Semiconductor and chip stocks staged a powerful comeback on September 16, with the benchmark index tracking the HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (589190) — known in Chinese as 科创芯片ETF华宝 — jumping as much as 5.5% during intraday trading. The exchange-traded fund stands out for its comparatively lower fee structure among its peers, making it an attractive vehicle for investors seeking broad exposure to the sector.
Leading the charge were semiconductor materials and equipment names, with Shandong Tianyue Advanced Materials posting double-digit gains at the top of the pack. Other strong performers included Zhongke Feice, National Silicon Industry Group, Xi'an Yicai, and AMEC (Advanced Micro-Fabrication Equipment). Meanwhile, heavyweight index constituents rallied in unison, with Cambricon Technologies climbing over 6%, while Hua Hong Semiconductor, Hygon Information Technology, and Semiconductor Manufacturing International Corp (SMIC) all advanced more than 4%.
Three Growth Drivers Fueling the Rally
The resurgence is underpinned by a trio of converging catalysts: price hikes, capacity expansion, and domestic substitution. On the pricing front, expectations of semiconductor silicon wafer price increases are heating up, as major domestic and international manufacturers have begun raising product prices. The supply-demand dynamics in the silicon carbide sector are also improving, further bolstered by the accelerating adoption of high-voltage DC power architectures in AI data centers, which has lifted sentiment around third-generation semiconductor materials.
China International Capital Corporation (CICC) projects that heavily doped silicon wafers, which are in particularly tight supply, will continue to see price gains in the second half of the year. The brokerage suggests that related companies may adjust long-term agreement prices for next year between September and October, implying that the current price hike cycle could persist at least through 2027.
Domestic Equipment Adoption Accelerates
On the equipment front, the localization of China's semiconductor manufacturing tools is accelerating at a rapid clip. Research data indicates that domestically produced equipment now accounts for approximately 23% of new semiconductor equipment purchases by Chinese companies in 2025. More strikingly, domestic equipment constitutes 35% of the installed base at wafer fabs, a 10-percentage-point increase from 2024. This share is expected to climb even higher in 2026.
Memory Constraints and Expansion Plans
In the memory segment, executives at Micron Technology recently highlighted that storage has become the most critical bottleneck limiting AI performance ceilings. Given the lengthy construction cycles for new capacity and the extreme complexity of manufacturing processes, the industry's supply-demand imbalance is unlikely to see meaningful new capacity come online until at least 2028.
Domestically, expansion plans are being disclosed at a brisk pace. According to the latest information, ChangXin Memory Technologies (CXMT) is in discussions with equipment suppliers regarding its new expansion framework, with orders expected to be finalized by year-end. Meanwhile, Yangtze Memory Technologies (YMTC) has begun work on connecting production equipment at its third facility in Wuhan.
New Demand Signals Emerge
On the demand side, a fresh variable has emerged. Channel research from Edgewater covering Micron and SK Hynix reveals that AI company Anthropic is expected to directly purchase approximately 20% of its memory requirements starting in 2027, with plans to increase that proportion in 2028. This would put Anthropic's direct DRAM purchases on a scale roughly comparable to that of NVIDIA.
Huaxi Securities notes that AI innovation is driving sustained breakthroughs in computing chips, optical components, PCBs, memory, and server liquid cooling technologies. The AIoT sector is benefiting from growing demand both domestically and internationally. Expectations for domestic substitution are strong across upstream semiconductor equipment, components, and materials. Power semiconductors, CIS (CMOS image sensors), and analog chip segments are seeing price recoveries from cyclical lows. With the overall industry logic turning positive, China's semiconductor sector is poised for a new round of development opportunities.
One-Stop Exposure via Index Funds
For investors, picking individual chip stocks across various sub-sectors can be challenging. An alternative approach is to gain exposure through an index fund that covers the entire chip supply chain. The 科创芯片ETF华宝 (589190) passively tracks the Shanghai Stock Exchange STAR Market Chip Index, which spans the full semiconductor value chain with heavy weightings in core segments such as memory, equipment, and materials. This positioning effectively captures the industrial trends driven by the continuous upgrade of AI computing infrastructure, offering strong offensive characteristics with 20% price fluctuation flexibility. Off-market investors can consider the feeder fund (code: 021225).
Public data shows that 科创芯片ETF华宝 (589190) charges a management fee of 0.3% and a custody fee of 0.08%, for a combined fee rate of 0.38% — notably lower than other ETFs tracking the same index.
Fee and Risk Disclosure
Regarding ETF fees: When subscribing or redeeming fund shares, the subscription/redemption agency may charge a commission of up to 0.5%, which includes fees levied by securities exchanges and registration institutions. For the feeder fund HUABAO Shanghai Sci-Tech Innovation Board Chip Index Feeder Fund A, the subscription fee (front-end) is 1,000 RMB per transaction for amounts of 2 million RMB or above, 0.2% for amounts between 1 million and 2 million RMB, and 0.5% for amounts below 1 million RMB. The redemption fee is 1.5% for holdings of less than 7 days and 0% for holdings of 7 days or more. Class C shares of the feeder fund charge no subscription fee, with a redemption fee of 1.5% for holdings under 7 days and 0% thereafter; the sales service fee is 0.2%.
Risk Warning: The 科创芯片ETF华宝 (589190) and its feeder fund passively track the STAR Market Chip Index, which has a base date of December 31, 2019, and was officially published on June 13, 2022. The index's returns over the past five complete fiscal years were: 6.87% in 2021, -33.69% in 2022, 7.26% in 2023, 34.52% in 2024, and 61.33% in 2025. The index's volatility rates over the same periods were: 34.32% in 2021, 36.60% in 2022, 28.64% in 2023, 44.67% in 2024, and 34.34% in 2025. Index constituent composition adjusts according to index compilation rules, and historical backtested performance does not预示 future index performance. This product is issued and managed by Huabao Fund; distribution institutions do not bear responsibility for investment, redemption, or risk management. Investors should carefully read the Fund Contract, Prospectus, Fund Product Information Summary, and other fund legal documents to understand the fund's risk-return characteristics and select products aligned with their own risk tolerance. The fund manager has assessed this fund's risk rating as R4 (medium-high risk), suitable for investors with suitability ratings of C4 and above. Performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Past fund performance does not indicate future returns. Funds carry risks; invest with caution! Sales institutions (including the fund manager's direct sales channels and other sales institutions) conduct risk evaluations of this fund in accordance with relevant laws and regulations. Investors should promptly review the suitability opinions issued by the fund manager; the suitability opinions of various sales institutions may not be consistent, and risk ratings published by fund sales institutions may not be lower than those issued by the fund manager. Differences exist between the fund contract's description of risk-return characteristics and the fund's risk rating due to varying considerations. Investors should understand the fund's risk-return profile and carefully select fund products based on their own investment objectives, time horizons, experience, and risk tolerance, assuming their own risks. Registration of this fund by the China Securities Regulatory Commission does not constitute a substantive judgment or guarantee of the fund's investment value, market prospects, or returns. Funds carry risks; invest with caution.