The market's valuation logic for the semiconductor sector is shifting from cyclical recovery to growth attributes. On May 6, A-share semiconductor stocks dominated the market with significant gains. Twenty-nine constituents of the Shenwan semiconductor industry index hit record highs collectively, led by bellwethers such as Montage Technology (688008.SH), Demingli (001309.SZ), Hygon Information Technology (688041.SH), and Centec Communications (688041.SH). The China Semiconductor Chip Index closed up 5.79%, also reaching a historic peak.
This robust performance was catalyzed by better-than-expected financial reports from the global memory chip industry. U.S. memory giant SanDisk secured long-term agreements locking in over 33% of its capacity through fiscal year 2027, backed by more than $11 billion in financial guarantees and minimum contracted revenue of $42 billion. Its data center business surged 233% quarter-over-quarter. Meanwhile, South Korean memory leaders Samsung Electronics and SK Hynix saw their stock prices reach all-time highs.
Market analysts believe the semiconductor narrative is transitioning from cyclical rebound to AI-driven growth. Bolstered by strong first-quarter results from AI chipmakers, the market is repricing the growth value of the semiconductor industry.
Twenty-nine semiconductor stocks reached new highs, with concentrations in memory and equipment sectors. Within the Shenwan semiconductor segment, 29 out of 177 stocks hit record highs on May 6, accounting for 16.4% of the total. By subsector, semiconductor equipment and chip design were the main contributors. Nine equipment stocks, including NAURA Technology Group (002371.SZ), Hangzhou Huafeng Measurement & Control Technology (688200.SH), and Kingsemi (688037.SH), achieved new highs. Memory chips also performed strongly, with Puya Semiconductor (688766.SH), Longsys (301308.SZ), Demingli, BIWIN Storage Technology (688525.SH), and GigaDevice Semiconductor (603986.SH) all刷新ing股价 highs. The remaining record-breaking stocks were distributed across analog chips, packaging and testing, and materials segments.
The semiconductor surge was not entirely unexpected. Before the May Day holiday, the China Semiconductor Chip Index had already risen 4.72% on April 30. Over a longer horizon, the index has accumulated a 35.72% gain since April. Analysts note that with the release of first-quarter 2024 and full-year 2025 earnings reports, the semiconductor industry's high growth trajectory has been validated. Additionally, stocks that experienced sustained corrections in the first quarter have become relatively attractive valuations, drawing capital to accelerate positioning in trends with improving earnings momentum.
Consecutive rallies among overseas memory chip giants have also boosted sentiment in A-share semiconductors. On May 6, both Samsung Electronics and SK Hynix hit record highs, reflecting soaring global memory chip demand. U.S. semiconductor stocks also shone, with the Philadelphia Semiconductor Index continuing to set new records, rising 44.7% since April. SanDisk, Seagate Technology, and Micron Technology all reached historic price levels. SanDisk recently reported earnings that exceeded expectations, with its data center business growing 233% sequentially, and announced long-term agreements securing over 33% of its capacity through FY2027.
This industry optimism has directly influenced the A-share market, leading investors to continuously revise upward earnings expectations for memory chip companies, thereby lifting valuation benchmarks. Among A-share memory chip stocks hitting new highs, Demingli and BIWIN Storage reported first-quarter net profit growth exceeding 1,500%, aligning closely with industry trends and serving as core drivers for their stock performance.
First-quarter earnings surges validate high AI-driven demand. A detailed review of the 29 semiconductor stocks hitting record highs reveals that capital is clearly focused on AI computing infrastructure-related segments: memory chips (Montage Technology, Demingli, BIWIN Storage), AI server CPUs (Hygon Information Technology), and switch chips (Centec Communications), among others.
These companies share the characteristics of strong first-quarter earnings growth and clear support from AI industry trends. Financially, the 29 stocks recorded an average revenue growth of 61.32% and an average net profit growth of 697.75% year-over-year in the first quarter, providing solid foundation for valuation expansion.
Taking computing power chips as an example, companies in this segment significantly outperformed industry averages in revenue and profit growth. According to a Sinolink Securities report, the computing chip subsector achieved revenue of RMB 32.632 billion in 2025, up 86.70% year-over-year, with net profit of RMB 4.522 billion, surging 513.01%. In the first quarter of this year, revenue reached RMB 10.514 billion, an increase of 83.41%, while net profit was RMB 2.137 billion, up 160.23%. In comparison, the broader semiconductor industry saw revenue and net profit growth of 12.12% and 29.32% in 2025, and 25.77% and 192.38% in the first quarter of this year, respectively.
