Stimulated by external news, on August 7, the A-share semiconductor sector strengthened across the board, with sub-sectors such as automotive chips, semiconductor wafers, and memory chips leading the gains. By the close, Dongxin Co., Ltd. (688110.SH), Fuman Micro (300671.SZ), and Sinda Semiconductor (603290.SH) hit the daily limit, while Silan Microelectronics (600460.SH) and Dongwei Semiconductor (688261.SH) also saw increases.
Since the global semiconductor market began to recover in the second half of 2024, demand has shown strong structural differentiation. AI demand remains robust, particularly benefiting from the changes in network architecture driven by the ASIC trend, leading to significant growth in the switch and server supply chain, while non-AI demand represented by consumer electronics is experiencing a mild recovery.
The current upturn in the semiconductor industry is at the intersection of the AI revolution and cyclical recovery, with valuation recovery reflecting the market’s recognition of its long-term prospects. At the same time, institutions’ structural overweight in the second quarter highlights confidence in core growth directions. However, the upcoming mid-year performance reports may serve as a key “litmus test” for this round of semiconductor market trends.
Semiconductor Valuation Recovery
In the secondary market, after a rapid increase in semiconductor sector valuations in January and February this year, a three-month consolidation phase ensued. Since June, funds have once again flowed into semiconductors, with index and individual stock valuations gradually expanding. As of the close on the 7th, 80 stocks in the semiconductor sector (Yangtze River component) reached new highs within two months over the past three trading days, with Huahong Semiconductor (688347.SH) even hitting a historical high. The China Semiconductor Chip Index reported 8986.25 points, up 1.36% this month, and has rebounded 8.89% since June, outperforming major indices such as the Shanghai 50 and CSI 300.
Industry analysts believe that the gradual expansion of semiconductor valuations is driven by multiple factors. On one hand, the continuous rise of the market since June has led to a corresponding increase in semiconductor valuations. On the other hand, the third quarter is traditionally a peak season for the electronics industry, with upcoming performance meetings for SMIC and Huahong Semiconductor, the launch of new Apple products, and the anticipated release of GPT-5, all catalyzing events that stimulate market sentiment. Meanwhile, as the AI industry continues to develop rapidly, semiconductor demand in non-AI sectors is further recovering, enhancing expectations for performance improvements across the semiconductor supply chain.
The shipment volume of silicon wafers is a leading indicator for verifying industry prosperity. According to SEMI data, the global silicon wafer shipment area in the second quarter of 2025 is expected to be 3.327 billion square inches, a year-on-year increase of 9.6% and a quarter-on-quarter increase of 14.9%, marking four consecutive quarters of year-on-year growth and reaching a new high since the third quarter of 2023. The recovery in silicon wafer shipment area more represents the end of inventory depletion and an increase in volume, indicating that signs of recovery are beginning to appear in areas outside of memory.
As the peak season approaches, institutions continue to overweight the electronics sector in the second quarter. According to a report from Tianfeng Securities, in the second quarter of 2025, the allocation ratio of the A-share electronics industry is 18.67%, maintaining the top position in the entire market, with an increase of 0.12 percentage points compared to the first quarter. By the end of the second quarter, the semiconductor sector accounted for the highest proportion in the holdings of Shenwan’s secondary electronic sector funds, reaching 10.47%; components accounted for 3.65%; and consumer electronics accounted for 3.10%.
“The current semiconductor recovery shows structural characteristics. Demand in areas represented by AI servers and high-end smartphones is strong, but the overall recovery in consumer electronics remains mild, and demand in industrial control and automotive electronics has not yet fully warmed up. The performance of companies in different sub-sectors will show significant differentiation. Based on demand and inventory changes, we are optimistic about semiconductor demand in the second and third quarters of this year. Since the second quarter, the power analog sector has shown positive recovery signals, and some memory products continue to maintain price increases. Companies producing AI SoC chips are benefiting from the release of AI hardware penetration rates, and these signals have already been reflected in the performance of leading listed companies,” said an analyst from the TMT industry. “In the medium to long term, AI infrastructure remains a high-growth track with certainty in demand. Major overseas cloud providers like Microsoft and Meta continue to increase capital expenditures, indicating that investment in AI computing power remains strong, and segments such as memory chips, power chips, SoC chips, and materials are expected to see high performance elasticity.”
