Core Viewpoint - The global semiconductor equipment industry is projected to see significant growth, with the top 10 companies expected to generate over $64 billion in revenue in the first half of 2025, marking a year-on-year increase of approximately 24% [5][6]. Summary by Sections Global Semiconductor Equipment Market Overview - The top 10 semiconductor equipment manufacturers will maintain the same rankings in 1H'25 as in 2024, with the first five positions unchanged [6]. - The combined revenue of the top five companies is nearly $54 billion, accounting for about 85% of the total revenue of the top 10 [6]. Top 10 Semiconductor Equipment Manufacturers 1. **ASML (Netherlands)**: - Revenue of approximately $17 billion in 1H'25, with a year-on-year growth of 38% [10]. 2. **Applied Materials (USA)**: - Revenue of about $13.7 billion in 1H'25, with a year-on-year growth of 7% [11]. 3. **Lam Research (USA)**: - Revenue growth of 29% in 1H'25 [12]. 4. **Tokyo Electron (Japan)**: - Revenue growth of 10% in 1H'25 [13]. 5. **KLA (USA)**: - Revenue growth of 27% in 1H'25 [14]. 6. **Advantest (Japan)**: - Revenue growth of 124% in 1H'25 [15]. 7. **Naura (China)**: - Revenue of approximately $2.2 billion in 1H'25, with a growth of 31% [16]. 8. **ASM International (Netherlands)**: - Revenue growth of 28% in 1H'25 [17]. 9. **Screen (Japan)**: - Revenue growth of 2% in 1H'25 [18]. 10. **Disco (Japan)**: - Revenue growth of 13% in 1H'25 [19]. Notable Trends - Naura is the only Chinese semiconductor equipment manufacturer to enter the global top 10, moving from eighth to sixth place in 2024, and then dropping to seventh in 1H'25 [6].

Core Insights - The report from Zhongyou Securities indicates that Northern Huachuang achieved a revenue of 16.142 billion yuan in H1 2025, representing a year-on-year increase of 29.51% [1] - Revenue from electronic process equipment reached 15.258 billion yuan, with a year-on-year growth of 33.89% [1] Revenue Breakdown - In the integrated circuit equipment sector, multiple high-end equipment have achieved client mass production, enhancing process coverage and market share [1] - Revenue from etching, film deposition, thermal treatment, and wet processing equipment exceeded 5 billion, 6.5 billion, 1 billion, and 500 million yuan respectively [1] Strategic Developments - The company is advancing its ion implantation and electroplating ECP equipment, strengthening its platform-based layout [1] - The acquisition of Chip Source Micro has further improved the product line in the semiconductor equipment sector, particularly in photolithography supporting equipment, creating strong synergies with existing semiconductor equipment business [1] Market Position - As a leading platform manufacturer of semiconductor equipment in China, the company covers multiple core process links including etching, film deposition, thermal treatment, cleaning, coating, and developing, with a comprehensive process coverage [1] - The domestic market share continues to increase, and the company is expected to benefit from downstream capacity expansion and the domestic substitution process [1]

