Group 1 - The semiconductor equipment ETF (159516) has seen a net inflow of 22 million units, surpassing 3 billion yuan in scale, with over 140 million yuan net inflow in the past five days, indicating strong demand for semiconductor equipment assets [1] - The World Artificial Intelligence Conference held in Shanghai from July 26 to 28 showcased over 3,000 cutting-edge exhibits, including more than 100 global debuts and Chinese premieres, highlighting the innovation and development trends in the AI industry [1] - Xiangcai Securities noted that the demand for edge AI computing power is increasing due to the rise of AI large models and the market share growth of AI smart glasses and smartphones, driving steady growth in the market demand for various semiconductor hardware [1] Group 2 - The semiconductor equipment ETF (159516) tracks the semiconductor materials and equipment index (931743), which is compiled by China Securities Index Co., Ltd., selecting listed companies involved in semiconductor materials and equipment manufacturing from the A-share market [2] - The index components cover key upstream areas of the semiconductor industry, including core materials and equipment supply fields such as silicon wafers, photoresists, and etching machines, reflecting the level of domestic semiconductor industry's self-sufficiency in basic materials and core equipment [2]

Market Overview - The three major stock indices experienced narrow fluctuations, with the Sci-Tech 50 index rising against the trend, while Hong Kong stocks declined over 1% [1] - The Shanghai Composite Index closed down 0.33% at 3593.66 points, the Shenzhen Component Index down 0.22% at 11168.14 points, and the ChiNext Index down 0.23% at 2340.06 points [1] - The total trading volume in the Shanghai and Shenzhen markets was 181.85 billion yuan, a decrease of approximately 58 billion yuan from the previous day [1] Semiconductor Sector - The semiconductor sector saw a strong afternoon rally, with several stocks experiencing significant gains, including Chipone Technology up over 13% and Cambrian Technology up over 12% [4][5] - The demand for high-performance Ethernet switches, advanced storage products, GPUs, and edge computing chips is expected to grow due to the rising demand for AI computing power [5] - According to Tianfeng Securities, the global semiconductor market is projected to continue its optimistic growth trajectory, driven by AI applications and domestic substitution trends [6][7] AI Application Concept - The AI application concept was active, with stocks like Yinsai Group hitting the daily limit up of 20% and several others, including CloudWalk Technology and Dahan Technology, also seeing significant gains [9][10] - Recent policies have provided substantial support for AI development, including annual computing power subsidies of up to 2 million yuan in Beijing and AI computing vouchers in Shanghai [11] - Citic Securities anticipates that ongoing policy support will further enhance the AI industry chain, creating new investment opportunities [11]

Group 1 - The semiconductor sector experienced a decline today, with the semiconductor equipment ETF (159516) dropping over 1%. However, it has seen a net inflow of over 300 million yuan for four consecutive days, with its shares increasing by over 50% since the beginning of the year [1] - According to Zhongyuan Securities, global semiconductor sales are projected to grow by 19.8% year-on-year in May 2025, marking 19 consecutive months of year-on-year growth and a month-on-month increase of 3.5%. WSTS forecasts a year-on-year growth of 11.2% for global semiconductor sales in 2025 [1] - The demand for edge AI computing power is expected to rise due to the proliferation of AI large models and the increasing market share of AI smart glasses and AI smartphones. This will drive steady growth in the market demand for various semiconductor hardware, including high-performance Ethernet switches, advanced storage products, GPUs, and edge computing chips [1] Group 2 - The traditional consumer electronics sector, including smartphones, PCs, and IoT, is showing signs of weak recovery, while domestic substitution remains a prevailing trend. Semiconductor companies with autonomous and controllable capabilities are likely to continue benefiting from these trends [1]

Investment Rating - The industry maintains a "Buy" rating [7][5][33] Core Viewpoints - The "Big and Beautiful" Act in the US increases tax credits for semiconductor manufacturers building new factories from 25% to 35%, which is expected to significantly lower expansion costs and encourage companies like TSMC, Intel, and Micron to accelerate their projects in the US [3][11][21] - The Philadelphia Semiconductor Index has shown a continued upward trend, supported by strong capital expenditures and positive long-term technology demand expectations, with a year-to-date increase of 12.46% as of July 3, 2025 [4][15] - The demand for AI-related hardware is expected to rise due to the proliferation of AI large models and devices like AI smart glasses and AI smartphones, driving steady growth in the market for high-performance Ethernet switches, advanced storage products, GPUs, and edge computing chips [5][33] Summary by Sections Industry Investment Rating - The report maintains a "Buy" rating for the semiconductor industry, suggesting a positive outlook for the sector [7][5][33] Market Overview - The semiconductor industry index experienced a decline of 1.18% from June 30 to July 4, 2025, while the broader market indices showed gains [10][13] - The semiconductor equipment sector led the performance among sub-sectors, while other sectors recorded declines [14] Key Legislative Developments - The "Big and Beautiful" Act was signed into law, which is expected to stimulate high-end manufacturing in the US and increase import tariffs on semiconductor manufacturing equipment and high-end chips [11][22] Company Recommendations - The report recommends focusing on companies such as Zhaoyi Innovation, Lanke Technology, Juchen Co., Shenkong Co., and Longxin Zhongke, which are expected to benefit from the ongoing trends in the semiconductor market [5][33]