The current slump in technology stocks represents a structural valuation reset, with AI hardware at its point of origin. From PCB to optical communications to memory, the hardware segments that were propelled higher over the past two years by the AI capital expenditure narrative are now undergoing a synchronized deflation of their bubbles. The trading session on October 26 served as a microcosm of this technology-sector bubble squeeze. Nanya New Material Technology Co.,Ltd. (688519.SH), a leading copper-clad laminate maker, closed down 12.49%, while Zhejiang Wazam New Materials Co.,Ltd. (603186.SH) and Goldenmax International Group Ltd. (002636.SZ) both hit the daily limit down. Semiconductor equipment, advanced packaging, silicon wafers, and optical modules all fell in tandem. Measured from July 1 through the October 26 close, the total market capitalization of the Shenwan electronics sector dropped from 27.25 trillion yuan to 19.14 trillion yuan, a contraction of 8.11 trillion yuan; the Shenwan communications sector fell from 8.25 trillion yuan to 6.34 trillion yuan, a shrinkage of 1.91 trillion yuan. Together, the two sectors vaporized 10.02 trillion yuan, while the market values of three leading stocks, Semiconductor Manufacturing International Corporation (688981.SH), Zhongji Innolight Co.,Ltd. (300308.SZ), and Foxconn Industrial Internet Co.,Ltd. (601138.SH), each fell below the trillion-yuan mark.
Electronics and Telecom Shed Over 10 Trillion Yuan Since July
On October 26, copper-clad laminates suffered the steepest declines of the day. Nanya New Material Technology Co.,Ltd. (688519.SH) closed down 12.49%, Zhejiang Wazam New Materials Co.,Ltd. (603186.SH) and Goldenmax International Group Ltd. (002636.SZ) both hit the limit down, Shengyi Technology Co.,Ltd. (600183.SH) fell 9.52%, and both Sinoma Science&Technology Co.,Ltd. (002080.SZ) and Baoding Technology Co.,Ltd. (002552.SZ) dropped more than 8.4%. Copper-clad laminate is the upstream material for PCBs, and its selloff quickly spread to the PCB segment itself, with Wus Printed Circuit(Kunshan)Co.,Ltd. (002463.SZ) falling 7.62% and Shennan Circuits Co.,Ltd. (002916.SZ) dropping 5.47%. Semiconductor equipment weakened in parallel, as Hangzhou Changchuan Technology Co.,Ltd. (300604.SZ) fell 10.65% and Shenzhen Seichi Technologies Co.,Ltd. (688627.SH) lost 9.31%. Optical chips and optical modules were not spared either: Linktel Technologies Co.,Ltd. (301205.SZ) tumbled 15.71%, Suzhou Dongshan Precision Manufacturing Co.,Ltd. (002384.SZ) fell 7.70%, Semight Instruments Co.,Ltd. (688808.SH) dropped 6% to close at 1,050 yuan, and Yuanjie Semiconductor Technology Co.,Ltd. (688498.SH) declined 5.42%.
The technology selloff on the 26th is a microcosm of the sustained bubble deflation in tech stocks over the past four months. Starting from July 1 and ending at the October 26 close, the total market value of the Shenwan electronics sector fell from 27.25 trillion yuan to 19.14 trillion yuan, a decrease of 8.11 trillion yuan, or 29.76%; the Shenwan communications sector fell from 8.25 trillion yuan to 6.34 trillion yuan, a decrease of 1.91 trillion yuan, or 23.12%. Combined, the two sectors shed 10.02 trillion yuan. At the sub-industry level, the distribution of market value losses was uneven and highly concentrated in the AI hardware chain. Within the electronics sector, the semiconductor segment's total market value fell from 15.40 trillion yuan to 11.70 trillion yuan, a decrease of 3.70 trillion yuan, or 24.03%; the components segment, which covers popular AI hardware tracks such as PCB, copper-clad laminate, and MLCC, saw its total market value drop from 3.87 trillion yuan to 2.43 trillion yuan, a decrease of 1.44 trillion yuan, or 37.21%, making it the electronics sub-sector with the steepest decline. The copper-clad laminate stocks that hit the limit down en masse on October 26 belong to the components segment. Within the communications sector, the divergence was even more dramatic. The communications equipment segment's total market value fell from 5.37 trillion yuan to 3.08 trillion yuan, a decrease of 2.29 trillion yuan, or 42.67%, while the communications services segment's total market value rose from 2.88 trillion yuan to 3.26 trillion yuan over the same period, an increase of roughly 380 billion yuan. The communications equipment sub-segment encompasses optical modules, optical components, and optical fiber, with optical communications being the most concentrated area of capital outflow on the equipment side. Based on the 41 constituent stocks of the Wind CPO index, total market value fell from 5.72 trillion yuan on July 1 to 3.07 trillion yuan at the October 26 close, a decline of 46.23%, the largest among major sub-tracks. It should be noted that this index includes companies such as Suzhou Dongshan Precision Manufacturing Co.,Ltd. (002384.SZ), Victory Giant Technology(Huizhou) Co.,Ltd. (300476.SZ), and Suzhou Everbright Photonics Co.,Ltd. (688048.SH), which are classified under electronics in the Shenwan system.
