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Aftershocks from NVIDIA’s earnings report lingered on. On August 27, NVIDIA surged 8.7% in US trading, adding USD 442 billion to its market capitalization in a single day. Reports indicate it plans to acquire Hugging Face for USD 12.9 billion and has suspended its revenue‑share financing programme for AI cloud vendors amid antitrust scrutiny. Some institutions have set a target valuation of USD 10 trillion for the company.
Storage capacity expansion accelerates. SK Hynix kicked off construction of its USD 4 billion advanced storage packaging plant in Indiana, USA, with mass production of HBM4E scheduled for H2 2029. Its CEO warned the memory shortage could persist until the end of 2030. Kioxia and SanDisk intend to jointly invest around USD 31 billion to expand NAND production capacity in Japan.
SMIC delivered better‑than‑expected interim results. First‑half revenue reached RMB 38.635 billion (+19.4%), with net profit at RMB 4.467 billion (+94.2%). Q2 net profit rose 128% quarter‑on‑quarter on higher wafer shipment volumes and average selling prices, validating the price‑up cycle for mature process nodes.
The silicon wafer price‑hike cycle is confirmed. Shin‑Etsu, SUMCO and GlobalWafers implemented synchronized price adjustments between May and June: standard 12‑inch wafers rose 5%‑8%, while high‑end AI‑specific wafers climbed 18%‑22%. Silan applied a full‑line price increase of 10%‑15% in July. China’s self‑sufficiency rate for domestic 12‑inch silicon wafers stands at merely ~10%, leaving substantial import‑substitution headroom.
Apple will unveil its first foldable iPhone at the September 9 launch event, lifting the full‑year shipment target to roughly 10 million units. Shanghai released the application guidelines for its new‑generation optical communication special initiative dubbed the “Intelligent Computing Optical Network”, creating dual momentum from policy support and end‑product innovation.
In-depth Analysis
Optical Communication / Optical Chips: Lumentek plans to inject no more than USD 150 million in capital to build an intelligent manufacturing base for 800G/1.6T high‑speed optical modules in Malaysia. Eoptolink reported sustained shipment growth for 1.6T products, with faster volume ramp‑up scheduled for the second half of the year. Zhongji Innolight has been included in the Stock Connect list for Hong Kong‑traded securities. Institutional estimates put the 2026 market size of high‑end 800G+1.6T optical modules at approximately USD 14.6 billion, while leading 1.6T production capacity can only cover 70%‑80% of total demand. Morgan Stanley forecasts the AI optical module market will expand from USD 18 billion in 2025 to USD 102 billion by 2028, representing a CAGR of roughly 78%. Polarization‑maintaining fiber (PMF), a key incremental component for CPO switches, has been highlighted in recent industry research reports.
Advanced Packaging: No major new updates for today. Previously covered themes include full‑capacity spillover from CoWoS production, a 30% price hike for ABF films, and import‑substitution progress for CBF/NBF/GBF build‑up films. CINNO projects downstream PCB industry investment in H2 will focus on R&D for AI‑compute PCBs, high‑order HDI boards and advanced packaging substrates, sustaining the boom for substrate products.
SiC / Power Semiconductors: Fujian’s 15th Five‑Year Plan explicitly builds a full‑chain compound‑semiconductor industrial cluster anchored in Xiamen, targeting mass‑production capacity upgrades for SiC/GaN substrates and epitaxial wafers. According to JCET Insights, United Nova Technology (UNT) turned profitable for the first time in H1, with AI‑business revenue rising by 84%. The firm plans a USD 20 billion capacity expansion; monthly output will exceed 500,000 wafers upon completion of Phase‑IV construction. Luxshare Precision’s SiC technology has entered the first tier, with critical breakthroughs in the development of 12‑inch substrates. Novosense posted H1 revenue of RMB 2.54 billion (+66.73%), achieving its first half‑year profit since its IPO.
Storage & Compute Chips: SK Hynix has broken ground on its US facility, which will serve as a core domestic HBM manufacturing base in America. Samsung and SK Hynix will ramp 8‑layer HBM4 supplies to NVIDIA in the second half of the year. The over‑allotment option for Changxin Technology’s IPO has been fully exercised, expanding its total share capital to 67.884 billion shares. Qualcomm has partnered with Samsung, SK Hynix and TSMC to commercialize High‑Bandwidth Compute (HBC) chips. A‑share storage‑related stocks stayed active, with Demingli and Dapu Micro hitting daily 10% price limits.
Equipment & Materials: SEMI statistics show global silicon‑wafer shipments reached 3,573 million square inches in Q2, up 7.4% year‑on‑year. An AI server consumes roughly 3.8 times the volume of 12‑inch silicon wafers compared with a general‑purpose server, while heavily‑doped HBM silicon‑wafer consumption triples that of mainstream DRAM products. From January to July, profits across China’s integrated‑circuit industry surged 18.5‑fold year‑on‑year.
Wafer Fabrication: SMIC shipped 5.379 million 8‑inch‑equivalent wafers in H1 (+14.9%), with average selling prices (ASP) climbing to RMB 6,667. First Shanghai initiated a Buy rating with a target price of HKD 120. Hua Hong’s H1 net‑profit growth of 437% was previously disclosed.
Policy & Macro Environment: Trump declared a national emergency over foreign‑manufactured power‑grid equipment in the United States; China voiced opposition to the over‑generalization of national‑security concepts. Shanghai released application guidelines for its “Intelligent‑Compute Optical Network” optical‑communication special programme. Fujian issued its compound‑semiconductor development blueprint under the 15th Five‑Year Plan. Domestic IPO fundraising totalled RMB 97.61 billion in July, with Changxin Technology contributing RMB 66.61 billion of the proceeds.
Daily Investment Tips
1. Resonant dual price‑hike cycles for memory and silicon wafers: Capacity allocation by memory manufacturers for 2027 is largely finalised, and the three major silicon wafer suppliers have rolled out coordinated price adjustments. Upstream material cost increases are passing down the industrial chain. Focus on players with high pricing flexibility and accelerated import‑substitution validation in segments including silicon wafers, ABF substrates and specialty gases.
2. Real momentum mixed with speculative froth across the NVIDIA supply chain: The 70% growth guidance for FY2028 underpins the medium‑term prosperity of the compute hardware chain. Nevertheless, the company’s voluntary suspension of revenue‑sharing financing arrangements signals antitrust and business‑model risks. Watch out for near‑term volatility at elevated valuations; priority should be given to optical module, substrate and equipment players with high order visibility.
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