driven by AI is as high as 85%. Coupled with the expansion of telecommunications networks and emerging applications such as automotive LiDAR, the global indium phosphide industry chain is entering a high prosperity cycle. In the upstream sector of the industry chain, core raw materials face extremely high technological barriers and supply constraints As a scarce strategic metal, high-purity indium occupies an absolute leading position in the global market, with China accounting for nearly 70% of production. Driven by AI demand, the price of high-purity indium in China has increased by approximately 180% from early 2024 to July 2026. Electron-grade high-purity red phosphorus (6N-7N) as another core phosphorus source has long been monopolized by a few companies such as NCI in Japan. The temporary supply disruption risk due to a tightening of Japanese quotas for China in 2026. The domestic high-purity red phosphorus industry is accelerating its breakthroug...