Peak Season Approaches, Awaiting Mid-Year Performance Verification
With the improvement in industry prosperity, the performance of A-share semiconductor listed companies is warming up. A total of 51 companies have released mid-year performance forecasts, with 22 expecting growth, 9 expecting slight growth, and 3 turning losses into profits, with approximately 66% of performance forecasts being optimistic, particularly for companies in the ASIC, SoC, and computing chip sectors.
As of now, the vast majority of semiconductor companies have not yet released their mid-year reports, and specific performance remains a “blind box.” However, through recent institutional research announcements in the semiconductor supply chain, leading semiconductor listed companies generally have a positive outlook on the long-term demand growth brought by AI. Some have reported record high orders in the second quarter, while others expect AI demand to drive a turnaround in their performance next year.
Chipone Technology (688521.SH) recently released a performance forecast, expecting second-quarter revenue of 584 million yuan, a year-on-year decrease of 4.7% but a quarter-on-quarter increase of 49.9%. Among them, revenue from IP licensing fees is 187 million yuan, a quarter-on-quarter increase of 99.6% and a year-on-year increase of 17%; revenue from mass production business is 260 million yuan, a quarter-on-quarter increase of 79% and a year-on-year increase of 11.7%.
As of the end of the second quarter, Chipone Technology had an order backlog of 3.025 billion yuan, an increase of 23.17% compared to the end of the first quarter of 2025, setting a new historical high for the company. During the research, Chipone Technology stated that approximately 81% of the orders in hand are expected to be converted within a year, and the rapid growth in orders is driven by demand in AI computing power and related fields, with nearly 90% of the orders coming from the company’s one-stop chip customization business.
Specialty process wafer foundry company Chip Alliance (688469.SH) released its semi-annual report this week, reporting an operating income of 3.495 billion yuan, a year-on-year increase of 21.38%; the net profit attributable to the parent company was a loss of 170 million yuan, a year-on-year reduction in loss of 63.82%. Notably, in the second quarter, Chip Alliance achieved a net profit attributable to the parent company of approximately 12 million yuan, marking the first time the company has achieved a quarterly profit since its listing.
In the research, Chip Alliance expressed optimism about profits in the third and fourth quarters, stating that as the company gradually ramps up projects in power modules, SiC MOSFETs, and analog ICs in the second half of the year, its revenue scale will continue to grow. It is expected that by 2026, revenue from the AI sector will reach double digits of total revenue, with multiple projects such as server power chips, robotic lidar chips, and AI glasses microphones continuing to ramp up, and the company’s goal of achieving profitability by 2026 remains unchanged.
SoC chip company Rockchip (603893.SH) stated during research that the AIoT sector is thriving across various industries, with new AI-related products emerging continuously, and the growth trend is long-term. As domestic and international large models become open-source and model capability density continues to improve, the deployment conditions for large models at the AIoT end are maturing, leading to a new wave of product updates in AIoT across various industries.
The aforementioned analyst stated that looking ahead to the third quarter semiconductor peak season, stable growth in non-AI consumer electronics and AI demand will be key to determining the performance growth of semiconductor companies. “Due to the impact of national subsidy adjustments, the production of major categories such as smartphones and PCs has shown significant fluctuations. As traditional consumer electronics have not seen breakthrough innovations for several years, whether demand will significantly recover or grow remains uncertain. The focus will be on the new product launches by Apple in the fall. The situation in home appliances is similar, with fluctuations in demand and policy impacts causing greater volatility than in smartphones,” the analyst said. “The core focus of this semiconductor cycle is still AI demand, with performance elasticity driven by the resonance of industry and cycles. The potential of AI glasses is significant, and AI PCs and domestic data centers also show clear growth trends. In terms of performance certainty, the market may still be waiting for the collective release of mid-year reports from semiconductor companies to further clarify which stocks can maintain high growth.”
Duty Editor: Grace