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US-listed AI hardware stocks suffered a sharp sell-off: On November 5, the PHLX Semiconductor Index (SOX) closed down 12% at 9035.38, marking its steepest single-day drop since 2020. The Nasdaq 100 fell 6.5%, wiping out USD 2.3 trillion in market value. The memory segment (SanDisk -22%, Micron -17%), optical communications segment (Lumentum -18%, Marvell -16%), and equipment segment (AMAT -10%) all tumbled heavily.
NVIDIA is shifting its focus toward optimizing “memory efficiency”: The per-GPU HBM capacity of Vera Rubin NVL72 rises by only around 3%, while inference throughput per unit cost can improve by up to 30x versus GB300. This may marginally slow the growth rate of per-unit HBM consumption.
Domestic breakthrough achieved in upstream substrate materials: The Xi’an quartz electronic fabric project of Lite Quarz, a subsidiary of Lite Optoelectronics, has topped out. It targets a monthly output of 1 million meters by Q2 2027, targeting the core high-frequency high-speed CCL base material segment long dominated by Japanese players.
MediaTek recruits Intel’s former packaging lead: Navid Shahriari will join as Senior Vice President on November 9 to oversee advanced process technology and packaging & testing. The company is pursuing a dual-track strategy of TSMC CoWoS and Intel EMIB.
Nexchip ramps up 12-inch wafer capacity: It plans to inject RMB 9.1 billion into Jingyi Integration together with related parties (Phase IV total investment of RMB 35.5 billion, monthly capacity of 55,000 wafers). It also proposes an A-share share repurchase of up to RMB 800 million and investment in 28nm mass-production equipment.
In-depth Analysis
Optical Communications / Optical Chips: The overseas segment led the sell-off, with Lumentum down 18%, Marvell 16% and Coherent 15%. The pullback stemmed from unwinding of crowded AI trades rather than order changes. Domestic industry progress continues: MTC’s monthly BOSA shipment has reached 10 million units; DFB optical chips below 25G are in volume shipment, while 70/100/200mW CW DFB chips are undergoing qualification. Luster’s OCS has secured small-batch orders for automated testing at domestic optical module manufacturers. Kingboard Electronics ships PCBs for 800G/1.6T optical modules in volume, with no reduction or postponement of AI orders, and maintains a positive outlook on demand for NPO/CPO/CPC.
Advanced Packaging & Testing: MediaTek has appointed Navid Shahriari, former EVP of Packaging, Test and Wafer Foundry Technology at Intel, as Senior Vice President. Its dual-track strategy combining CoWoS and EMIB helps diversify packaging capacity, including ASICs for Google TPU. On upstream materials, the first looms for Lite Optoelectronics’ quartz electronic fabric have arrived, targeting a monthly output of 1 million meters by Q2 2027 to supply high-frequency high-speed CCL for AI servers and switches. E-Start Technology has closed its Series C financing, focusing on board-level system packaging and testing. No new ABF substrate quotes today. The backdrop remains Ibiden’s JPY 151 billion capacity expansion and TPCA’s view that supply tightness will persist through 2027.
SiC / Power Semiconductors: No major updates today. The earlier thesis that domestic SiC has shifted from “following” to “neck-and-neck competition” remains intact, after Xinyueneng and Xinjuneng’s 1400V SiC MOSFET main-drive modules rolled out in volume at StarDrive Technology and entered regular supply to tier-one three-electric players. Supply pressure for automotive-grade memory and power devices continues to build.
Memory & Compute Chips: JPMorgan notes that major memory stocks have corrected by an average of 45% from their 2026 peaks and the SOX is down 29%, yet DRAM/NAND markets remain tight with expanding LTAs, and fundamentals are expected to stay robust through 2028. Automotive-grade memory in China is entering a large-scale adoption window: major fabs are tilting capacity toward AI, pushing up automotive memory prices and lengthening lead times. Automakers are hedging via long-term price-locked agreements and domestic qualification awards. Weiheng Qiyuan completed two financing rounds within one month. It targets the inference “memory wall” with 3D DRAM stacking, near-memory computing and RISC-V, with nearly RMB 10 billion in customer demand in the pipeline.
Equipment & Materials: Advanced Micro-Fabrication Equipment (AMEC) recorded all-time high volume and growth for new orders in 2026. ACM Research Shanghai holds outstanding orders of RMB 17.073 billion (+88.2%), with new orders in the first three quarters rising 147%. Qiaoyuan Co., Ltd. plans to invest RMB 3.158 billion in an integrated high-purity fluorine electronic specialty gas project. Electronic fabric prices keep rising in November with full capacity, and substrate tightness is propagating downstream to CCL and substrates.
Wafer Foundry: Nexchip plans to inject RMB 9.1 billion into Jingyi Integration for Phase IV of its 12-inch fab (40/28nm CIS, OLED and logic processes). It is also launching an A-share share repurchase of up to RMB 800 million and seeking authorization for an H-share repurchase of up to HKD 600 million, alongside investment in mass-production equipment for 28nm logic control chips, balancing capacity expansion and shareholder returns.
Policy / Macro Backdrop: Democrats may expand their majority in both houses after the US midterm elections, stoking market concerns over stricter regulation of data center approvals and power costs. Microsoft is tightening reviews on selected projects from Nebius, IREN and Nscale. China’s Ministry of Commerce stated it will continue refining its export control system. Apple plans to issue around USD 7 billion in bonds, extending the AI infrastructure financing wave among large tech firms.
Daily Investment Tips
1. Following the SOX’s 12% single-day drop and the 45% pullback among leading memory names, the divergence between fundamentals and valuation creates room for an oversold rebound — conditional on no downward revision to capex guidance from North American CSPs. Key risks stem from constraints on 2027 spending brought by tighter AI financing conditions (bond markets, power supply) and stricter data center permitting. On the technology roadmap, if NVIDIA’s approach of trading memory efficiency for throughput (with only 3% HBM capacity growth) is widely adopted, the growth rate of per-unit HBM consumption may fall below linear extrapolation. Segments with relatively higher certainty include upstream substrate materials (quartz electronic fabric, electronic fabric, copper foil) and order delivery for domestic semiconductor equipment.
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