Is Domestic Substitution the Strongest Narrative in Semiconductors?

The Semiconductor Battlefield Reignites: New Trends in the US-China Game and Opportunities for Domestic Substitution

—— From Micron’s Price Increase to Anti-Dumping Investigations, A Comprehensive Analysis of Market Low-Position Strategies

1. The Semiconductor Battlefield Reignites: New Trends in the US-China Game

In September, the tension in the US-China semiconductor sector intensified.

1. Actions from the US:

   • 23 Chinese companies were added to the “Entity List,” including 13 semiconductor and integrated circuit companies such as Fudan Microelectronics.
   • The US initiated an anti-discrimination investigation in the integrated circuit sector against China, continuing extreme pressure.

2. Countermeasures from China:

   • The Ministry of Commerce quickly launched an anti-dumping investigation targeting US imports of analog chips (general interface chips and gate driver chips).
   • The Jiangsu Semiconductor Industry Association became the applicant for this investigation, further advancing domestic substitution.

Core Observation: The decoupling of US and Chinese semiconductors has become a foregone conclusion, and the certainty of domestic substitution has further increased.

2. Market Response: The Logic Behind the Semiconductor Sector’s Anomalies

On Friday, the semiconductor sector in the A-share market performed brilliantly, especially the China-Korea Semiconductor ETF (513310) leading the gains.

1. The Driving Effect of Korean Semiconductors:

   • The Korean stock market continues to reach new highs, with semiconductors as the core driving force.
   • The China-Korea Semiconductor ETF includes many leading Korean semiconductor companies and supports T+0 trading, attracting capital inflow.

2. Chain Reaction Triggered by Micron’s Price Increase:

   • Micron’s stock price soared from $61 to $157, reflecting a supply-demand imbalance in memory chips.
   • A-share memory-related stocks (Beijing Junzheng, Jiangbolong, Zhaoyi Innovation) collectively surged.

3. Highlighting Low-Position Advantages:

   • These stocks were generally at low positions before Friday, possessing rebound momentum from overselling.

Key Point: The semiconductor market trend is not merely speculation but a result of fundamentals (price increases) + sentiment (US-China game) + low-position resonance.

3. Domestic Substitution: The Most Certain Investment Line

In the current climate where AI hardware is highly sought after, the certainty of semiconductor domestic substitution is underestimated.

1. Opportunities in Sub-Sectors:

   • Analog Chips: The domestic substitution rate is low, but leading companies (such as Sanken Electric, SiRuipu) already exist.
   • Equipment and Materials: Most affected by sanctions, but the potential for domestic substitution is the broadest (such as North Huachuang, Zhongwei Company).

2. Valuation Advantages:

   • Compared to AI computing power chips (such as Cambricon), the valuations in sub-sectors like analog chips and memory are more reasonable.
   • Some leading companies have market capitalizations of only a few hundred billion, with long-term growth potential.

Investment Insight: Domestic substitution is not a short-term concept but a core trend for the next 5-10 years.

4. Market Strategy: How to Respond to the US-China Game and Policy Window

1. Short-Term Focus on Negotiation Progress:

   • The US-China Madrid negotiations in late September are a key node; a neutral outcome can be seen as a positive.
   • If negotiations ease, the semiconductor sector may experience emotional recovery; if they worsen, the logic of domestic substitution will be further strengthened.

2. Rising Policy Expectations:

   • October may welcome a small peak in domestic demand policies, with semiconductors as a strategic industry likely to benefit.
   • Focus on policy support directions for domestic equipment and materials.

3. Low-Position Layout Strategy:

   • Prioritize selecting sub-sector leaders with reasonable valuations and high technical barriers.
   • Avoid chasing short-term hot spots and focus on performance realization capabilities.

5. Conclusion: A Long-Term Perspective on the Semiconductor War

The US-China semiconductor game is a protracted battle, but the path for domestic substitution is becoming clear.

Advice for Investors:

1. Do Not Blindly Follow Trends: While AI hardware is hot, opportunities across the entire semiconductor industry chain are more worthy of deep cultivation.
2. Focus on Low-Position Stocks: Amid market sentiment fluctuations, undervalued quality companies have greater safety margins.
3. Long-Term Perspective: Semiconductor domestic substitution is a ten-year plan; short-term fluctuations do not change the long-term trend.

When others are fearful, consider those undervalued domestic semiconductor leaders—they may be waiting for a “chip revival” belonging to Chinese manufacturing.

Disclaimer: I am not a professional securities practitioner; the information provided is obtained using AI from the internet. Please correct any errors or omissions; it does not constitute investment advice. For business cooperation, please contact the backend, focusing on AI software and hardware product solutions.