The stock prices of NVTS and Hua Hong diverged today.

Today, the US stock $Navitas Semiconductor(NVTS.US) closed at $28.88, down 9.2%, while the Hong Kong stock $HUA HONG GRACE(01347.HK) closed at $169.70, up 11.4%. At the two ends of the same wave of AI data center + new energy vehicle trend, the directions are completely opposite:

Navitas Semiconductor was founded in Silicon Valley, USA, in 2014, initially focusing on gallium nitride (GaN) power semiconductor integrated ICs. Traditional power semiconductors are made of silicon (standard MOSFETs), but silicon has physical limits, with switching speed, voltage tolerance, and loss reaching a bottleneck. GaN (gallium nitride) and SiC (silicon carbide) are new-generation compound semiconductor materials, offering faster switching speeds, lower losses, and high-temperature resistance—simply put, silicon is a regular diesel engine, while GaN/SiC is the turbocharged version. For the same power, they are smaller in size and more efficient.

The main applications of GaN/SiC are in three scenarios: First, AI data center PSUs—NVIDIA H100/H200 racks require 20-40kW of power. Traditional silicon devices have conversion efficiency of 92-94%, while GaN can achieve 96-98%, immediately saving a chunk of electricity costs for the entire data center. Second, new energy vehicle fast charging and OBCs (on-board chargers)—BYD, Tesla, and Aito are all transitioning to 800V high-voltage platforms, making GaN/SiC essential for this path. Third, consumer fast chargers—the 65W, 100W PD fast charging adapters you buy, which can be as small as a matchbox, rely on GaN technology.

NVTS's core barrier in the GaN field is "integration"—it doesn't just sell a single GaN transistor but packages the driver IC and GaN together into a single chip (GaNFast), which customers can use directly. This IC-based approach has already been validated in the fast charging market, and now the company is applying the same technology to AI server PSUs.

Looking at the news from the past month:

May 13: Mitsubishi UFJ Asset Management made a small position of 67,762 shares, setting the stage early.
May 14: Well-known macro investor Citrini Research strongly recommended the compound semiconductor sector. Wolfspeed surged, and NVTS followed.
May 20-21: NVTS rose 18-19% consecutively in the pre-market, with options calls skyrocketing 333% in a single day, and retail investors began chasing in large numbers.
May 22: NVTS rose 16.69% in a single day, hitting a new high, and the company showcased new solutions at an AI data center exhibition. I would label this day as a "genuine fundamental positive."
May 26 (yesterday): NVTS continued +8.5% pre-market and extended gains in the night session, with cumulative gains possibly exceeding 50% over five consecutive trading days.
May 27 (today): Peaked at a high, fell below -10% during the session, and closed -9.2%. A typical "positive catalyst realization + short-term overbought" reversal.

So why did Hua Hong rise 11% on the same day? Because Hua Hong's script is completely different. As the second-largest wafer foundry in mainland China, Hua Hong focuses on 8-inch and 12-inch specialty process lines—specialty processes like IGBT, MOSFET, analog RF, and power management. Since 2024, it has prioritized SiC/GaN foundry capacity (Wuxi 12-inch fab), making it one of the main players in domestic compound semiconductor foundry. Today, on May 27, ChangXin Memory's IPO passed the review in the A-share market, and the narrative of domestic memory/compound semiconductor substitution exploded, with funds spreading from A-shares to leading Hong Kong stocks.

To summarize: NVTS is the "ARM of the GaN era," focusing on design + IP, asset-light but betting on technological leadership. Hua Hong is the "TSMC of the GaN era" (though far smaller in scale), asset-heavy in foundry, betting on capacity expansion and yield ramp-up. Both are riding different segments of the same wave—upstream design peaked and cashed out short-term, while midstream capacity is still in the early stages of catching up.

For trading now, I think a few points should be noted:

(1) This wave of NVTS is essentially event-driven + thematic clustering, rising from $13 to $32 in less than a month. Today's -9% is not a peak signal but is no longer a low-risk buying point. The kind of one-day +16.69% rally seen on May 22 will not return anytime soon.

(2) Compound semiconductors indeed have long-term logic, but NVTS is still losing money financially, relying on the realization of AI PSU orders in the next 2-3 years. If Q3 earnings don't deliver $100M+ quarterly revenue, the market will quickly reprice it.

(3) If you want to play this sector but fear stepping on landmines, Hua Hong is much safer than NVTS—Hua Hong has actual foundry capacity, government orders as a backstop, and a reasonable PE. Its upside potential is smaller than NVTS's, but so is its downside risk.

I think NVTS's 9% drop is not the end of the compound semiconductor story but the inevitable unwinding of crowded trades after momentum funds became too concentrated. Hua Hong's 11% rise on the same day, on the contrary, validates that the sector is still running, with funds just rotating from the US stock side to the Hong Kong stock side. In the short term, I won't catch NVTS's falling knife but will add Hua Hong to my watchlist—it's the relatively under-hyped segment of this narrative.