Corporate profits rebound, with many industries experiencing explosive growth

Ask AI · Does the high growth of semiconductors signify a new cycle for the industry?

Reporter: Zhang Hong Editor: Liao Dan

On March 27, the National Bureau of Statistics released profit data for industrial enterprises above designated size (hereinafter referred to as large-scale industrial enterprises) for January and February.

Daily Economic News

Specifically, from January to February, the profit of large-scale industrial enterprises nationwide increased by 15.2% year-on-year, with the growth rate accelerating by 14.6 percentage points compared to the entire previous year. The reporter from Daily Economic News noted that in the first two months of this year, profits in related industries such as non-ferrous metals, chemicals, and semiconductors saw explosive growth. Interviews were conducted regarding the reasons for and sustainability of this profit surge in the aforementioned industries.

Significant Impact from Price and Cost Changes

Data from the National Bureau of Statistics shows that in January and February, the profit of the non-ferrous metals industry grew by 148.2%, with the profits of aluminum rolling processing, non-ferrous metal alloy manufacturing, and copper rolling processing industries increasing by 264.0%, 205.1%, and 50.8%, respectively; the chemical industry saw profits increase by 35.9%, with profits in inorganic salt manufacturing, inorganic acid manufacturing, and organic fertilizers and microbial fertilizers manufacturing rising by 518.5%, 306.3%, and 38.5%, respectively.

So, which industries are related to these raw materials?

In an interview with Daily Economic News, Guotai Junan Fund Management Co., Ltd. stated that in terms of industry, aluminum rolling products mainly serve lightweight applications in new energy vehicles, photovoltaic frames, construction profiles, and electric cables; copper rolling processing corresponds to power infrastructure, AI (artificial intelligence) data centers, new energy electric drive systems, and consumer electronics; non-ferrous alloys are associated with aerospace, military, and high-end equipment manufacturing. In the chemical sector, inorganic salts are key materials for glass, photovoltaics, and lithium batteries; inorganic acids are widely used in metal smelting, fertilizer production, and semiconductor cleaning; organic fertilizers and microbial fertilizers directly support green agriculture and soil improvement.

Is the profit growth driven by increased orders, or by changes in costs or prices?

Guotai Junan Fund Management Co., Ltd. indicated that the driving factors differ between the two industries.

The explosive profit growth in the non-ferrous metals industry is mainly “price-driven” — with electrolytic aluminum production capacity nearing a ceiling of 45 million tons, ongoing disruptions in copper mine supply, coupled with emerging demand from new energy and AI, the price center for aluminum and copper has significantly increased compared to the same period last year, and the price difference in the processing stage has been notably expanded.

The chemical industry benefits more from the resonance of “low base + cost improvement.” The chemical industry was in an “increased volume, reduced profit” surplus predicament in the same period of 2025, with very low profit bases for inorganic salts and inorganic acids; this year, the downward adjustment in upstream coal and crude oil prices alleviated cost pressures, while the “anti-involution” policy promoted production cuts to maintain prices and accelerated clearing, thus restoring product price differences.

Overall, the contribution of order volume to the profits of both industries is relatively limited; changes in prices and costs are the core driving forces.

Continuous Optimization of Profit Structure in Industrial Enterprises

The “ballast stone” role of the equipment manufacturing industry is evident, with the profit structure of industrial enterprises continuously optimizing. In January and February, the operating income of large-scale equipment manufacturing increased by 8.9% year-on-year, which is 3.6 percentage points higher than that of all large-scale industrial enterprises. The rapid growth in operating income drove the profit of large-scale equipment manufacturing to increase by 23.5% year-on-year, accelerating by 15.8 percentage points compared to the entire previous year; profits from large-scale equipment manufacturing accounted for 30.4% of all large-scale industrial enterprises, up 2.0 percentage points year-on-year, indicating a continuous optimization of the profit structure. From an industry perspective, among the eight sectors of equipment manufacturing, five sectors achieved profit growth, with fast growth seen in the electronic, railway, shipbuilding, aerospace, and electrical machinery industries, which increased by 203.5%, 11.4%, and 6.2% year-on-year, respectively.

Profits in high-tech manufacturing grew rapidly, enhancing its leading role. In January and February, the profits of large-scale high-tech manufacturing increased by 58.7% year-on-year, accelerating by 45.4 percentage points compared to the entire previous year; this contributed 7.9 percentage points to the profit growth of all large-scale industrial enterprises, with the contribution effect enhancing by 5.5 percentage points compared to the previous year. From an industry perspective, the manufacturing of intelligent products is developing well, with profits in the manufacturing of intelligent unmanned aerial vehicles, intelligent onboard equipment, and other smart consumer devices increasing by 59.3%, 50.0%, and 31.3%, respectively; the rapid development of the semiconductor industry has driven profit growth in related sectors, with profits in semiconductor discrete device manufacturing, optoelectronic device manufacturing, and electronic circuit manufacturing increasing by 130.5%, 56.1%, and 19.5%, respectively.

In January and February, the electronic industry and semiconductor discrete device manufacturing industry saw profits increase by 203.5% and 130.5% year-on-year, respectively. What are the reasons for this significant profit growth?

Regarding the reasons for the substantial increase in profits, Guotai Junan Fund Management Co., Ltd. stated that, firstly, there is a low base effect, as the industry was at the bottom of the inventory destocking and off-peak demand cycle during the same period last year, resulting in a lower profit base; secondly, there is demand-side pull, especially with the continuous increase in demand for power devices and discrete devices from AI servers, high-performance computing, and automotive electronics, which provides stable order support for discrete device manufacturing. Products have also seen price increases to varying degrees, contributing to some profit growth.

Is this growth sustainable? In this regard, Guotai Junan Fund Management Co., Ltd. stated that although the growth rate figures may fluctuate with last year’s base, the overall positive logic of the industry remains unchanged. With the ongoing deepening of intelligent transformation and energy electronicization, the semiconductor industry has gradually emerged from its trough and entered a new upward cycle. Future growth momentum will be driven more by technological innovation and structural opportunities in downstream application fields rather than mere base fluctuations; the overall operational trend remains robust.

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