The tech and chip sector continues its upward momentum, with the cost-effective HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ETF: 589190) surging over 2% on June 30th, marking another record high since its listing.
This recent sustained rally has positioned the chip sector as a dominant market theme, attracting significant capital inflows. Data from the Shanghai Stock Exchange reveals that ETF 589190 has drawn a net inflow of 2.23 billion yuan over the past five trading days.
Constituent Stocks Show Widespread Gains
Most constituent stocks are trading higher, with GalaxyCore Inc. hitting the 20% daily limit-up, and ASR Microelectronics Co., Ltd. and ETown Microelectronics Co., Ltd. rising over 10%. Among the heavyweight leaders, Cambricon Technologies Corporation Limited (688256) gained more than 6% and Hygon Information Technology Co.,Ltd. (688041) advanced nearly 5%, both reaching new all-time highs. Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor also saw increases exceeding 2%.
Catalysts for the Sector Surge
The rally is fueled by significant industry developments. South Korea has initiated its largest-ever investment project focused on AI and semiconductors, with the government collaborating with giants Samsung Electronics and SK Group. They unveiled "Three Super Projects" centered on semiconductors, physical AI, and AI data centers, planning a total investment exceeding 4,755 trillion won in AI-related fields. The South Korean government aims to double DRAM production capacity within five years and projects the global memory market to quadruple in size over the same period.
Furthermore, the high demand from the AI supercycle is propagating upstream to critical supply chain nodes. Nearly 20 global analog and power semiconductor companies are set to implement a new round of price hikes starting July 1st, following multiple stepwise adjustments this year. Many manufacturers report robust order books and significantly improved capacity visibility.
Industry Analysis and Expansion Cycle
Research indicates the semiconductor supply chain is entering an expansion phase. Domestic wafer fabs in China are accelerating capacity expansion and supporting local supply chains due to security considerations. Significant breakthroughs in localization have been achieved in areas like etching, thin-film deposition, and CMP, with progress expected in photoresist coating/development and metrology/inspection. The domestic self-sufficiency sector has shown growth momentum following corporate earnings reports and is poised for a new upturn as advanced memory and process wafer fabs proceed with expansion.
Performance Highlights
Notably, the tech and chip sector has demonstrated strong offensive performance in the current semiconductor market rally. The SSE Science and Technology Innovation Board Chip Index has surged 101% year-to-date, outperforming its peers.
It is important to note that the index's past performance over the last five full years (2021: 6.87%, 2022: -33.69%, 2023: 7.26%, 2024: 34.52%, 2025: 61.33%) does not guarantee future results, as its composition is adjusted per its rules.
Investment Vehicle for the "Super Cycle"
For investors seeking exposure to the chip industry's "super cycle" and high-volatility opportunities, the HUABAO SHANGHAI SCI TECH INNOVATION BOARD CHIP TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (ETF: 589190) and its feeder funds (Class A: 021224, Class C: 021225) passively track the SSE Sci-Tech Innovation Board 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 high hard-tech content and strong offensive potential.
Cost Considerations
This ETF 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.
Important Risk Disclosures
Investors should note that ETF 589190 passively tracks the SSE Science and Technology Innovation Board Chip Index (Base Date: Dec 31, 2019; Release Date: Jun 13, 2022). The fund is issued and managed by Huabao Fund. Distributors are not responsible for the fund's investment, redemption, or risk management. Investors must carefully read the Fund Contract, Prospectus, and Key Facts Statement to understand the fund's risk-return profile and choose products matching their own risk tolerance. The fund manager rates this fund as R4 (Medium-High Risk), suitable for investors with a C4 or higher suitability rating. Past performance of the fund or other funds managed by the manager does not guarantee future results. Investment involves risks. The China Securities Regulatory Commission's registration of this fund does not indicate a judgment or guarantee of its investment value, market prospects, or returns. Investors should make investment decisions cautiously based on their own circumstances.
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