After the tech stock dip in July, why are materials more worth watching?

July 2026 was a month of extreme volatility for investors positioned in the technology growth sector. Looking back at the overall market performance in July, the STAR 50 Index experienced an intramonth maximum drawdown exceeding 23%. The collective pullback of previously high-flying sectors such as electronics and telecommunications, coupled with the market sentiment shock caused by the concentrated exit of leveraged funds, has led to divergent views on the long-term logic of the technology main theme.

However, looking back at the market trends on the first trading day of August, on July 31, driven by the dual forces of the continuous advancement of overseas AI commercialization and the recovery of the memory chip industry, China's A-share semiconductor sector saw a strong rebound. The STAR Chip Index surged over 10% during intraday trading, and the upstream materials sector warmed up simultaneously.

After fully experiencing this market cycle of "deep correction followed by a strong rebound," it can be found that most targets wrongly killed by market sentiment during this adjustment possess solid industrial fundamentals. The semiconductor materials sector is a core representative of this.

This adjustment belongs to emotional clearing, not an industry turning point

Many institutional market views believe that the recent significant adjustment in the technology sector stems from valuation repair caused by market sentiment fluctuations and phased liquidity changes. The industry's own prosperity cycle remains in an upward channel, and no fundamental downward turning point has appeared yet.

This judgment mainly relies on three major industrial fundamentals:

First, the expansion pace of downstream wafer fabs continues. Demand for AI computing power maintains high prosperity, and leading cloud vendors have a strong willingness to expand capital expenditures. In 2026, the overall capital expenditure of global wafer fabs remains high, and the capacity expansion of memory chips and wafer manufacturing is gradually entering a stage of concentrated volume release.

Second, industry signals of simultaneous volume and price increases have emerged in semiconductor materials. The market price of tungsten hexafluoride rose by more than 230% year-on-year, and the price increases of core semiconductor materials such as photoresist and wet electronic chemicals generally exceeded 30%. The industry as a whole presents a trend of tight supply and demand and synchronized improvement in volume and price.

Third, domestic substitution has ushered in a window of accelerated certainty. China has included some high-end semiconductor materials in the export control list, covering core categories such as EUV photoresist, large silicon wafers, and high-end target materials. This forces local semiconductor material enterprises to accelerate technological breakthroughs and capacity introduction. Domestic materials are officially moving from the concept verification stage to the scale-based landing and volume release stage.

In short, the deep adjustment of the technology sector in July was essentially a concentrated clearing of market leveraged funds and pessimistic emotions, which did not change the industry's real industrial prosperity and growth logic.

Semiconductor Materials: A Core Track with Long-Term Cycles and High Certainty

There is a clear industry rule in the semiconductor industry chain: equipment comes first, materials follow.

When wafer fabs start an expansion cycle, equipment orders will land and realize first; and when production lines are officially put into operation and mass production continues, semiconductor materials, as necessary consumables for production, will welcome a longer-cycle and more stable demand growth curve.

Currently, the rapid iteration of the AI server industry has triggered the explosion of the HBM and advanced packaging industries. Among them, the CoWoS-L packaging process is expected to account for 70% of the market share in 2027. The upgrade of advanced processes and high-end packaging directly increases the single-unit usage of core materials such as polishing slurry, epoxy molding compound, and wet electronic chemicals. The industry has officially entered a multi-year consumable dividend cycle.

In addition, the semiconductor materials sector also has two core advantages easily ignored by the market:

First, the sector's valuation has been sufficiently digested. During the systemic adjustment of the technology sector in July, the drawdown of core material targets such as Anji Technology and NSIG was higher than that of most equipment leaders. The overall valuation of the sector fell to a one-year low, highlighting its valuation cost-effectiveness.

Second, interim report performance begins to concentrate realization. Taking CSSC Special Gas as an example, the company's net profit attributable to parents increased by 95.63% year-on-year in the first half of 2026, practically verifying the positive transmission logic of "order landing and performance realization" in the semiconductor materials sector.

Capital Layouts Against the Trend, Sector Logic Recognized

Against the backdrop of recovering industry fundamentals and stabilizing valuations at low levels, mainstream capital has begun to layout against the trend.

According to Wind statistical data, as of July 28, among the top ten products with net ETF fund inflows in July, three were semiconductor materials and equipment theme ETFs, with cumulative net inflows exceeding 42 billion yuan.

Among them, the STAR New Materials ETF tracking the SSE STAR New Materials Index (000689) has achieved consecutive six-day overall net fund inflows as of July 30, and the trading activity of the sector continues to increase.

This behavior of market capital "layouting more as the adjustment goes on" is not simply short-term bottom-fishing, but more likely a pre-layout and pricing by market capital on the dual growth logic of consumable rigidity + domestic substitution.

After every round of high-level divergence and deep adjustment in technology growth tracks, capital will eventually return to the essence of the industry: whether it is AI computing power, humanoid robots, or 6G communication, solid-state batteries, the landing and iteration of all high-end technology industries ultimately rely on the breakthrough and mass production of underlying core materials.

From the perspective of institutional time dimension judgment, look at sector valuation repair in the short term of half a year to one year, and look at the implementation and realization of industrial logic in the medium to long term of two to three years. 2027 to 2028 will be the peak period for the concentrated expansion of domestic storage capacity, corresponding to the demand release cycle of the semiconductor materials sector just beginning, with sufficient room for industry growth.

Risk Warning: The data mentioned in this article is only for sorting out objective market information and does not constitute investment advice. The market has risks, and investment requires caution.