Gallium Nitride Concept Gains Momentum as Jingquanhua and Aohai Technology Hit Limit-Up; Multiple Companies Respond to Related Developments [SMM News Flash]

SMM March 6:

Driven by the favorable policies from the Two Sessions, market demand for artificial intelligence, consumer electronics, and NEVs is expected to grow, coupled with market capital favoring high-growth tech firms. The gallium nitride concept surged at the opening on March 6. As of 10:09 a.m. on March 6, the gallium nitride concept index rose by 2.1%. Regarding individual stocks: Jingquanhua and Aohai Technology hit the daily limit, while North Huachuang, Aglare Technology, and H&T ranked among the top gainers. On the news front: This year's government work report proposed cultivating and expanding emerging and future industries, advancing the integrated cluster development of strategic emerging industries, and launching large-scale demonstration actions for the application of new technologies, products, and scenarios. It also aims to promote the safe and healthy development of emerging industries such as commercial aerospace and the low-altitude economy, establish a growth mechanism for future industry investment, and foster future industries like bio-manufacturing, quantum technology, embodied intelligence, and 6G.

News Front

[Xi Jinping: To Drive Industrial Innovation, We Must Uphold the Foundation of the Real Economy and Simultaneously Promote the Transformation and Upgrading of Traditional Industries and the Development of Strategic Emerging and Future Industries] Xi Jinping, General Secretary of the CPC Central Committee, President of the People's Republic of China, and Chairman of the Central Military Commission, emphasized during the deliberation of the Jiangsu delegation at the third session of the 14th National People's Congress on the afternoon of March 5 that major economic provinces must take the lead in achieving the goals of the 14th Five-Year Plan. Xi pointed out that technological and industrial innovation is the fundamental path to developing new quality productive forces. To drive technological innovation, efforts should focus on building a modern industrial system, emphasizing education, technology, and talent simultaneously, producing more scientific achievements, and transforming them into tangible productive forces. To drive industrial innovation, the foundation of the real economy must be upheld, with equal emphasis on upgrading traditional industries and developing new tracks for strategic emerging and future industries. To integrate technological and industrial innovation, platforms should be built, systems and mechanisms improved, the role of enterprises as the main body of innovation strengthened, and seamless integration between the innovation chain and the industry chain ensured.

[Government Work Report: Implement a Moderately Loose Monetary Policy with Timely RRR Cuts and Interest Rate Cuts] The third session of the 14th National People's Congress opened at 9 a.m. on March 5 in Beijing, where Premier Li Qiang delivered the government work report. The report proposed implementing a moderately loose monetary policy, leveraging the dual functions of monetary policy tools in terms of total volume and structure, and conducting timely RRR cuts and interest rate cuts to maintain ample liquidity. It aims to align the growth of social financing scale and money supply with economic growth and the expected targets for the overall price level. Structural monetary policy tools will be optimized and innovated to promote the healthy development of the real estate and stock markets more effectively, and greater support will be provided for technological innovation, green development, boosting consumption, and private and small and micro enterprises. Efforts will also be made to further unblock the transmission channels of monetary policy, improve the interest rate formation and transmission mechanism, implement policies such as loan renewal without principal repayment, and strengthen measures like financing guarantees and risk-sharing. The goal is to reduce the comprehensive financing costs of society, enhance the accessibility and convenience of financial services, maintain the yuan exchange rate at a basically stable and reasonable equilibrium level, expand the macro-prudential and financial stability functions of the central bank, innovate financial tools, and ensure the stability of financial markets.

[State Council: Leverage the Multi-Level Capital Market as a Key Hub to Support Technological Innovation, Focusing on Early, Small, Long-Term, and Hard-Tech Investments] The General Office of the State Council issued guidelines on advancing the "Five Key Financial Tasks." The guidelines emphasize strengthening financial support for achieving high-level technological self-reliance and building a strong technological nation. Efforts will be made to enhance financial services for technological innovation, integrate the use of equity, debt, and insurance tools, provide full-chain and life cycle financial services for tech enterprises, and strengthen financial support for major national scientific tasks and tech-based SMEs. The multi-level capital market will play a key role in supporting technological innovation, with a focus on early-stage, small-scale, long-term, and hard-tech investments. Financial policies and tools supporting major national scientific tasks will be enriched, and mechanisms for dispersing risks in major technological breakthroughs will be improved. The financing environment for tech-based SMEs will be optimized, and equity investment, venture capital, and angel investment will be developed to grow patient capital and support the cultivation of leading tech firms, unicorn companies, and specialized and innovative SMEs.

[Financial Regulatory Administration: Pilot Program for M&A Loans for Tech Firms Includes 18 Cities, Including Beijing, Shanghai, Hangzhou, and Shenzhen] A relevant official from the National Financial Regulatory Administration answered questions about the pilot work on M&A loans for tech firms. The pilot cities were selected based on their concentration of technological resources, high R&D intensity, and active M&A and equity investment markets. These cities include Beijing, Shanghai, Tianjin, Chongqing, Nanjing, Hangzhou, Hefei, Jinan, Wuhan, Changsha, Guangzhou, Chengdu, Xi'an, Ningbo, Xiamen, Qingdao, Shenzhen, and Suzhou, covering three international tech innovation centers (Beijing, Shanghai, and the Guangdong-Hong Kong-Macao Greater Bay Area) and three regional tech innovation centers (Wuhan, Chengdu-Chongqing, and Xi'an). Pilot banks must have sound operations, good corporate governance, compliance with key prudential regulatory indicators, and strong professional services and risk control capabilities for M&A loans. Pilot tech firms must have strong R&D and innovation capabilities, significant demand for technological transformation, promising prospects for the commercialization of scientific achievements, and good credit records.

Several publicly listed firms responded to inquiries about gallium nitride applications.

Faraday Electronics stated on February 27 via the investor interaction platform that its products have been mass-applied in products utilizing gallium nitride technology.

Jianye Co. stated on February 18 via the investor interaction platform that Jianye Microelectronics, its wholly-owned subsidiary, produces ultra-pure ammonia, a key material in the preparation of gallium nitride.

North Huachuang responded on February 13 via the interaction platform that it provides gallium nitride epitaxial equipment and equipment for etching, thin films, furnace tubes, and cleaning in the gallium nitride chip sector. The company leads globally in market share for process equipment in the gallium nitride chip field.

Yangjie Technology stated on January 11 via the investor interaction platform that it currently has only a small amount of gallium nitride products and will plan its product layout based on its development and market demand in the future.

Spot

》Click to View SMM Gallium Metal Price Trends

》Click to View SMM Historical Spot Price Trends

From the performance of gallium spot prices, although demand for gallium from the semiconductor sector remained relatively stable, declining demand for gallium in magnetic materials and PV applications led to a downward shift in gallium's price center since mid-November last year. Taking the price trend of 7N high-purity gallium as an example, its price center continued the downward trend from mid-November last year into 2025. The average price of 7N high-purity gallium was 2,425 yuan/kg on December 31, 2024, and 2,200 yuan/kg on March 6, 2025, marking a decrease of 225 yuan/kg over more than two months, a drop of 9.28%.

Regarding the outlook for gallium, in the absence of significant improvement in market demand, gallium prices are expected to continue fluctuating downward in the short term. Future developments to watch include changes in gallium exports, the development of the semiconductor industry, particularly the future trends in the semiconductor optoelectronics sector, including chip R&D and lithography machine manufacturing, as well as the timing of the traditional stockpiling season in the semiconductor and magnetic materials industries, which could drive demand improvement.