Last week, from June 22nd to 26th, the semiconductor industry chain experienced a significant surge. According to data, the CSI Semiconductor Materials & Equipment Index climbed over 15% for the week, while the Shanghai Stock Exchange STAR Market Semiconductor Index rose nearly 9%. On the capital flow front, a group of 44 semiconductor and chip-related ETFs, including the E Fund Shanghai Stock Exchange STAR Market Semiconductor ETF (589130) and the E Fund Semiconductor Equipment ETF (159558), collectively saw net inflows exceeding 26 billion yuan last week, making it the most concentrated direction for market fund inflows.
Both investment avenues are attracting capital, yet the underlying index characteristics are distinctly different.
The CSI Semiconductor Materials & Equipment Index selects 40 listed companies involved in semiconductor materials and equipment from the A-share market, focusing on the upstream segment of chip manufacturing. In terms of sector composition, semiconductor equipment accounts for approximately 65.78%, semiconductor materials for about 23.41%, and electronic chemicals for roughly 9.74%, with these three categories combining to nearly 99%. This index is almost entirely exposed to the semiconductor upstream sector and is highly sensitive to the trends of equipment localization and downstream capacity expansion.
The Shanghai Stock Exchange STAR Market Semiconductor Index selects 50 chip-related listed companies from the STAR Market, covering the complete chain from chip design and wafer fabrication to packaging and testing. Regarding sector distribution, digital chip design is the largest weighting sector at around 47.66%; semiconductor equipment accounts for approximately 18.67%, integrated circuit manufacturing for about 15.41%, and it also covers analog chip design, semiconductor materials, and other areas. This index includes both chip design and manufacturing segments, with its core exposure tied to the logic of surging AI computing power demand.
The differing positioning of these two indices within the industry chain becomes even clearer when examining their top ten constituent stocks.
The top ten constituents of the CSI Semiconductor Materials & Equipment Index are uniformly companies in the semiconductor equipment and materials sectors. Leading domestic equipment manufacturers such as Advanced Micro-Fabrication Equipment Inc. China (AMEC), Naura Technology Group Co.,Ltd., and Piotech Inc. are all included, with the top ten holdings combining for a weight of approximately 65.37%. In contrast, the top ten constituents of the STAR Market Semiconductor Index span both chip design and manufacturing. Companies like Cambricon Technologies, Montage Technology, and Hygon Information Technology are leaders in AI chip design, while Semiconductor Manufacturing International Corporation (SMIC) and Huahong Grace Semiconductor Manufacturing Corporation are leading wafer foundries. Equipment leaders like Advanced Micro-Fabrication Equipment Inc. China (AMEC) and Piotech Inc. also hold positions. The combined weight of its top ten holdings is about 64.10%.
From an investment rationale perspective, the two indices correspond to two core driving forces within the semiconductor industry.
The core logic for the CSI Semiconductor Materials & Equipment Index is the synergy between localization and downstream capacity expansion. The enactment of measures like the CHIPS Act has further intensified the urgency for domestic equipment. Domestic wafer fabs are accelerating the localization of their equipment supply chains. On the demand side, AI is driving growth in chip computing power requirements, leading to strong expansion intentions among downstream manufacturers and a continuous increase in equipment orders. The volatility potential of this index primarily stems from the acceleration of the localization process—as domestic equipment transitions from being usable to being high-quality, there is significant room for market share growth.
The core logic for the STAR Market Semiconductor Index is the demand for AI computing power coupled with the rise of domestic chips. With the explosion in demand for large model training and inference, domestic AI chip companies are entering a period of performance realization. The rapid revenue growth of companies like Cambricon and Hygon validates the commercial pathway for domestic computing power. The volatility potential of this index mainly comes from the earnings realization of AI chips—as domestic chips move from concept to profitability, their valuations may undergo a reassessment.
These two indices are not substitutes for each other; rather, they serve as allocation tools for different segments of the semiconductor industry chain. Investors need to determine their own allocation direction. If one is more optimistic about the long-term potential of semiconductor equipment localization and wishes to focus on the certainty of the upstream industry chain, the CSI Semiconductor Materials & Equipment Index represents a purer choice. If one is more bullish on the explosion of demand for advanced process nodes driven by AI computing power and wishes to cover both design and manufacturing segments, the STAR Market Semiconductor Index provides a more comprehensive exposure.
Regarding corresponding investment products, the E Fund Semiconductor Equipment ETF (159558) tracks the CSI Semiconductor Materials & Equipment Index, while the E FUND SHANGHAI STOCK EXCHANGE STAR MARKET SEMICONDUCTOR TRADING OPEN-END INDEX SECURITIES INVESTMENT FUND (589130) tracks the Shanghai Stock Exchange STAR Market Semiconductor Index. Investors can search for these product codes within their brokerage apps or market platforms to make purchases.
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