It's time for the semiconductor industry to test its faith.
This morning, the semiconductor equipment ETF Zhaoshang (561980) fell over 2%, with Zhongwei Company, Northern Huachuang, and Changchuan Technology dropping over 3%, and SMIC down over 5%. However, Cambrian and Tuojing Technology showed strong gains, while Sanjia Technology (advanced packaging) hit the daily limit beautifully.
I believe everyone's soul-searching three questions are about to call back: Have semiconductor equipment stocks peaked? Can we still chase after the pullback?
First, it must be clear: after a big rise yesterday, it's prudent to avoid chasing high, and after a big drop today, it's time for rational thinking. In the upward cycle of semiconductors, severe fluctuations are never an end but a norm. Every emotional outburst is a stress test of confidence in holdings—at least for today, the catalytic logic of the dual storage expansion and Huawei's Tao (τ) law has not collapsed, the fundamentals have not collapsed, and once the chips have exchanged hands, what needs to turn back will naturally turn back.
Secondly, regarding the collective surge in the semiconductor sector following the release of Huawei's &#34;Tao Law&#34; yesterday, the immediate pullback today can be attributed to several reasons:
First, the short-term gains were too large, leading to concentrated profit-taking. The semiconductor equipment ETF Zhaoshang (561980) has risen over 70% this year. After consecutive surges, the chip structure is highly unstable; once there is any disturbance, short-term funds will inevitably flee, amplifying volatility.
Second, the wave of share reductions has created pressure on sentiment. According to Wind data, since 2026, the semiconductor sector has issued 489 share reduction announcements involving 65 leading companies, with total cashing out exceeding 80 billion yuan. On the evening of May 22, seven leading companies collectively disclosed share reductions.
However, the wave of reductions fermented over the weekend, and yesterday the semiconductor equipment sector still surged, mainly because the subjects of this reduction were mostly industrial capital and early-stage venture capital institutions. The reductions were not due to a deterioration in the company's fundamentals but rather because they had indeed made too much profit, leading to some emotional suppression.
Third, the short-term position congestion is indeed high; the semiconductor sector is now referred to as &#34;the most congested sector in A-shares,&#34; so funds entering without cost considerations need to go through a phase of chip cleaning.
However, despite the decline, several core long-term logic points have not changed.
1. Dual storage listing expansion: The rigidity of orders remains unchanged
Changxin Technology, China's first and the world's fourth-largest DRAM manufacturer, is scheduled for review on May 27. The prospectus reveals that it expects to achieve revenue of 110 billion to 120 billion yuan in the first half of 2026, with a net profit attributable to the parent company of 50 billion to 57 billion yuan. In the first quarter, it reported revenue of 50.8 billion yuan and a net profit of 24.76 billion yuan, a year-on-year increase of 1688%, proving Changxin's explosive potential.
Before Changxin's listing, the continuous surge in chip prices was indeed unsafe, requiring some fluctuations to wash out excess before there is room for further increases.
More critically, the capacity utilization rate is high. Data shows that Changxin's capacity utilization rates for 2024 and 2025 will reach 92.46% and 95.73%, respectively, indicating extreme tightness in storage capacity. Guojin Securities estimates that Changxin's equipment procurement demand in the second quarter of this year alone will reach 5 billion to 6 billion USD—this directly provides order sources for equipment manufacturers such as Northern Huachuang, Zhongwei Company, and Huahai Qingke
Yangtze Memory Technologies is also advancing synchronously. On May 19, it launched the IPO counseling filing, and the output of Plant 2 doubled from 30,000 wafers per month to 60,000. As the only 3D NAND manufacturer in China, it currently holds only about 8% of the global market share, indicating significant room for expansion compared to overseas giants.
For semiconductor equipment—the &#34;shovel-selling&#34; industry—the most fundamental demand equation is &#34;wafer fab expansion → buy equipment.&#34; The acceleration of the storage leader's IPO essentially extends the certainty of future expansions through capitalization.
2. Tao's Law: Not just a concept, but a product realization
Huawei officially proposed Tao (τ) Law at ISCAS 2026, with the core idea of replacing &#34;geometric scaling&#34; with &#34;time scaling,&#34; continuously compressing signal propagation delay through logical folding to enhance equivalent transistor density.
A key reason this concept can transform into a catalytic market trend is that it is not a distant vision but a solution that has already been implemented. Huawei revealed that over the past six years, it has designed and mass-produced 381 chips based on Tao's Law, covering multiple fields such as smartphones, AI computing, and communications.
