The domestic computing power industry is seeing a massive surge in investment. Major tech firms are accelerating their hardware procurement at levels that surpass industry forecasts. SMIC reports that customer orders for critical components, such as logic circuits and optical module transceivers, are exceeding expectations and straining supply chains.
Tencent and Alibaba remain at the center of this expansion. Tencent is ramping up computing power procurement for the third quarter to support new AI applications. Meanwhile, Alibaba is scaling its production capacity for modular data centers, cutting construction timeframes and costs significantly. Industry analysis suggests that these investments are now delivering tangible returns, changing how the market evaluates cloud provider spending.
Upstream supply chain segments are reacting to this demand with rapid capacity growth. Companies like Yuanjie Technology, Shijia Photons, and Qiangrui Technology are investing billions into new industrial parks and manufacturing projects for high-end laser chips and liquid cooling components. This expansion indicates a shift toward long-term AI infrastructure requirements rather than temporary demand.
Market experts identify three key shifts in how AI is valued. Investors now prioritize revenue growth and profit realization over simple capital expenditure figures. Additionally, while cloud spending may eventually stabilize, the sustained demand for inference efficiency from model vendors creates a fresh, long-term driver for the entire computing ecosystem. This cycle of investment is positioning the hardware supply chain for continued growth as domestic AI models move toward high-density production environments.