Trillion-Yuan Darlings Beat a Collective Retreat
The 10.02 trillion yuan gap ultimately landed on individual companies, covering nearly every popular AI hardware stock. The optical module trio of Yizhongtian was the most conspicuous example. Zhongji Innolight Co.,Ltd. (300308.SZ) saw its total market value drop from 1.364 trillion yuan on July 1 to 700.3 billion yuan on October 26, a decrease of 663.7 billion yuan, or 48.7%; Eoptolink Technology Inc.,Ltd. (300502.SZ) fell from 802.5 billion yuan to 351 billion yuan, a decrease of 451.5 billion yuan, or 56.3%; adding Suzhou Tfc Optical Communication Co.,Ltd. (300394.SZ), the three companies together vaporized 1.21 trillion yuan. Elsewhere in the supply chain, Yuanjie Semiconductor Technology Co.,Ltd. (688498.SH), Accelink Technologies Co.,Ltd. (002281.SZ), Hengtong Optic-Electric Co.,Ltd. (600487.SH), and Yangtze Optical Fibre And Cable Joint Stock Limited Company (601869.SH) saw declines of 50.3%, 49.5%, 52.9%, and 41.4%, respectively. The PCB segment also saw massive pullbacks. Shengyi Technology Co.,Ltd. (600183.SH) fell from 400.3 billion yuan to 243.5 billion yuan, a decline of 39.2%; Shennan Circuits Co.,Ltd. (002916.SZ) dropped 40.3%; Wus Printed Circuit(Kunshan)Co.,Ltd. (002463.SZ) fell 31.8%; and Goldenmax International Group Ltd. (002636.SZ) declined 51.1%. Suzhou Dongshan Precision Manufacturing Co.,Ltd. (002384.SZ) dropped from 451.1 billion yuan to 193.1 billion yuan, a decline of 57.2%. Memory was the deepest retrenchment within the electronics sector. Gigadevice Semiconductor Inc. (603986.SH) fell from 541.8 billion yuan to 194.6 billion yuan, a decline of 64.1%; Shenzhen Longsys Electronics Co.,Ltd. (301308.SZ), Shenzhen Techwinsemi Technology Co.,Ltd. (001309.SZ), and Biwin Storage Technology Co.,Ltd. (688525.SH) all saw declines exceeding 60%.
Alongside the market value shrinkage, the trillion-yuan market cap club in the electronics and communications sectors also saw vacancies. Foxconn Industrial Internet Co.,Ltd. (601138.SH) saw its total market value fall from 1.389 trillion yuan to 927.3 billion yuan, Semiconductor Manufacturing International Corporation (688981.SH) dropped from 1.322 trillion yuan to 880 billion yuan, and Zhongji Innolight Co.,Ltd. (300308.SZ) also fell below the trillion-yuan threshold.
Overall, the over-10-trillion-yuan market value retrenchment in the electronics and communications sectors since July is the result of a combination of elevated valuations, crowded trading, external uncertainties, and pressure to validate earnings. The concentrated decline on October 26 further demonstrates that the AI hardware supply chain remains in a phase of bubble digestion and valuation repricing. The broad retreat at the individual stock level reflects a shift in the market's pricing logic for technology growth stocks. Over the past two years, factors such as AI computing power, semiconductor localization, and rising optical module prosperity jointly drove sustained valuation increases for related assets. Some companies' share prices had already risen substantially before earnings were realized, to some extent borrowing from future growth expectations. Once risk appetite declines, high-valuation assets become more vulnerable to concentrated selling. Changes in the external environment are also affecting risk asset pricing. Global geopolitical uncertainty, fluctuating overseas interest rate expectations, and policy disruptions in the technology supply chain have all made capital more cautious toward high-volatility growth stocks. Compared with low-position assets such as dividend and consumer stocks, the electronics and communications sectors had concentrated institutional holdings and high trading crowding in the earlier period, making them more prone to liquidity discounts when risk appetite contracts.
More critically, the market is re-examining the sustainability of earnings growth. During the third-quarter reporting window, capital is no longer satisfied with merely high growth but is paying closer attention to whether growth can continue to exceed expectations and whether single-quarter profit can continue to improve sequentially. As of October 26, Zhongji Innolight Co.,Ltd. (300308.SZ), Eoptolink Technology Inc.,Ltd. (300502.SZ), Foxconn Industrial Internet Co.,Ltd. (601138.SH), Shengyi Technology Co.,Ltd. (600183.SH), and Gigadevice Semiconductor Inc. (603986.SH) had not yet disclosed their third-quarter reports. Among companies that have disclosed, sequential earnings declines have already appeared: Hygon Information Technology Co.,Ltd. (688041.SH) reported third-quarter net profit attributable to shareholders of 1.048 billion yuan, down 5.7% from 1.111 billion yuan in the second quarter; Han'S Laser Technology Industry Group Co.,Ltd. (002008.SZ) fell from 934 million yuan to 889 million yuan; Jiangsu Etern Company Limited (600105.SH) dropped from 345 million yuan to 240 million yuan, a decline of 30.5%; and Tangshan Sunfar Silicon Industries Co.,Ltd. (603938.SH) fell from 80.27 million yuan to 57.91 million yuan, a decline of 27.9%. Although Cambricon, JCET, and Fenghua Advanced Technology did not see sequential declines in third-quarter net profit, their growth rates have narrowed significantly. The continued downtrend in technology stock valuations does not mean the fundamentals of the relevant companies have reversed, but for investors, when single-quarter profit growth struggles to continue exceeding expectations or maintaining high sequential growth, the basis for the market to assign high valuations weakens. Valuation expansion for growth stocks often depends on continuous upward earnings revisions, and once investors begin to worry that the peak of prosperity is near, the valuation center may shift downward first.
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