This sector allows both speculative funds and institutions to dance together, and there is speculation every year. AI requires chips, new energy requires chips, cars require chips, robots require chips… everywhere you know needs chips. However, the style and logic of each speculation may vary greatly. Recently, everyone knows that technology is powerful, especially chips and AI. You can see that in such a strong market, many stocks in the sector have risen significantly, but many have also fallen back. In fact, semiconductors represent a very mature industrial system that we have been trying to catch up with for decades. In various sub-sectors, most of the domestic industry is already quite mature and competitive. Let’s first look at the specific speculation patterns:
1. Core Speculation Logic
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Domestic Substitution Logic (Strong Narrative, Emotion-Driven)
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Background: This is the most core and grand narrative of the A-share semiconductor market. When China faces obstacles in semiconductor technology or industry (the most typical being U.S. sanctions escalation), funds will speculate on the urgency of “self-controllability”.
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What to Speculate: Companies that directly benefit from the “bottleneck” segments.
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Equipment: Lithography machines (though difficult, they must be speculated), etching (SMIC), cleaning (Shengmei Shanghai), etc.
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Materials: Photoresists (Tongcheng New Materials, Nanda Optoelectronics), silicon wafers (Shanghai Silicon Industry), etc.
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EDA/IP: Huada Jiutian, Gai Lun Electronics.
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CPU/GPU: Haiguang Information, Loongson Technology, Jingjia Micro.
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Characteristics: Event-Driven, highly emotional, with huge short-term gains, but often detached from fundamentals (because real breakthroughs take time). The more severe the sanctions, the crazier the speculation.
Cycle Recovery Logic (Performance-Driven, Swing Trading)
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Background: Semiconductors are a global cyclical industry, following the classic cycle of “strong demand -> tight capacity -> price increase -> capacity expansion -> overcapacity -> price decline -> destocking”.
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What to Speculate: Strongly cyclical sub-sectors.
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Memory Chips: Changxin Storage supply chain (Zhaoyi Innovation, Beijing Junzheng, etc.).
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Power Semiconductors: Sijia Semiconductor, Times Electric (linked to new energy demand).
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Wafer Foundry: SMIC, Hua Hong Semiconductor.
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MCU: Zhaoyi Innovation, Zhongying Electronics (related to consumer electronics prosperity).
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Characteristics: Positioning at the industry bottom (worst performance, highest inventory, widespread pessimism) and selling at the industry peak (product price increases, explosive performance). Requires tracking the financial reports and capacity guidance of global giants (like Samsung, Micron).
Technological Innovation Logic (Growth Story, Imagination Space)
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Background: New demand generated by revolutionary technologies or products.
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What to Speculate: Potentially explosive new technology directions.
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AI Chips: Cambricon, Haiguang Information (AI training/inference).
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Chiplet/Advanced Packaging: Changdian Technology, Tongfu Microelectronics, Jingfang Technology.
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Automotive Semiconductors: Sijia Semiconductor (IGBT), Weir Shares (CIS), Naxin Micro (analog chips).
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Third-Generation Semiconductors: Sanan Optoelectronics (SiC), Tianyue Advanced (SiC substrates).
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Characteristics: Storytelling, looking at future space, price-to-earnings ratio (PE) may be very high or even negative, but price-to-sales ratio (PS) and price-to-dream ratio are more important. Need to distinguish between real growth and pure concept.
2. Main Speculation Styles
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“Speculating on Small, New, and Poor” Style
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In the early stages of the sector’s market or when market risk appetite is high, funds prefer small market capitalization, high price elasticity, and appealing stories stocks. These companies may have average fundamentals but can double in the short term based on a concept. High risk, high reward.
“Leading Trend” Style
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As the market deepens or the logic is confirmed, funds will shift from speculating on concepts to embracing the most certain industry leaders. Leading companies may not rise as sharply as smaller stocks, but their growth is more sustained and stable. For example, leading equipment companies like Northern Huachuang, SMIC; leading analog companies like Shengbang Shares, etc.
“Industry Chain Transmission” Style
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Funds will explore and rotate along the upstream and downstream of the industry chain.
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Top-Down: First speculate on design (light assets, high elasticity), then on manufacturing/testing (heavy assets, strong cyclicality), and finally on equipment/materials (lagging but lasting).
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Bottom-Up: When a terminal product is hot (like TWS headphones, new energy vehicles), corresponding chip suppliers will be explored upstream.
3. Other Common Speculations
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Policy Catalysis: Investment trends of national-level major funds (National Integrated Circuit Industry Investment Fund); important industrial support policies issued.
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Event Catalysis: Escalation or signs of easing of U.S. semiconductor sanctions against China; important news from international giants (like TSMC, ASML).Analog chips are our countermeasures against 🇺🇸. Similar to the logic of agricultural soybeans, if you sell to me, I can choose not to buy.
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Technical Catalysis: A domestic company announces breakthroughs in key processes (like 28nm, 14nm); breakthroughs in advanced packaging and new technologies.
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Performance Catalysis: Leading companies exceed performance expectations, especially when there is a “performance inflection point” that confirms the cycle recovery logic.
We can see that what are the underlying logics behind different speculations? What are the styles behind different operations? What I can cover is only the tip of the iceberg. In the future, we also need to analyze specific issues specifically.We are a manufacturing-based country, and naturally, our stock market has such a structure. Even if we have key areas where we may be constrained, our capital market is the most complete in terms of industry categories and the most comprehensive industrial system among independent economies in the world.So no matter what, our funds can find corresponding speculation directions in our market. This is our A-share market, our uniquely Chinese capital market.The styles and logic of speculation are constantly changing. This place has the smartest and most diligent people.To be honest, it is indeed very difficult, but it is nothing more than the following characteristics:One-day tours; cyclical/periodic; repeated speculation;………Emotionally: riding on concepts.Logically: supported by performance, with future imagination space (with incremental that can be sustained).Having said so much, what I really want to say is:This is why every time the market changes, we cannot stubbornly hold on to past views. We must seek new changes each time. We must analyze objectively and be pragmatic. The logic this time must align with the causal conditions and laws in the process of this reality’s development.You may be wrong You may be right but there are no absolutes so we must maintain respect and manage our positions.