CITIC SEC has reaffirmed a robust positive stance on the electronics sector, highlighting substantial investment opportunities following a significant market correction.

The second quarter of 2026 mutual fund reports have been fully disclosed, showing the electronics sector's allocation ratio continued its upward trend from the first quarter, remaining at elevated levels. In Q2 2026, the total market value of fund heavy-weight holdings in the electronics sector reached 1,583.888 billion yuan, a quarter-on-quarter increase of 155.46%. The electronics sector's share of total fund heavy-weight holdings stood at 39.08%, up 19.64 percentage points quarter-on-quarter, with an overweight position of 16.07 percentage points, maintaining a high level. Among actively managed funds, the allocation to the electronics sector was 42.64%, a quarter-on-quarter increase of 21.41 percentage points, with an overweight of 19.62 percentage points, up 11.85 percentage points quarter-on-quarter, still at a historical high.

At the sub-industry level, the proportion of components within the electronics sector increased, while consumer electronics, semiconductors, other electronic components II, and optical optoelectronics saw a slight decrease in their internal share. Since July, the sector has undergone a significant adjustment, with valuations for related targets clearly retracing. However, the industry's fundamental strength remains robust: the certainty of semiconductor equipment orders is continuously strengthening, orders for domestic computing power and supply chain stockpiling are expected to accelerate, AI server demand is driving sustained momentum in PCB and AI power supplies, the trend of memory price increases is becoming clearer, and opportunities along the supply chain are gradually spreading to consumer electronics. The institution believes the current price adjustments have placed some high-quality targets in a valuation trough, setting the stage for a future convergence of earnings delivery and valuation recovery, leading to a firm bullish view on post-correction investment opportunities.

Heavy-weight Holdings Scale: Electronics Sector Maintains High Allocation

In Q2 2026, the electronics sector accounted for 39.08% of total fund heavy-weight holdings, up 19.64 percentage points quarter-on-quarter, with an overweight of 16.07 percentage points, remaining at a high level. Actively managed funds allocated 42.64% to the electronics sector, up 21.41 percentage points quarter-on-quarter, with an overweight of 19.62 percentage points, up 11.85 percentage points quarter-on-quarter, still at a historical peak. The total market value of fund heavy-weight holdings in the electronics sector was 1,583.888 billion yuan in Q2 2026, a quarter-on-quarter increase of 155.46%. In terms of style, actively managed equity funds saw their heavy-weight holdings in the electronics sector increase by 189.23% quarter-on-quarter, contributing 67.67% to the change in total heavy-weight holdings for the sector.

Sub-Industry Analysis: Components Gain Share Within Electronics

In Q2 2026, fund heavy-weight holdings in the semiconductor segment had a market value of 1,148.397 billion yuan, up 153.0% quarter-on-quarter, accounting for 72.5% of the electronics sector's fund heavy-weight holdings, a decrease of 0.71 percentage points quarter-on-quarter. Fund heavy-weight holdings in the consumer electronics segment totaled 156.223 billion yuan, up 110.09% quarter-on-quarter, representing 9.86% of the sector's total, down 2.13 percentage points. The components segment saw fund heavy-weight holdings reach 203.609 billion yuan, up 278.32% quarter-on-quarter, accounting for 12.86% of the sector, up 4.18 percentage points. Optical optoelectronics fund heavy-weight holdings were 33.403 billion yuan, up 59.61% quarter-on-quarter, representing 2.21% of the sector, down 1.27 percentage points. Other electronic components II fund heavy-weight holdings were 42.256 billion yuan, up 148.56% quarter-on-quarter, accounting for 2.67% of the sector, down 0.07 percentage points.

Concentration Analysis: Top 10 Holdings Increase in Value and Focus

The market value of the top 10 most heavily held stocks in the electronics sector by mutual funds in Q2 2026 was 435.911 billion yuan, up 185.92% quarter-on-quarter. This accounted for 27.52% of the total fund heavy-weight holdings in the sector, an increase of 2.93 percentage points quarter-on-quarter, indicating a rise in the concentration of fund heavy-weight holdings in electronics stocks during Q2 2026.

Individual Stock Holdings: Top 10 by Market Value and Gainers by Float

The top 10 stocks by fund heavy-weight holding market value in Q2 2026 were: Dongshan Precision Manufacturing (67.222 billion yuan), Cambricon Technologies (63.946 billion yuan), NAURA Technology Group (48.784 billion yuan), Yuanjie Technology (46.013 billion yuan), GigaDevice Semiconductor (45.981 billion yuan), Advanced Micro-Fabrication Equipment Inc. (37.417 billion yuan), Chaozhou Three-Circle Group (33.213 billion yuan), Luxshare Precision Industry (32.615 billion yuan), Haiguang Information Technology (31.716 billion yuan), and Wus Printed Circuit (31.083 billion yuan). The top five stocks by increase in fund heavy-weight holdings as a percentage of floating shares in Q2 2026 were: Hengyun Chang (13.55 percentage points), Defu Technology (12.52 percentage points), Fenghua Advanced Technology (10.53 percentage points), Jinghe Integration (10.07 percentage points), and Guide Electric (9.85 percentage points).

Risk Factors

Global macroeconomic downturn; changes in the international political environment and escalating trade frictions; downstream demand falling short of expectations; AI innovation underperforming; AI commercialization progress lagging; Android supply chain innovation disappointing; XR sales missing targets; domestic substitution progress slower than anticipated; domestic wafer fab expansion failing to meet plans; advanced process technology development falling short; intensifying competition among downstream manufacturers; raw material price risks due to inflation; escalated US semiconductor sanctions against China; significant exchange rate fluctuations; and technology iteration not meeting expectations.

Investment Advice: Firmly Bullish on Post-Correction Opportunities in the Electronics Sector

Since July, the sector has experienced significant adjustments, with valuations for related targets clearly retracing. However, the fundamentals of key directions such as self-sufficiency and control, AI components, the pricing chain, and consumer electronics have not reversed. Certain sub-sectors currently have valuations that do not fully reflect expectations for subsequent order growth, price increases, and earnings delivery, offering strong potential for post-correction recovery. The inflection point for earnings growth in domestic semiconductor equipment and domestic computing power is becoming clearer. Driven by global AI demand, the supply-demand dynamics for segments like PCB, memory, and AI power supplies will remain robust. Furthermore, the AI supply chain trend is expected to gradually spread to consumer electronics. The institution continues to favor these directions and recommends focusing on: 1) Semiconductor equipment and components, benefiting from mainland wafer fab expansion and deepening domestic substitution; advanced packaging, testing, and wafer foundry segments, benefiting from higher utilization rates, advanced packaging expansion, and price increases. 2) Domestic computing power, benefiting from domestic chip iterations, improved order visibility, and accelerated supply chain stockpiling. 3) PCB, with sustained growth in AI server and high-end computing hardware demand, and potential acceleration in CCL procurement. 4) AI power supplies, benefiting from tightening supply-demand dynamics for high-end MLCC, inductors, and power devices, along with price increases and higher per-unit value. 5) Memory, with stronger sustainability in price increases for niche and automotive-grade memory, allowing related design firms to benefit fully. 6) Consumer electronics, where demand for traditional hardware is expected to bottom out and recover, coupled with the start of new product cycles like AI and AR glasses.