Group 1 - The A-share market experienced a collective decline on September 16, with the Shanghai Composite Index dropping by 0.17% during intraday trading [1] - The chip technology sector continued to strengthen, with the Chip ETF (159995) rising by 1.21% as of 10:17 AM, and notable increases in constituent stocks such as Longxin Technology (up 14.29%) and Haiguang Information (up 5.90%) [1] - According to招商证券, the evolution of the global trade landscape has elevated the importance of self-sufficiency in the semiconductor industry as a key strategic focus for China's industrial development, supported by ongoing government policy initiatives [1] Group 2 - The AI innovation cycle, combined with the backdrop of tariffs, has reinforced expectations for self-sufficiency, leading to a sustained recovery in the semiconductor sector, which is now entering a new upward cycle [1] - The Chip ETF (159995) tracks the National Chip Index, comprising 30 leading companies in the A-share chip industry across various segments including materials, equipment, design, manufacturing, packaging, and testing [1] - Notable companies within the ETF include SMIC, Cambricon, Changdian Technology, and Northern Huachuang [1]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative increase in stock price of over 20% compared to the benchmark index within the next six months [5][12]. Core Insights - The company achieved a revenue of 16.142 billion yuan in the first half of 2025, representing a year-on-year growth of 29.51%. The electronic process equipment segment contributed 15.258 billion yuan, with a year-on-year increase of 33.89% [3]. - The company has strengthened its product line in the semiconductor equipment sector through strategic acquisitions, notably the acquisition of Chip Source Micro, enhancing its capabilities in lithography process equipment [3][4]. - The gross profit margins for electronic process equipment and electronic components were 41.70% and 50.43%, respectively, showing a decline of 2.93 percentage points and 6.96 percentage points year-on-year [3]. Financial Projections - The company is projected to achieve revenues of 39.485 billion yuan, 49.924 billion yuan, and 59.924 billion yuan for the years 2025, 2026, and 2027, respectively. Correspondingly, the net profit attributable to the parent company is expected to be 7.428 billion yuan, 9.598 billion yuan, and 12.036 billion yuan [5][10]. - The earnings per share (EPS) are forecasted to be 10.29 yuan, 13.30 yuan, and 16.68 yuan for the years 2025, 2026, and 2027, with a decreasing price-to-earnings (P/E) ratio from 36.62 to 22.60 over the same period [10][11]. Industry Context - The semiconductor equipment market in China is rapidly growing, with domestic equipment manufacturers narrowing the performance gap with foreign counterparts. The market share of China's semiconductor equipment is expected to continue increasing [4]. - By 2030, China is projected to become the largest semiconductor wafer foundry center globally, with its share of global installed capacity expected to rise from 21% in 2024 to 30% [4].

Core Viewpoint - The semiconductor industry chain is experiencing a strong rally in the A-share market, driven by recent news regarding U.S. sanctions on Chinese companies, particularly in the semiconductor sector [1] Group 1: Market Reaction and Performance - On September 15, the China-Korea Semiconductor ETF (513310) saw significant trading activity, with a transaction volume exceeding 3.3 billion yuan by 13:40 [1] - The average daily trading volume of the ETF in September has surpassed 2.8 billion yuan, a substantial increase compared to the average of 575 million yuan from early 2025 to the end of August [1] - The ETF's scale has grown over 70% in the past month, reaching approximately 994 million yuan, nearing the 1 billion yuan mark [1] Group 2: ETF Composition and Valuation - The China-Korea Semiconductor ETF tracks the China-Korea Semiconductor Index, selecting 15 leading companies in semiconductor design, manufacturing, application, and equipment production from both countries [1] - As of the end of Q2 2025, the top five constituents of the index include SK Hynix, Samsung, SMIC, Northern Huachuang, and Haiguang Information [1] - The current valuation of the China-Korea Semiconductor Index is at 16.5 times earnings, which is significantly lower than the historical median of 55.70% since its inception, indicating potential for valuation recovery [1] Group 3: Industry Outlook - The U.S. sanctions on Chinese semiconductor companies may lead to an acceleration in domestic substitution within China's AI and semiconductor industries [1] - The China-Korea Semiconductor ETF is positioned to capture growth opportunities in the semiconductor sector, which is critical for the electronic information industry and is expected to benefit from the global competition in high-end computing chips [2] - The ETF is managed by Huatai-PB Fund, a leading ETF manager in China with over 18 years of experience, and has a total ETF scale exceeding 560 billion yuan as of September 12, 2025 [1]

