Is the Semiconductor Boom Over?
Last week’s market was quite frustrating, with repeated reversals; the index experienced three reversals in one week, which is something I haven’t encountered in many years. Looking back at the Shanghai Composite Index chart from 2009 to now, this week marks the only instance of three reversals, making it a rare occurrence.
However, after watching over a dozen self-media hosts over the weekend, not a single financial host mentioned it, indicating that there are almost no practical hosts in this industry. There’s nothing we can do; this industry is all about talk, calling for “Suzhou” and “Jianghu style” to stir things up.
Without further ado, I expect a bullish trend on Monday, which is tomorrow, and it is highly likely that we will see another reversal.
This kind of reversal after reversal, if it is a matter of “speculation,” how can one play it? It’s impossible to play. This week has clearly illustrated the concept of “fast is slow, slow is fast” in the A-share market.
Is the semiconductor market over?
To answer this question, we need to look at the position of the semiconductor chip within the current bull market cycle. If the position is high, then it is not over; if it is in the middle or low range, then it is over.
How to understand this? For example, if we were to face a once-in-50-years famine, like the three-year famine of the 1960s, those in high positions would be unaffected. In the short term, they might be disturbed by fear, misunderstanding, or following the crowd, slightly reducing non-essential expenditures. However, after a while, they would return to normal; those in low positions would have to live frugally, giving up some plans they originally had.
At the same time, after this round of significant increases in semiconductor chips, once it became a main line, some began to say that this round of semiconductor market was due to “many big stories, lively events,” domestic substitution, industry prosperity, high profit margins, and strong policy support…
I just want to say that this is forcibly finding reasons for the already risen results, which is why we look for reasons.
We must understand that the most lively and significant event in the semiconductor industry is not this Shenzhen Bay Chip Exhibition, but the Huawei Mate 50 launch event on September 22, 2023, which was supported by central media such as the People’s Daily…
The domestic substitution and policy support were at their strongest in 2020;
The industry prosperity and high profit margins peaked in 2022 to 2023;
If the above reasons were valid, the semiconductor industry should have become the main line back in 2020.
Moreover, the military industry is not inferior to the semiconductor industry, with more achievements and more lively stories, and policies are more reliable…
From a fundamental perspective: the high-tech industry has a fatal flaw, which is poor stability: product iterations are fast, and if one generation of products fails, it can easily lead to a downturn; R&D investment is high, and the probability of failure is significant.
In contrast, public utilities like natural gas and railways, as well as rigid consumer goods like rice, flour, and daily necessities, remain unchanged for 20 years, with no worries, requiring almost no R&D and iteration, and there are no issues with product compatibility, making the fundamental risk almost zero. These long-term stable industries, commonly referred to as cash cows, should be more favored by investors.
Therefore, the rise of semiconductors as a main line has nothing to do with the above factors.
What is fundamentally related to the rise of semiconductors: once again, I present — the laws of development of things.
Because the semiconductor industry has entered an accelerated phase after meeting its own certainty!
Currently, no other industry meets this rule; it is unique.
The laws of development of things cannot be interrupted by any sanctions or freezes.
Unless there is a decisive intervention from above, like the off-campus training ban in 2021, otherwise, it cannot stop the forward momentum.
Now, let’s talk about Anshi Semiconductor, a company I am familiar with.
Its predecessor was the Siemens Semiconductor Division, headquartered in the Netherlands. After experiencing operational difficulties, it was acquired by Wingtech Technology for nearly $3 billion in 2019, turning losses into profits and thriving again. Its main products are power semiconductors, primarily supplied to the automotive and power industries, with strong competitiveness, ranking third or fourth in its niche, with Infineon and STMicroelectronics ahead.
This time, the Netherlands acted as the vanguard for the U.S., brazenly seizing our quality assets overseas, and it can be declared: the Netherlands is finished.
Therefore, the semiconductor market has not ended; it may be in a slumber, but it will definitely not fall into a long sleep now.