Group 1 - The Shanghai Stock Exchange's Sci-Tech Innovation Board semiconductor materials and equipment index has risen by 1.74%, with notable increases in component stocks such as SMIC (up 12.02%), Fuchuang Precision (up 7.76%), and Zhongwei Company (up 3.27%) [1] - The Sci-Tech Semiconductor ETF (588170) has seen a 1.58% increase, with the latest price at 1.22 yuan, and has experienced continuous net inflows over the past three days, totaling 75.75 million yuan [1] - Tianfeng Securities anticipates that domestic large model development companies and internet platforms will gradually increase their procurement and usage of domestic chips, presenting growth opportunities for domestic chip suppliers and their supporting industry chain [1] Group 2 - The Sci-Tech Semiconductor ETF (588170) and its linked funds track the Shanghai Stock Exchange's Sci-Tech Innovation Board semiconductor materials and equipment index, which includes companies in semiconductor equipment (59%) and semiconductor materials (25%) [2] - The semiconductor equipment and materials industry is a significant area for domestic substitution, characterized by low domestic substitution rates and high ceilings for domestic replacement, benefiting from the expansion of semiconductor demand driven by the AI revolution and advancements in lithography technology [2]

Group 1 - The Shanghai Stock Exchange's Sci-Tech Innovation Board semiconductor materials and equipment index decreased by 0.80% as of August 20, with mixed performance among constituent stocks [1] - New Yichang led the gains with an increase of 4.04%, while Jing Sheng Co. experienced the largest decline at 4.40% [1] - The Sci-Tech Semiconductor ETF (588170) fell by 0.91%, with a latest price of 1.09 yuan and a net inflow of 33.32 million yuan [1] Group 2 - The Sci-Tech Semiconductor ETF and its linked funds track the semiconductor materials and equipment index, covering 59% semiconductor equipment and 25% semiconductor materials [2] - The semiconductor equipment and materials industry is a significant area for domestic substitution, characterized by low domestic replacement rates and high potential for domestic substitution [2] - The industry is expected to benefit from the expansion of semiconductor demand driven by the artificial intelligence revolution, technology restructuring, and advancements in lithography technology [2]

Core Viewpoint - The semiconductor sector is currently in an upward cycle, driven by the strong performance of artificial intelligence (AI) and a recovery in the industrial sector, which is expected to benefit Chinese semiconductor manufacturers significantly in the future [1][2]. Group 1: Market Performance - As of August 19, 2025, the Shanghai Stock Exchange's Sci-Tech Innovation Board Semiconductor Materials and Equipment Theme Index fell by 1.01%, with mixed performance among constituent stocks [1]. - Leading stocks included Jing Sheng Co., which rose by 6.09%, and Shen Gong Co., which increased by 3.87%, while Shanghai Hejing fell by 5.64% [1]. - The Sci-Tech Semiconductor ETF (588170) decreased by 1.33%, with a latest price of 1.11 yuan, indicating a potential opportunity for investment during the pullback [1]. Group 2: Investment Logic - The investment logic in the semiconductor sector can be divided into two main lines: focusing on cloud computing with self-sufficiency and looking at downstream growth in terminal markets [1]. - The semiconductor equipment and materials industry is crucial for domestic substitution, characterized by low domestic replacement rates and high ceilings for domestic alternatives [2]. - The sector is expected to benefit from the expansion of semiconductor demand driven by the AI revolution, technology restructuring, mergers and acquisitions, and advancements in lithography technology [2].

Core Insights - The Shanghai Stock Exchange's Sci-Tech Innovation Board semiconductor materials and equipment index has risen by 2.76% as of August 18, with notable increases in constituent stocks such as Huahai Chengke (up 8.03%), Tianyue Advanced (up 7.10%), and Aisen Co. (up 5.98%) [1] - The Sci-Tech Semiconductor ETF (588170) has also seen a rise of 2.64%, indicating active market trading with a turnover of 75.84 million yuan and a turnover rate of 18.06% [1] - According to China International Capital Corporation (CICC), the demand for AI hardware is expected to grow significantly due to the increasing capabilities of large models and the expansion of AI inference computing power [1] Industry Trends - There is a confirmed increase in domestic and international demand for computing power, which is expected to drive growth in AI hardware [1] - The importance of networks in AI Data Center (AIDC) applications is anticipated to rise [1] - The acceleration of AI applications such as Agents is expected to contribute to market growth [1] Investment Opportunities - The Sci-Tech Semiconductor ETF (588170) tracks the semiconductor materials and equipment index, focusing on companies in semiconductor equipment (59%) and materials (25%) sectors [1] - The semiconductor equipment and materials industry is identified as a key area for domestic substitution, benefiting from low domestic replacement rates and high potential for domestic alternatives [1] - The sector is poised to gain from the expansion of semiconductor demand driven by the AI revolution, technology restructuring, and advancements in lithography technology [1]

Core Viewpoint - The semiconductor materials and equipment sector in China's Sci-Tech Innovation Board is experiencing significant growth, driven by increasing demand for computing power and advancements in artificial intelligence [1][2]. Group 1: Market Performance - As of August 18, 2025, the Sci-Tech Innovation Board semiconductor materials and equipment theme index rose by 2.55%, with notable increases in constituent stocks such as Huahai Chengke (+8.49%), Tianyue Advanced (+5.11%), and Hushi Silicon Industry (+5.00%) [1]. - The Sci-Tech Semiconductor ETF (588170) also increased by 2.55%, reaching a new high for the year at 1.13 yuan [1]. Group 2: Computing Power Growth - According to the Ministry of Industry and Information Technology, China's computing power reached 180 EFLOPS by the end of 2022, ranking second globally, and is projected to grow to 300 EFLOPS by 2025 [1]. - The proportion of intelligent computing power within the total computing power has increased from 3% in 2016 to 25.4% by June 2023, with expectations to reach 35% by 2025 [1]. Group 3: Investment in Intelligent Computing Centers - Tianfeng Securities reports that the domestic intelligent computing center market is experiencing rapid growth, with a market size of 87.9 billion yuan in 2023, reflecting over 90% year-on-year growth [1]. - The demand for computing power is shifting towards inference as AI large models are increasingly implemented in commercial scenarios [1]. Group 4: Semiconductor Sector Characteristics - The Sci-Tech Semiconductor ETF (588170) tracks the semiconductor materials and equipment theme index, comprising 59% semiconductor equipment and 25% semiconductor materials, highlighting the importance of domestic substitution in these sectors [2]. - The semiconductor equipment and materials industry is characterized by low domestic substitution rates and high potential for domestic replacement, benefiting from the expansion of semiconductor demand driven by the AI revolution and technological advancements [2].