Core Viewpoint - The article discusses various ETFs that cater to different investment needs, emphasizing the importance of asset allocation in a volatile market [2][4]. Group 1: ETF Introductions - The "National Enterprise Dividend ETF" (159515) is highlighted as a strong dividend selection [5][8]. - The "Digital Economy ETF" (560800) focuses on core industries within the digital economy, aiming for both growth opportunities and long-term value [8]. - The "30-Year Treasury ETF" (511090) is presented as a long-term asset protector, offering flexible trading and high liquidity [8]. - The "Double Innovation 50 ETF" (588350) targets technology trends and emerging leaders in the market [8]. - The "Quality Growth ETF" (560500) is characterized as an active mid-cap stock explorer [9]. Group 2: Market Performance and Trends - As of September 15, 2025, the "Digital Economy Theme Index" (931582) rose by 1.39%, with notable individual stock performances such as Shengbang Co. (300661) increasing by 20.00% [11]. - The "Digital Economy ETF" (560800) saw a 1.22% increase, with a trading volume of 36.26 million yuan and a turnover rate of 4.77% [11]. - The index's top ten weighted stocks account for 53.36% of the total, with companies like Dongfang Wealth (300059) and Zhongxin International (688981) leading the way [13][15]. Group 3: Industry Insights - CITIC Securities notes that the analog chip sector has been lagging within the semiconductor industry but is expected to improve due to industry and policy trends [12]. - The article suggests focusing on four key areas: wafer foundries, computing chip design, domestic equipment and components, and advanced packaging, particularly in AI chip applications [12].

Summary of the Conference Call on China's Semiconductor Supply Chain Industry Overview - In 2Q25, China semiconductor chipmakers (fabless, IDM, foundry, OSAT) reported a revenue growth of 16-21% YoY, indicating a mild recovery in net profit margins (NPM) with fabless/IDM companies' average NPM increasing from 12% in 1Q25 to 13% in 2Q25. Foundry and OSAT suppliers' average NPM improved slightly from 4% to 5% [1][8] - Semiconductor equipment companies experienced a slowdown in sales growth from 42% YoY in 1Q25 to 28% in 2Q25, although their average NPM improved from 16% to 19% [1] - Silicon wafer suppliers, such as NSIG and Lion Electronics, continued to report losses in 2Q25 with NPM at -18% and -5%, respectively [1] Inventory Management - Notable inventory reduction was observed among Chinese semiconductor fabless companies in 2Q25, with inventory turnover periods for MCU, analog, and power discrete segments decreasing by 16-48 days QoQ [2] - Overall inventory levels in the China market remain higher than pre-2022 levels but are healthier compared to 2023-24, where days of inventory (DoI) were between 200-300 days [2] Demand and Supply Dynamics - The integrated circuit (IC) billing volume in China was reported at 12.6 billion units in July, reflecting a 10% YoY increase. This demand growth rebounded from a -1% contraction in June [3] - China's IC import volume grew by 12% YoY, while domestic manufacturing volume increased by 25% YoY. The netting off of a 17% export growth suggests a supply volume increase of 15% YoY on a 3-month moving average basis [3] - The trend of inventory digestion among Chinese chipmakers observed in 2Q25 may be moderating as supply growth has outpaced demand for two consecutive months since June [3] Pricing Trends - The global average unit price for NOR flash was reported at US$0.39 in July, down 6% MoM and 28% YoY, indicating continued price softness [4] - However, major Taiwan and China NOR flash suppliers reported normalized inventory levels, which may support price stabilization [4] - Specialty DRAM contract prices have seen significant increases in 3Q25, with DDR4 prices rising approximately 70% in July and 10% in August, while 4Gb DDR3 prices increased by 20% in July and 50% in August [4] Financial Performance Overview - In 2Q25, the fabless and IDM sectors saw over 20% YoY sales growth, while foundry, OSAT, and silicon wafer sectors grew in the mid to high teens [8] - Despite improvements in net profit margins across sectors, silicon wafer companies like NSIG and Lion Electronics continued to post net losses [8] Future Outlook - Consensus forecasts predict 15%-26% YoY sales growth for the semiconductor industry in 2026, with expectations for further improvement in net profit margins [9] - Specific companies such as SMIC and JCET are projected to see significant sales growth, with SMIC's sales expected to reach US$78.3 billion by 2026, reflecting a 16% YoY increase [9] Additional Insights - The semiconductor supply chain is experiencing a dynamic shift in supply and demand, with potential implications for inventory management and pricing strategies moving forward [3][4] - The recovery in profitability and sales growth across various segments indicates a positive trend for the semiconductor industry in China, despite ongoing challenges in specific areas such as silicon wafer production [1][8]

