Core Insights - The SW semiconductor index increased by 14.07% in September 2025, outperforming the electronics sector by 3.10 percentage points and the CSI 300 index by 10.86 percentage points [2] - The global semiconductor sales reached $64.88 billion in August 2025, showing a year-on-year growth of 21.7% and a quarter-on-quarter increase of 4.4% [4] - The domestic AI chip ecosystem is increasingly capable of localization, with several companies adapting to new models simultaneously [6] Semiconductor Index Performance - The SW semiconductor index's PE (TTM) was 118.97x as of September 30, 2025, positioned at the 91.58 percentile since 2019 [2] - Semiconductor equipment and materials led the sub-industry performance with increases of 27.82% and 14.72%, respectively [2] Fund Holdings and Market Trends - In Q2 2025, active funds had a semiconductor holding ratio of 10.1%, which is 5.6 percentage points above the semiconductor market cap ratio of 4.48% [3] - The top twenty holdings saw new additions of companies like Naxin Micro and Sierpu, while others like Fengcai Technology were replaced [3] Global Sales and Price Trends - The semiconductor sales in China reached $17.63 billion in August 2025, with a year-on-year growth of 12.4% [4] - DRAM and NAND Flash prices are expected to rise, with forecasts indicating a quarter-on-quarter increase of 8%-13% for DRAM and 5%-10% for NAND Flash in Q4 2025 [4][6] Investment Strategy - The domestic AI supply chain is strengthening, with recommendations for companies like Cambrian, Aojie Technology, and others [6] - The semiconductor industry is expected to benefit from rising storage prices and increased demand driven by AI applications [6] Capacity Growth Projections - SEMI projects a CAGR of 8.1% for China's wafer fab capacity from 2024 to 2028, surpassing the global average of 5.3% [7] - Companies such as SMIC and Hua Hong Semiconductor are highlighted as key players in the production chain [7]

Core Insights - The report maintains an "outperform" rating for the semiconductor sector, highlighting the increasing domestic capabilities in the AI supply chain and a clear price increase cycle in storage [1][6]. Market Review - In September 2025, the SW semiconductor index rose by 14.07%, outperforming the electronic industry by 3.10 percentage points and the CSI 300 index by 10.86 percentage points [3][13]. - The semiconductor equipment sector saw the highest increase at +27.82%, followed by semiconductor materials at +14.72% [3][19]. - The current price-to-earnings (PE) ratio for the SW semiconductor index is 118.97x, placing it in the 91.58 percentile since 2019 [3][23]. Industry Data Update - Global semiconductor sales reached $64.88 billion in August 2025, marking a year-on-year increase of 21.7% and a quarter-on-quarter increase of 4.4% [5][40]. - The sales in China were $17.63 billion, with a year-on-year growth of 12.4% [5][41]. - The prices of DRAM and NAND Flash have continued to rise, with forecasts indicating a quarter-on-quarter increase of 13%-18% for DRAM and 5%-10% for NAND Flash in Q4 2025 [5][47]. Investment Strategy - The report emphasizes the strengthening of domestic AI chip manufacturers, recommending companies such as Cambrian, Aojie Technology, and others in the AI supply chain [6][7]. - The storage chip market is in a price increase cycle, with recommendations for domestic storage manufacturers like Jiangbolong and Demingli [6][7]. - The Ministry of Commerce's anti-dumping investigation into imported analog chips from the U.S. is expected to improve price competition and accelerate domestic substitution, with recommendations for companies like Sanbang Technology and Jiewa Technology [6][7]. Fund Holdings Analysis - In Q2 2025, the proportion of semiconductor holdings in active funds was 10.1%, with a market value of 252.7 billion yuan [4][30]. - The top five semiconductor heavyweights accounted for 37.1% of the holdings, slightly down from 37.9% in the previous quarter [4][37]. Key Company Earnings Forecasts - SMIC is projected to have a net profit of 57.6 billion yuan in 2025, with a PE ratio of 149 [7]. - Huahong Semiconductor is expected to achieve a net profit of 9 billion yuan in 2025, with a PE ratio of 211 [7].