Daily Semiconductor Investment Insight | October 20, 2026

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The Philadelphia Semiconductor Index halted its eight-session losing streak, with the memory and semiconductor sectors leading the gains. SanDisk rose 5%, while SK Hynix and Marvell Technology both climbed 4%. That said, Goldman Sachs noted that hedge funds are offloading tech stocks at the fastest pace since 2016, with the semiconductor segment seeing the largest sell-off. Net leverage has fallen to a one-year low of 48.6%.

TrendForce: The global optical fiber supply-demand gap will reach 180 million core-kilometers in 2026. Spot prices are set to rise 2.8x to 5x year-on-year, and supply tightness will persist at least through 2028. Data center optical fiber demand will grow 32% year-on-year to 91.6 million core-kilometers.

Xinlian Integrated reported Q3 revenue of RMB 3.196 billion (+65.87% YoY), net profit attributable to parent of RMB 412 million (+240.66% YoY), and a quarterly gross margin of 29.55% (up 24.8 percentage points YoY). Its SiC and power foundry businesses are entering a phase of accelerated profitability.

Barclays: DDR5 spot prices gained 8% month-on-month in October, marking a 20% cumulative rise over the past three months. Micron unveiled EIM, an edge inference memory for physical AI, scheduled for mass production in 2H28. Bank of America believes memory stock valuations are showing signs of a cyclical bottom.

The MIIT announced the establishment of a RMB 60 billion national AI industrial investment fund. The Ministry of Commerce rolled out revised export controls for shield machines, dredgers and drones, which will take effect on November 18.

In-depth Analysis

Optical Communications & Optical Chips: Data released by TrendForce on October 19 shows that global optical fiber demand will reach 760 million core-kilometers in 2026 against a supply of 725 million core-kilometers, representing a supply gap of approximately 4.6%. The gap is set to widen to 9.2% in 2027. The average price of bend-insensitive optical fiber for data centers has surged more than fivefold year-on-year. Domestic G.657.A2 specialty fiber prices have jumped from RMB 32 per core-kilometer to RMB 240, marking a 650% increase. The bottleneck lies in optical preforms, which account for 70% of fiber costs. New production lines require an 18–24 month lead time. Global optical preform line utilization exceeds 95%, while domestic effective capacity utilization stands at 84.3%. New capacity will not come online until around 2028. Separately, per CCTV Finance, high-speed optical module components at an optical enterprise in Nanchang are fully booked through end-2027, with its first-half communications optical revenue up 118.25% year-on-year.

Advanced Packaging & Testing: No major updates today. Domestic packaging substrate capacity accounts for less than 4% of the global total. The ABF substrate shortage continues to widen in the near term. Domestic build-up films including CBF, NBF and GBF remain in a 1–3 year qualification window, with no new mass-production or order announcements.

SiC & Power Semiconductors: Xinlian Integrated posted Jan–Sep revenue of RMB 7.758 billion (+43.09% YoY) and net profit attributable to parent of RMB 690 million, turning profitable (+249.03% YoY). Gross margin reached 19.65% (up 15.68 percentage points YoY), and EBITDA was RMB 3.207 billion (+116.4% YoY). Q3 operating cash flow hit RMB 1.275 billion (+709.5% YoY). During the period, the company completed the sale of assets and technology licensing to Xinlian Advanced for a consideration of RMB 1.211 billion. Rising capacity utilization and pricing for its power foundry business validate demand from AI server power supplies and automotive-grade applications.

Memory & Compute Chips: DDR5 spot prices rose 8% month-on-month in October. ChangXin Memory Technologies increased its registered capital from RMB 50.85 billion to RMB 60.18 billion, an 18% uplift. Micron will unveil multi-generation roadmaps for DRAM, HBM and NAND on October 21. On the end-market side, China’s mobile phone shipments fell 10% YoY in Q3, with Huawei and Apple together capturing a combined 40.8% market share. Apple confirmed it will launch its first touchscreen MacBook Pro on October 28.

Equipment & Materials: Xi’an Yicheng generated Jan–Sep revenue of RMB 2.651 billion (+37.16% YoY) and turned a net profit of RMB 151 million, though non-recurring profit remains negative. Longtu Photomask recorded revenue of RMB 210 million (+14.8% YoY) and net profit of RMB 18.806 million, down 63.69% YoY, pointing to profitability pressure in its photomask business. Silicon wafer revenue is recovering faster than profits, reflecting dual headwinds from pricing and depreciation.

Wafer Foundry: Aside from Xinlian Integrated, SMIC and Hua Hong released no new capacity or pricing announcements today. The sector rebounded alongside broader market sentiment.

Policy & Macro: The RMB 60 billion national AI industrial investment fund has deployed its first batch of investments. The four new export control notices issued by the Ministry of Commerce embody a dual regulatory approach that balances control listings with compliant facilitation. Overseas, the US proposes barring DeepSeek from federal agency projects, and the Pentagon signalled it may use export controls to restrict AI labs.

Daily Investment Tips

1.Supply rigidity in optical fibers and optical preforms has spread upstream from optical module shortages to raw materials. A tight supply-demand balance is highly likely before 2028. Still, downside risks include price declines once new capacity comes online in 2028, as well as reliance on imports for high-purity quartz sand and germanium tetrachloride. Power foundry businesses have delivered financial evidence of simultaneous improvements in volume, pricing and margins. If capacity utilization stays steady in Q4, valuation recovery upside will outpace that of chip design players.

2.The risk is that after rapid deleveraging by hedge funds, high-beta semiconductor assets become more sensitive to liquidity shocks.

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