To The Moon

Driven by progress in US-Iran negotiations, geopolitical tensions around the Strait of Hormuz are expected to ease, leading to a sharp drop in international oil prices and a significant boost in risk appetite across global capital markets. Overnight, the US tech sector rebounded in response, with memory semiconductors performing particularly well, and the Chinese and South Korean semiconductor sectors also strengthened in tandem.

Beyond the improvement in external sentiment, the semiconductor industry's own fundamentals are also delivering positive news, with signals flowing from upstream equipment and materials to advanced process and memory leaders. Although the A-share semiconductor sector has recently experienced increased volatility, the long-term structural logic of the semiconductor equipment and materials track continues to drive sustained capital inflows into the core upstream segments of the semiconductor industry.

According to Wind and exchange data, the popular product, the STAR Market Semiconductor Equipment ETF (588710), has seen net inflows exceeding 10 billion yuan over the past 33 trading days. Since July, its average daily turnover has reached 2.096 billion yuan, a 543% increase from the average of 326 million yuan in the first half of the year. Its latest fund shares stand at 3.65 billion, with a scale of 9.416 billion yuan, representing year-to-date growth of 540% and 963%, respectively.

In the advanced process segment, Taiwan Semiconductor Manufacturing (TSMC)'s 3nm production ramp-up has exceeded expectations. According to Taiwanese media reports on August 3, major clients including Advanced Micro Devices, Nvidia, and Broadcom are actively competing for production capacity. The original target of achieving a monthly output of 180,000 wafers by the end of the year is expected to be reached early in the fourth quarter. Orders for the 2nm process are also heating up, with five 2nm plants expected to ramp up production simultaneously in 2026, forecasting a compound annual growth rate of 70% in capacity over the next three years.

The acceleration of process node iteration directly drives demand for supporting equipment and materials, such as etching, thin-film deposition, and metrology and inspection. The verification and adoption of domestic equipment manufacturers at key process nodes are also expected to accelerate.

On the news front, Japanese NAND flash memory giant Kioxia announced a massive share buyback plan worth 800 billion yen, making it the first company in the global memory chip industry to launch a large-scale repurchase program. Nomura Securities pointed out that the total value of share buybacks by South Korean listed companies is expected to reach a historic peak of 116 trillion won in 2026, with about 90% coming from the two major semiconductor giants. This is projected to further expand to 274 trillion won and 328 trillion won in 2027 and 2028, respectively. Large-scale buybacks reflect industry confidence in its own cash flow and long-term profitability. Meanwhile, expansion of memory production capacity also relies on a continuous supply of equipment and materials, creating a positive transmission effect on upstream orders.

From a domestic perspective, the dual drivers of AI and domestic substitution are expected to put the Chinese semiconductor equipment market on a trajectory of high prosperity. Citic Securities forecasts that the scale of China's semiconductor equipment market could approach 100 billion USD by 2028. The expansion of domestic wafer fabs is accelerating, and investment intensity in advanced logic, memory, and advanced packaging production lines is increasing, which is expected to drive rapid growth in equipment demand. Core segments such as etching, thin-film deposition, and metrology and inspection remain the main sources of growth. The penetration rate of domestic equipment manufacturers at key process nodes is expected to continue rising, potentially leading the industry into a phase of both volume and price growth along with increasing market share.

It is reported that the STAR Market Semiconductor Equipment ETF (588710) tracks the STAR Semiconductor Materials and Equipment Index, helping investors to easily access the core upstream assets on the STAR Market. It offers a pure focus on the dual themes of equipment and materials, serving as a potential efficient tool for investors to capture the semiconductor domestic substitution opportunity and the AI computing power buildout. Over the past year, the STAR Semiconductor Materials and Equipment Index has accumulated a gain of 138%, outperforming the CSI Semiconductor Materials and Equipment Theme Index's 128% return over the same period. Investors outside the exchange can consider the Huatai-PineBridge STAR Semiconductor Materials and Equipment Theme ETF Linked Fund (A-share: 024974 / C-share: 024975).

Semiconductor equipment and materials are high-beta sectors. Investors should be aware of the risks associated with high valuations and trading volatility. It is recommended that investors make rational judgments and invest cautiously based on their own risk tolerance. One might consider an allocation strategy, pairing this with the "Dividend Family Bucket" to construct a barbell portfolio—using the growth-oriented tech track on the offensive side to capture industrial dividends, and using dividend-type assets on the defensive side to smooth out portfolio fluctuations.

Huatai-PineBridge Fund is one of the first ETF managers in China, with over 19 years of deep experience in index investing. The company has provided investors with transparent, easily tradable, and low-cost index tools, such as the CSI 300 ETF (510300) and the CSI A500 ETF (563360). As of the end of June 2026, the company's ETFs have generated a total profit of over 180.6 billion yuan for its holders over the past two years, making it one of only three public fund companies in the entire A-share market to achieve cumulative profits exceeding 160 billion yuan during the same period.