The &#34;Kirin 2026&#34; mobile chip, set to debut in the fall of 2026, will be the first to fully adopt logical folding technology, achieving a 53.5% increase in transistor density, a peak frequency of 3.1GHz for the P-core, and a 41% improvement in energy efficiency. By 2031, it is expected that transistor density will reach levels equivalent to a 1.4nm process.
The significance of this solution lies in the fact that chip performance improvement no longer solely relies on the continuous reduction of process nodes, effectively avoiding the advanced process and GKJ bottlenecks faced by domestic alternatives, achieving a &#34;detour overtaking.&#34;
According to analysis from CITIC Securities, the realization of logical folding and 3D stacking will systematically drive new demands for ultra-fine pitch hybrid bonding, TSV etching, CMP equipment, etc.—equipment manufacturers will become the core beneficiaries in the process of implementing this technological route.
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【Can we still invest in equipment?】
However, having support does not mean one should blindly rush in. The current valuation position still requires a calm assessment.
Northern Huachuang: PE of about 86 times, a platform-type equipment leader benefiting from the expansion of two storage sectors and a wide coverage of processes, has a strong ability to digest valuations.
Zhongwei Company: PE of about 110 times, an etching equipment leader benefiting from high aspect ratio process upgrades, with a high valuation implying high growth expectations.
Cambricon: PE (TTM) as high as 300 times, facing the greatest valuation pressure among core targets. Morgan Stanley predicts that the self-sufficiency rate of domestic AI chips will evolve from 21% in 2024 to 86% in 2030, providing long-term imaginative space. However, in the short term, this asset's phase volatility is indeed the highest, and one needs to consider their holding period and risk preference before deciding on allocation ratios
If the expansion of major storage manufacturers proceeds as expected and equipment orders continue to increase, the profit growth over a three-year cycle can roughly offset the high PE of some leading chip companies. However, this inference still needs to be validated over time.
So the question returns to: &#34;Can we still get on board?&#34; — My answer is that rhythm is more important than position.
First, the biggest advantage of semiconductor equipment ETFs like Zhaoshang (561980) is not the daily fluctuations, but the structural balance. The CSI Semiconductor Index is one of the few indices in China that covers 100% of the four major industrial chains: equipment, materials, design, and manufacturing. The combined weight of Northern Huachuang and Zhongwei Company is about 28%, Cambrian and Haiguang Information about 15%, and SMIC about 5%, with the top ten concentration at 75%. The benefit of this structure is that when the four catalytic paths of storage expansion, domestic substitution, computing power release, and Tao's Law take effect simultaneously, assets can achieve relatively comprehensive participation without betting on a single link.
Second, for those who do not have a bottom position yet, the position after a significant drop is more cost-effective than chasing highs yesterday. The fundamentals of the sector have not changed fundamentally; today's adjustment is more about short-term profit-taking and cooling emotions, and the core order logic still holds. Gradually building positions and controlling rhythm is more prudent than making a one-time heavy bet on short-term fluctuations.
Third, for those who already have positions, there is no need to waver because of a single bearish candle. It is completely normal for the semiconductor equipment ETF Zhaoshang to experience a single-day adjustment after a cumulative increase of nearly 70% this year. What really needs to be examined is the underlying assets held — has there been any change in the expansion plans of leading storage companies? Has the growth rate of equipment orders slowed down? Has the real industrial value of Tao's Law been disproven? The current answers are all &#34;no.&#34;
What truly determines long-term returns is never about how accurately one times the market, but whether the core logic has weakened. The expansion cycle of the two storage companies is still accelerating, SMIC's orders and utilization rates are high, and Tao's Law provides a new dimension for the long-term evolution of the semiconductor industry, with equipment maintaining its role as the &#34;shovel seller&#34; upstream in the industrial chain

The Semiconductor Equipment ETF (561980) fell over 2% today, with companies like Zhongwei Company and Northern Huachuang dropping more than 3%. Despite increased market volatility in the short term, the fundamentals have not collapsed, and investors need to think rationally. The wave of reductions and the concentration of short-term profit-taking are putting pressure on sentiment, but the core logic remains solid in the medium to long term, especially as the support from orders for the expansion of the two storage facilities remains unchanged

同壁财经

China Merchants CSI Semiconductor Industry ETF

AMEC

NAURA

CCTech

SMIC

Cambricon

Piotech

SINOLINK SECURITIES

HWATSING

CITIC Securities Co., Ltd.

CITIC SEC

Hygon Information Technology

SMIC HK SDR 5to1

Two storage expansion + Tao τ law taking turns to go viral, can semiconductor equipment still be pursued?