Recent volatility in the semiconductor sector has increased, with market focus gradually returning to industry fundamentals. The growth in AI demand, improvements in the memory cycle, and the trend of domestic substitution remain unchanged. As the core beneficiary segment of semiconductor capital expenditure, equipment and materials continue to attract attention for their long-term growth logic. According to Wind and exchange data, the Huatai-PineBridge Sci-Tech Semiconductor Equipment ETF (588710) has seen a cumulative net capital inflow of 6.924 billion yuan over the past month. Its latest scale and share count have reached 8.5 billion yuan and 2.7 billion units respectively, with the fund's share count hitting a new historical high and growing 374% year-to-date.
Taiwan Semiconductor Manufacturing (TSMC) has significantly increased its capital expenditure, which is expected to bring sustained benefits to the upstream semiconductor materials and equipment sector. On July 16, TSMC released its Q2 2026 financial report, showing a net profit of 706.6 billion New Taiwan Dollars, a year-on-year increase of 77.4%. Driven by extremely strong demand for AI computing chips, the company has substantially raised its full-year capital expenditure guidance from the previous $52-56 billion to $60-64 billion. TSMC's CEO attributed this to two main factors: firstly, persistently strong customer demand, with clients strongly urging TSMC to expand capacity in tandem; and secondly, equipment inflation pushing up procurement costs, necessitating a corresponding increase in the actual investment scale.
CICC noted that the global semiconductor equipment components sector is experiencing a historically rare wave of price increases across the entire supply chain. Pricing power within the semiconductor industry chain is structurally shifting from chip end-products towards the equipment and components segments. Component companies are typically smaller in scale with a high proportion of fixed costs, meaning price increases translate directly into profits. Furthermore, the production line expansion cycle is lengthy, typically 12-18 months, resulting in poor supply elasticity. Attention should be paid to the domestic substitution demand and pricing logic arising from extended delivery times for overseas suppliers of components like valves and piping, ceramic parts, RF power sources, and GAS BOXes.
The Huatai-PineBridge Sci-Tech Semiconductor Equipment ETF (588710) tracks the Sci-Tech Innovation Board Semiconductor Materials and Equipment Index. It offers high-purity exposure to the upstream semiconductor "materials + equipment" fields, with these industries cumulatively accounting for 87% of the index, giving it high sensitivity to wafer fab capital expenditure, memory expansion, and the domestic substitution process. Concurrently, the index has over 70% exposure to memory chip concepts and 58% exposure to "advanced packaging" concepts. Off-exchange investors can consider the Huatai-PineBridge SSE STAR Market Semiconductor Materials & Equipment Theme ETF Feeder Fund (Class A 024974 / Class C 024975).
The semiconductor equipment and materials sector faces relatively concentrated industry catalysts, but investors should be mindful of risks associated with high valuations and trading volatility. The valuation of the semiconductor equipment sector is already at historically high levels, and trading structures are relatively crowded. Profit-taking and a downturn in market sentiment could trigger significant volatility. Investors are advised to make rational judgments and invest cautiously based on their own risk tolerance.
Huatai-PineBridge Fund is one of China's first ETF managers, with over 19 years of experience in the index investment field. It has created transparent, convenient, and low-cost index tools for investors, such as the Huatai-PineBridge CSI 300 ETF (510300) and the Huatai-PineBridge A500 ETF (563360). As of the end of June 2026, the company's ETFs had cumulatively generated over 180.6 billion yuan in profits for holders over the preceding two years, making it one of only three public fund companies in the A-share market to achieve cumulative profits exceeding 160 billion yuan during that period.
Comments