Guosen Securities released a research report stating that the active fund overweight position in semiconductors reached 11.66% in Q4 2025, representing an overweight of 5.6 percentage points. Global semiconductor sales reached $88.78 billion in February (YoY +61.8%, QoQ +7.6%), marking 28 consecutive months of year-on-year growth. From a global perspective, the analog chip sector is currently in the early stages of an upward cycle following inventory depletion. Both Texas Instruments and Analog Devices indicated that Q1, typically a slow season, was not weak. Domestic manufacturers continue to benefit from market share gains on this basis. New products developed from R&D investments in previous years are entering a revenue realization phase, and the price competition environment has also improved, suggesting the sector's profitability is expected to continue rising. The main views of Guosen Securities are as follows:
In March, the SW Semiconductor Index fell by 14.87%, with its valuation at the 78.59th percentile since 2019. In March, the SW Semiconductor Index declined by 14.87%, underperforming the broader electronics sector by 1.36 percentage points and the CSI 300 Index by 9.34 percentage points. Overseas, the Philadelphia Semiconductor Index fell by 6.30%, and the Taiwan Semiconductor Index dropped by 9.34%. By sub-sector, Discrete Devices (-4.89%), Semiconductor Equipment (-11.31%), and Analog Chip Design (-13.36%) showed relatively smaller declines. Integrated Circuit Packaging & Testing (-20.48%), Semiconductor Materials (-19.37%), and Digital Chip Design (-15.71%) saw larger declines. As of March 31, the price-to-earnings ratio (TTM) of the SW Semiconductor Index stood at 100.59x, placing it at the 78.59th percentile since 2019. Within SW semiconductor sub-sectors, Integrated Circuit Packaging & Testing and Semiconductor Equipment had lower P/E ratios (TTM) of 59x and 80x, respectively. Analog Chip Design and Digital Chip Design had valuations of 135x and 98x, respectively. Semiconductor Equipment was at a relatively low valuation level since 2019, at the 42.73rd percentile.
Active funds' semiconductor holdings accounted for 11.66% of their major holdings in Q4 2025, an overweight of 5.6 pct. Within the major holdings of active funds in Q4 2025, the market capitalization of electronic companies was CNY 403.3 billion, representing a holding proportion of 22.95%. The market capitalization of semiconductor companies was CNY 204.8 billion, with a holding proportion of 11.66%, a quarter-on-quarter decrease of 0.9 percentage points. This represents an overweight of 5.6 percentage points compared to the semiconductor sector's 6.08% share of the circulating market cap. Among the top 20 major holdings in Q4 2025, new additions included BIWIN Storage, Changchuan Technology, Fudan Microelectronics, Demingli, and OmniVision Group, replacing VeriSilicon, Rockchip, Smartsens, SG Micro, and Bestechnic. ZKFT, Cambricon, and Hwatsing saw the largest increases in their proportion of circulating shares held. Hua Hong Semiconductor, Source Photonics, 3Peak, and GigaDevice experienced the largest decreases.
Global semiconductor sales grew 61.8% year-on-year in February, with memory contract prices continuing to rise. According to SIA data, global semiconductor sales reached $88.78 billion in February (YoY +61.8%, QoQ +7.6%), marking 28 consecutive months of year-on-year growth. Semiconductor sales in China were $23.63 billion, up 57.4% year-on-year and 3.6% month-on-month. In the memory sector, DRAM contract prices continued to rise in February, although spot prices declined in March. Furthermore, TrendForce forecasts that overall general-purpose DRAM contract prices will increase by 58-63% quarter-on-quarter in Q2. The NAND Flash market continues to be driven by demand from AI and data centers, with the effect of chain-wide price increases persisting. Overall contract prices are expected to rise by 70-75% quarter-on-quarter in Q2. Based on February revenue data from Taiwanese semiconductor companies, IC manufacturing/packaging and testing saw year-on-year growth but month-on-month declines. DRAM chips grew both year-on-year and month-on-month, while IC design declined both year-on-year and month-on-month.
Investment Strategy: Recommend cyclically recovering and undervalued analog chips, along with high-demand computing chips. From a global perspective, the analog chip sector is in the early stages of an upward cycle following inventory depletion. Both Texas Instruments and Analog Devices indicated that Q1, typically a slow season, was not weak. Domestic manufacturers continue to benefit from market share gains. New products from R&D investments in prior years are entering a revenue generation phase, and the price competition environment has improved, suggesting sustained profitability growth for the sector. It is recommended to focus on analog chip companies such as SG Micro, 3Peak, Joulwatt, Novosense, Southchip, Bright Power Semiconductor, and Awinic.
During the keynote at GTC 2026, Jensen Huang projected that total purchase orders for Blackwell and Rubin would reach at least $1 trillion by 2027, stating that the inflection point for AI inference has arrived. AI is evolving from a simple prompt-based tool into intelligent, long-running systems capable of reasoning, planning, and execution. SEMI indicated that, driven by AI computing power and the global digital economy, the era of a trillion-dollar global semiconductor industry, originally forecast for 2030, is expected to arrive ahead of schedule by the end of 2026. It is recommended to focus on core growth drivers in this semiconductor cycle, namely computing power and memory-related supply chains, including companies such as Cambricon, ASR Micro, Montage Technology, Loongson Technology, Longsys, Demingli, GigaDevice, and Allwinner Technology.
Domestic foundries like SMIC and Hua Hong Semiconductor are maintaining relatively high capacity utilization rates. Memory chips are in a phase of capacity expansion. It is recommended to monitor the semiconductor production chain, including SMIC, Hua Hong Semiconductor, AMEC, NAURA, Piotech, JFMetal, Dinglong, JCET, Tongfu Microelectronics, WeTest, and SMIC Integration.
Risk warnings: The pace of domestic substitution may fall short of expectations; Downstream demand may be weaker than expected; Risks of intensified industry competition; Risks associated with unfavorable changes in international relations.
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