Semiconductor shares in Hong Kong rallied, with Hua Hong Semiconductor jumping 7%, SMIC and Shanghai Fudan up about 5%.

The rally follows a report by SEMI forecasting that global semiconductor manufacturing equipment sales by original equipment manufacturers (OEMs) will hit a record high of USD 125.5 billion in 2025, up 7.4% year-on-year. According to TF Securities, the global semiconductor industry is expected to maintain its growth momentum into 2025, driven in part by downstream demand from AI applications.

At the same time, rising geopolitical risks continue to disrupt and reshape global supply chains, accelerating the push for domestic alternatives. Strong preliminary Q2 earnings across various segments also boosted sentiment. Looking ahead to the Q3 peak season, analysts recommend watching the design segment for upside in memory, foundry, SoC, ASIC, and CIS, as well as domestic substitution opportunities in equipment, materials, and compute chips.

Memory contract prices are projected to rise sharply in Q3 2025, with strong demand for enterprise-grade products driving clear quarter-on-quarter earnings growth among leading players. Wafer foundry leaders may also raise prices, with a positive earnings outlook for Q2 and Q3.