Core Insights - The announcement of a 15.7% equity transfer in ChipLink Innovation Integrated Circuit Industry Development (Beijing) Co., Ltd. has garnered significant attention in the semiconductor industry, with a total transfer price of approximately 17.85 million yuan [1][2] - ChipLink Innovation was established in August 2020 as a high-tech platform company funded by 26 domestic semiconductor enterprises, aimed at promoting the development, design, and services of integrated circuits and semiconductor technologies [1] - The company has been active in industry collaboration, notably leading a 100 million yuan investment in the North Integrated Circuit Technology Innovation Center, becoming the largest shareholder [1] Financial Overview - ChipLink Innovation has not generated any revenue in recent years, with projected revenue for 2024 expected to be zero, while reporting an operating profit and net profit of 4.6825 million yuan [2] - As of June 30, 2025, the company still reported no revenue, with a profit of only 0.01 yuan and zero liabilities, maintaining total equity at approximately 100 million yuan [2] Strategic Implications - The simultaneous exit of the four companies may indicate a strategic refocus or adjustment in capital allocation, raising questions about the changing role of this collaborative platform in the semiconductor industry [2] - The semiconductor industry is currently at a critical development stage, with industry collaboration and ecosystem construction being essential for overcoming overseas technology blockades [2] - The potential impact of changes in shareholder structure on future business operations and resource integration within the industry is under close observation [2]

Global Market Overview - The Hang Seng Index closed at 26,086, down 0.43% for the day but up 30.04% year-to-date [1] - The Shanghai Composite Index rose by 1.65% to 3,875, with a year-to-date increase of 15.62% [1] - The US markets saw the Dow Jones increase by 1.36% to 46,108, with a year-to-date gain of 8.38% [1] Sector Performance - In the Hong Kong market, the healthcare, energy, and consumer discretionary sectors led the decline, while materials, utilities, and industrials saw gains [3] - The semiconductor and rare metals sectors performed notably well, with significant inflows from southbound funds amounting to HKD 189.89 billion [3] Economic Indicators - The European Central Bank (ECB) maintained interest rates and revised down its inflation forecast for 2027 to 1.9% [3] - The US Consumer Price Index (CPI) showed a month-on-month increase of 0.4% and a year-on-year increase of 2.9%, aligning with market expectations [3] Investment Recommendations - Geely Automobile is rated as a "Buy" with a target price of HKD 25.00, representing a potential upside of 33% [4] - Luckin Coffee is also rated as a "Buy" with a target price of USD 44.95, indicating a 19% upside [4] - Semiconductor companies like Horizon Robotics and Beike Micro are rated as "Buy" with target prices of HKD 12.30 and HKD 93.00, respectively, showing potential upsides of 19% and 76% [4]

Group 1 - The technology sector remains strong, with storage chip concepts gaining momentum, as evidenced by the performance of related ETFs [1] - The Tianhong Sci-Tech Innovation Index ETF (589860) increased by 1.44% with a trading volume exceeding 34 million yuan, while the Tianhong Chip ETF (159310) rose by 2.47% [1] - Key stocks in the Tianhong Sci-Tech Innovation Index ETF include leading tech companies such as Cambrian (寒武纪-U), Haiguang Information, and SMIC [1] Group 2 - Unigroup Guowei has successfully launched and mass-produced multiple eSIM products, becoming the first domestic chip manufacturer to achieve global commercial use of eSIM [2] - Micron Technology's stock rose over 7% in the US market, marking a seven-day consecutive increase, with expectations of strong earnings guidance in its upcoming financial report [2] - The semiconductor industry showed steady growth in Q2 2025, with a year-on-year revenue increase of 13.87% and a net profit growth of 23.99% [2] Group 3 - Supply-side reductions are becoming evident, with major manufacturers focusing on advanced products that offer better profit margins, leading to price increases in DRAM and NAND contracts [3] - Demand from cloud computing companies is rising, driven by increased capital expenditures and heightened expectations for AI-related demand, which is boosting enterprise storage needs [3] - The storage market is entering a clear upward trend, with a positive outlook for enterprise storage demand and domestic DRAM replacement [3]