Today marks the fourth day of volatile adjustment for the A-share market after hitting a recent high of 4190.87 points. The overall market sentiment remains weak, yet certain sectors are shining brightly, such as the real estate sector which is leading the gains, with stocks like Grandjoy and Cheng Tou Holdings hitting their daily limit-up. However, the sustainability of the real estate sector's leadership remains to be seen. Comparatively, the semiconductor industry, represented by segments like advanced packaging, demonstrates greater certainty and has already established a long-term upward trend. The semiconductor sector is entering an upward cycle. By the midday close on January 20th, the A-share market had bottomed out and rebounded. The Shanghai Composite Index showed both upper and lower shadows, indicating intensified capital competition. The fact that the lower shadow was slightly longer than the upper shadow suggests stronger buying power at lower levels, with selling pressure failing to persist, potentially signaling a short-term rebound or trend reversal. In terms of sectors, stimulated by positive policies such as the extension of individual income tax benefits supporting home replacement purchases until the end of 2027, the Real Estate Select Index led the gains among all popular concept indices with a 3.35% increase. Related indices like the Cement Manufacturing Select Index also performed well. Simultaneously, the Advanced Packaging Index ranked among the top gainers in popular concept indices, securing the second position with a 2.62% rise. Extending the statistical period reveals that the Advanced Packaging Index has surged 29.10% year-to-date, ranking first among popular concept indices. The Semiconductor Equipment Index followed with a 22.15% gain. Regarding individual stocks, companies like Jinhaitong, Sinyang Micro, and Fullcreate Precision have accumulated substantial gains, with Jinhaitong rising nearly 80% since the start of the year. Today, Yingfang Micro, which plans an asset restructuring, hit the limit-up, further boosting sentiment in the semiconductor sector. Why is the semiconductor sector consistently leading the A-share market? Traditionally, the semiconductor industry cycle heavily depends on demand fluctuations in consumer electronics, exhibiting a typical pattern of alternating boom and bust. However, the current AI-driven growth in the semiconductor industry is unprecedented. Unlike past cycles, this growth is structural, with no clear peak in sight. The World IC Association forecasts that, driven by strong AI market demand, the global semiconductor market size is expected to reach $783.8 billion in 2025 and break through $900 billion in 2026. Concurrently, the four major North American cloud providers—Amazon, Microsoft, Google, and Meta—are projected to invest $600 billion in AI infrastructure by 2026, focusing on AI chips, high-bandwidth memory, and computing clusters. This provides the industry with greater resilience to navigate economic cycles. Many stocks have "locked in" significant earnings growth. Analyzing the gains of semiconductor companies shows that the better performers are mostly those that have announced 2025 earnings previews indicating substantial profit growth. For instance, Biwin Storage, which recently broke through its historical high of 193.38 yuan per share, forecasted a net profit increase of 427.19% to 520.22% year-on-year. Similarly, Zhongke Bluewhale, which has been trending upwards, projected a net profit growth of 366.15% to 376.51%. Industry insiders suggest that substantial capital is still flowing towards companies with solid earnings fundamentals. Conversely, investors should cautiously assess market risks and make rational investment decisions regarding purely speculative themes. Beyond these companies that have released 2025 earnings previews, several other semiconductor firms have already "locked in" significant profit growth based on available data. For example, Yuanjie Semiconductor Technology reported a net profit attributable to shareholders of 106 million yuan for the first three quarters of 2025, a staggering increase of 1827.41% compared to the full year of 2024. Barring major operational changes in Q4 2025, a significant full-year earnings increase is highly probable. Additionally, Swayne Electronics' performance for the first three quarters of 2025 grew by 1027.01% compared to the full year 2024. Other companies with similarly doubled or more earnings growth include Helmn, Cambricon-U, and Zhenratech. It is noteworthy that Cambricon-U is also one of the heavily weighted stocks held by "super retail investor" Zhang Jianping, who held nearly 8.5 billion yuan worth of the company's shares as of the end of Q3 2025. Leveraged funds have already made large-scale position increases. Analyzing the latest fund flows reveals that multiple major capital forces are continually increasing their stakes in semiconductor companies, with leveraged funds being one of them. Since the beginning of the year, a total of 163 semiconductor companies have been held by leveraged funds, with 119 of them experiencing varying degrees of position increases, accounting for over 70%. Specifically, Loongson Technology saw the highest net financing purchases by leveraged funds, with a cumulative net buy of 1.664 billion yuan year-to-date, contributing to its 17.91% gain during this period. Biwin Storage and Jiangbolong followed closely with net financing purchases of 1.323 billion yuan and 1.082 billion yuan, respectively. These three companies are among the few with net financing purchases exceeding 1 billion yuan. Furthermore, other semiconductor companies with significant net financing purchases from leveraged funds include Changchuan Technology, Haiguang Information, and GigaDevice, all with net purchases exceeding 300 million yuan. Among these, GigaDevice is one of the heavily weighted stocks held by "super retail investor" Ge Weidong, who held over 3.6 billion yuan worth of the company's shares as of the end of Q3 2025.
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