Specifically, memory module makers Demingli, BIWIN Storage, and Longsys delivered explosive first-quarter results. Their revenue grew 502.08%, 341.53%, and 132.8% year-over-year, respectively, while net profit skyrocketed by 49.4 times, 15.6 times, and 26.4 times.
Regarding memory demand outlook, BIWIN Storage indicated in a recent investor relations activity that benefiting from AI applications and rising token usage, product prices still have room to increase. Moreover, original manufacturers have begun locking in capacity for 2027 and beyond. As of the end of the first quarter, BIWIN had signed long-term purchase contracts for memory wafers totaling $1.5 billion in committed procurement value. The company's inventory scale reached RMB 12.069 billion, up 53.39% from the end of 2025. Compared to a net profit of RMB 2.899 billion in the first quarter, this reflects robust memory demand and visible earnings potential.
Memory expansion drives equipment demand; domestic semiconductor equipment makers are accelerating product adoption. Leaders in etching, deposition, and cleaning equipment all reported strong earnings growth. On May 6, Kingsemi, Fulltech Microelectronics (688409.SH), Piotech (688072.SH), and Advanced Micro-Fabrication Equipment (688012.SH) all saw their shares hit new highs. Among them, Piotech's first-quarter net profit surged 488.29% year-over-year, while AMEC grew 197.20%.
A TMT industry analyst noted that the semiconductor rally is essentially a subset of the AI trend, with capital focusing on accelerated domestic substitution driven by AI infrastructure development. First-quarter results indicate increased certainty in capacity expansion by leading domestic wafer fabs. Wafer fabs serve as anchors, with tight supply in both logic and memory wafer capacity. The memory chip demand explosion is driving significant expansion. High-end core equipment previously undergoing verification is now passing production line acceptance and recognizing revenue. Scale effects and a higher proportion of high-margin products are boosting sector profitability. Opportunities lie in memory expansion, advanced process breakthroughs, and demand growth from accelerated domestic substitution, the analyst added.
Institutional funds may return to semiconductors in the second quarter. The semiconductor market has entered a new phase of "earnings verification and sustainable growth." Against the backdrop of a rapidly closing domestic computing ecosystem and sustained high global investment in AI infrastructure, institutional capital is repricing the value of the semiconductor supply chain with a long-term perspective, significantly raising valuation benchmarks.
However, fund flow data shows that in the first quarter, institutions did not adopt a "buy-the-dip" strategy for leading stocks with genuine AI technology and earnings support, instead showing clear divergence. CICC statistics indicate that active equity funds reduced their semiconductor allocation by 0.1 percentage points in the first quarter. While thematic index ETFs saw overall scale increases, sectors like semiconductor materials and equipment attracted more inflows.
Notably, several semiconductor leaders that hit new highs on May 6 saw significant institutional selling in the first quarter. Disclosures show that Montage Technology was reduced by 5.02 million shares via the Stock Connect program in Q1. Three major mutual fund companies—ChinaAMC, Harvest Fund, and E Fund—through their respective STAR 50 ETFs, were net sellers, with E Fund's STAR 50 ETF selling a substantial 15.324 million shares.
"Stock king" Cambricon Technologies (688256.SH) saw a net reduction of 2.426 million shares via Stock Connect in Q1, with E Fund's STAR 50 ETF also cutting 1.431 million shares. Demingli experienced a similar pattern: Stock Connect bought 1.8075 million shares, making it the third-largest shareholder, while GF Vision Selection Hybrid Fund became the seventh-largest shareholder with 1.9856 million shares. However, Yongying Pioneer Semiconductor Select and GF Asset Management's Shenxinli No. 71 single-asset management plan reduced their holdings to varying degrees. Additionally, Kingsemi, AMEC, and GigaDevice were all subject to selling by index funds or Stock Connect in the first quarter.
Institutional holding data reflects adjustments made between January and March, a period that aligns with the semiconductor sector's performance rhythm. Data shows the China Semiconductor Index fell 18.2% cumulatively in February and March, undergoing a deep correction that brought valuations to relatively low levels over the past year.
The aforementioned analyst suggested that the Q1 semiconductor market environment was characterized by significant valuation disputes over AI chips, leading institutions to make defensive adjustments at lower levels. The earnings disclosure period from late March through April completely reversed market expectations. Strong earnings data confirmed the real prosperity of the AI-driven semiconductor industry, which has now spread to other subsectors like analog chips and discrete devices. Given the rebound in semiconductor valuations and fund inflows since April, institutional capital may be shifting toward "Q2 replenishment" after Q1 reductions. However, this is not a blanket move; for targets with sustained earnings outperformance and enduring growth potential, institutions are willing to accept higher valuations to allocate to core assets truly benefiting from the AI wave, the analyst concluded.