The Sci-Tech Innovation Board chip sector staged a powerful rally on June 18th, with industry giant Cambricon Technologies Corporation Limited (ASX: 688256) leading the charge. Its shares surged over 16% at one point, closing up more than 14% to set a new record high above 1500 yuan. The company's market capitalization approached 950 billion yuan, bringing it within striking distance of the coveted trillion-yuan valuation club.
Hua Hong Grace Semiconductor Manufacturing Corporation saw gains of over 12% intraday before closing up more than 6%. Hygon Information Technology Co., Ltd. advanced over 6%, while Semiconductor Manufacturing International Corporation and BIWIN Storage Technology Co., Ltd. both rose more than 4%. More than ten stocks, including Hua Hong Grace, BIWIN Storage, CSSC Special Gas Co., Ltd., and Joulwatt Technology Inc., hit new highs.
Focus on the Core Chip Industry
The HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ASX: 589190), which offers comprehensive exposure to the chip sector with a focus on core components, saw its price surge over 5% intraday before closing up 4.46%. This marked another consecutive record high since its listing.
It is noteworthy that the Sci-Tech chip segment has demonstrated strong upward momentum during this year's semiconductor rally. The SSE STAR Market Chip Index has accumulated a gain of 76.55% year-to-date, outperforming its peers in the semiconductor and chip index category.
Historical data shows the SSE STAR Market Chip Index delivered the following annual returns over the past five full years: 6.87% in 2021, -33.69% in 2022, 7.26% in 2023, 34.52% in 2024, and 61.33% in 2025. The index's composition is adjusted periodically according to its rules, and its past performance is not indicative of future results.
Key Market Drivers
The rally is being driven by major cloud service providers increasing their procurement of domestic chips. Industry sources indicate that ByteDance is in discussions with Tianshu Zhixin Semiconductor Co., Ltd. to purchase at least 50,000 AI chips, primarily for inference tasks. This has fueled market speculation about the large-scale commercial deployment capabilities of domestic AI chips.
Data from IDC in April showed that total deliveries of AI accelerator cards in the Chinese market reached 4 million units in 2025. Domestic manufacturers delivered 1.65 million units, capturing a market share of 41%, while Nvidia's share in China contracted significantly from a near-monopoly of 95% to 55%.
Analysts point to a favorable environment for domestic AI chip makers. Guosen Securities notes that against the backdrop of restricted access to high-end overseas chips, the simultaneous push for domestic IT innovation and large language model development is accelerating the adaptation and volume production of domestic AI chips, creating incremental opportunities across the entire ecosystem.
Another securities firm, Guojin Securities, believes the competition in computing power has evolved from a focus on single-chip performance to a new phase of system-level competition involving chips, storage, interconnects, software, and cluster coordination. Domestic computing chips are benefiting from a convergence of policy support, demand, technology, and ecosystem development. The industry is entering a high-growth cycle characterized by increasing order volumes and earnings realization, positioning it as a core allocation theme within the technology sector.
Navigating the Earnings Season
As we move into late June, the market enters a window for verifying first-half earnings reports. Given high earnings expectations, market attention is likely to intensify on leading companies within high-growth segments of the technology sector, potentially strengthening the dominance of the hard-tech investment theme.
Capturing the Chip 'Super Cycle'
For investors looking to position for the chip industry's growth cycle, focusing on high-beta opportunities is key. The HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ASX: 589190) and its feeder funds (Class A: 021224, Class C: 021225) passively track the SSE STAR Market Chip Index. They offer balanced, full-chain exposure to the chip industry, with over 90% weight in core areas like integrated circuits and semiconductor equipment, reflecting a high concentration of hard-tech assets and strong offensive characteristics.
Cost Considerations
The HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ASX: 589190) features a management fee of 0.3% and a custody fee of 0.08%, resulting in a total expense ratio of 0.38%, which is relatively low among ETFs tracking the same underlying index.
Investment Risks
The HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND passively tracks the SSE STAR Market Chip Index. The index's base date is December 31, 2019, and its release date was June 13, 2022. The fund is issued and managed by Huabao Fund. Selling agents do not bear responsibility for the fund's investment, redemption, or risk management. Investors should carefully read the fund's legal documents, including the Fund Contract, Prospectus, and Key Facts Statement, to understand its risk-return profile and choose products suitable for their own risk tolerance. The fund manager assesses this fund's risk rating as R4 (Medium-High Risk), suitable for investors with a suitability rating of C4 or above. The past performance of other funds managed by the fund manager does not guarantee this fund's future performance. Past fund performance is not indicative of future results. Funds carry risks, and investing requires caution. Selling agencies (including the fund manager's direct sales channels and other agencies) evaluate the fund's risk according to relevant laws and regulations. Investors should pay attention to the appropriateness opinions issued by the fund manager. Opinions on suitability may differ among selling agencies, and a selling agency's risk rating assessment result for a fund product shall not be lower than the risk rating assessment result made by the fund manager. The description of the fund's risk-return characteristics in the Fund Contract and its risk rating may differ due to different considerations. Investors should understand the fund's risk-return situation, make prudent choices based on their own investment objectives, horizon, experience, and risk tolerance, and bear the risks themselves. The CSRC's registration of this fund does not indicate a substantive judgment or guarantee of its investment value, market prospects, or returns. Funds carry risks, and investing requires caution.
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