The revised Regulations on the Protection of Integrated Circuit Layout Designs are set to take effect soon, following the State Council's recent announcement of the updated rules, which will be implemented on October 15 this year. This marks the first comprehensive revision of the regulations in 25 years. The update introduces originality declaration requirements and strengthens exclusive rights protection for integrated circuit layout designs, providing institutional support for the upgrading of the domestic chip design industry. The transmission path from regulation to industry is clear: strengthened intellectual property protection boosts innovation incentives for chip design companies, increases R&D investment, enhances domestic chip design capabilities, and expands market share.

Against this backdrop, Hwabao Fund, a major ETF provider managing over 100 billion yuan in assets, today (September 4) launched its new product, the STAR Chip Design ETF Hwabao (589430). The ETF tracks the SSE STAR Market Chip Design Thematic Index, which comprises 50 hard-tech companies listed on the STAR Market whose primary business is chip design (both digital and analog). This fund offers investors another powerful tool to participate in capturing investment opportunities in the high-value-added segments of China's chip industry chain.

Pure Design. The Soul of Sci-Tech Innovation

Chip-led cutting-edge hard technology has become a core battleground in the global race among major powers. According to the latest report from the U.S. Semiconductor Industry Association (SIA), global semiconductor sales reached $795.6 billion in 2025, far exceeding early-year expectations and setting a new record. The report forecasts that global chip sales will surpass $1.5 trillion for the first time in 2026, a 90% surge from 2025. The chip industry operates along a "design-manufacturing-packaging and testing" division of labor. The design stage directly determines chip performance, power consumption, cost, and market competitiveness, holding the highest technical barriers and strongest pricing power. Compared to the asset-heavy nature of manufacturing and packaging/testing, chip design companies offer greater earnings and valuation flexibility. In the current AI-driven chip cycle, design innovation is most active in GPU/AI acceleration, CPUs, memory, interface, and switching chips. According to McKinsey, profit distribution in the chip industry follows the "smile curve," with industry profits concentrated in high-end equipment, high-end design, and terminal applications that possess brand and technology advantages.

The STAR Chip Design ETF Hwabao (589430) tracks the underlying SSE STAR Market Chip Design Thematic Index (950162.CSI), which selects 50 listed companies from the STAR Market whose primary business is chip design (digital and analog). As of the end of August 2026, digital chip design accounts for 76.08% of the index weight, while analog chip design accounts for 22.61%, with the design segment collectively representing over 98% of the index weight. The index constituents cover 50 chip design listed companies, with the top five weighted stocks collectively accounting for 41.48% and the top ten accounting for 60.97%. The index covers four main investment lines: computing power (stocks like Hygon Information Technology and Cambricon Technologies), storage (including Biwin Storage Technology, PUYA Semiconductor Technology, and GigaDevice Semiconductor), interconnect and customization (such as Montage Technology, VeriSilicon Microelectronics, and Centec Networks), as well as specialty sensing and SoC (featuring Raytron Technology and Amlogic). The index methodology caps individual constituent weights at 10%, adjusts its sample semi-annually, and the linked ETF product has a daily price fluctuation limit of 20%.

Outperforming Performance. An Offensive Tool

As AI applications shift from training to inference and from the cloud to the edge and terminal devices, R&D directions for chip design companies will increasingly focus on computing power, power consumption, bandwidth, interfaces, and ecosystem adaptation. Demand is fully expanding across design segments including on-device SoCs, edge inference chips, AI acceleration chips, and storage and interconnect interfaces—precisely the core coverage of the SSE STAR Market Chip Design Thematic Index. Investing in the "chip design segment" itself avoids the asset-heavy cyclical fluctuations of equipment and manufacturing, while providing direct exposure to three major design-end investment themes: AI computing power, domestic substitution, and edge innovation.

From a domestic substitution perspective, China's AI accelerator chip market is expected to exceed 210 billion yuan in 2026, with the domestic chip share projected to rise to over 50%. Inference scenarios are expected to achieve full import substitution, while training scenarios are accelerating penetration. Major domestic internet companies have already begun batch purchasing domestic AI chips, deploying them in core business scenarios such as large model training, AIGC content generation, intelligent review, and precision recommendation. Domestic computing power is shifting from "single-card performance competition" to "system-level competition"—deep model adaptation, supernodes, and unified "one cloud, multiple chips" scheduling provide validation and iteration scenarios for local chip design companies.

Supported by solid industry fundamentals and a distinctive constituent structure, the long-term performance of the SSE STAR Market Chip Design Thematic Index is outstanding. During the period from September 1, 2021, to August 31, 2026, the index achieved an annualized return of 13.60%, significantly outperforming the National Securities Chip Index and the SSE STAR 50 Index, which returned 7.62% and 3.27% respectively over the same period. The maximum drawdown of the index during this period was -59.56%, broadly similar to the -58.75% and -56.55% drawdowns of the other two indices. According to semi-annual reports, the constituent stocks of the index saw their H1 2026 operating revenue grow 59.55% year-on-year, while attributable net profit surged 281.88%. Their H1 2026 net sales margin reached 22.73%, with a current ratio of 3.97 and a quick ratio of 2.80, reflecting low debt repayment pressure and high cash flow quality under their asset-light model. The leading constituent stocks maintain R&D expense ratios of generally over 15%, including Centec Networks at 32.81%, Hygon Information Technology at 27.39%, and Montage Technology at 14.13%, demonstrating their strong hard-tech DNA.

According to statistics from the Shanghai and Shenzhen Stock Exchanges, Hwabao Fund's equity ETF asset management scale reached 124.9 billion yuan as of the end of June 2026, ranking 9th in the industry. Through sustained investment and careful layout in high-tech strategic emerging industries, Hwabao Fund has established an AI industry chain ETF matrix covering computing power, large models, and applications. Its flagship products include the ChiNext AI ETF Hwabao (159363) focusing on overseas computing power themes, the STAR Chip ETF Hwabao laying out the full STAR Market chip industry chain, the market's first HK Connect Information Technology ETF Hwabao covering the Hong Kong chip industry chain, the STAR AI ETF Hwabao covering domestic computing power themes, the Big Data ETF Hwabao, the Intelligent Manufacturing ETF Hwabao, and the Information Technology Application Innovation ETF Hwabao. Products focusing on large model themes include the Hong Kong Internet ETF Hwabao, while AI application coverage includes the Electronics ETF Hwabao, Fintech ETF Hwabao, General Aviation ETF Hwabao, and HK Connect Automobile ETF Hwabao.

Special reminder: Recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors should make rational investment decisions based on their own capital situation and risk tolerance, paying close attention to position and risk management. Regarding ETF fee explanations: When subscribing or redeeming the STAR Chip Design ETF Hwabao, subscription and redemption agent brokers may charge commissions at a standard rate not exceeding 0.3%. On-exchange trading fees are subject to actual broker charges. Fund fee rates are detailed in the fund's legal documents. "Market's first" refers to the first ETF tracking the CSI HK Connect Information Technology Composite Index. As of June 30, 2026, Hwabao Fund's total equity ETF scale was 124.9 billion yuan, ranking 9th among all 56 public fund companies with equity ETF businesses. Data sources include the Shanghai and Shenzhen Stock Exchanges and Hong Kong Exchanges.

Risk disclosure: The STAR Chip Design ETF Hwabao passively tracks the SSE STAR Market Chip Design Thematic Index, with a base date of December 31, 2019, and a release date of July 26, 2024. The index's annual returns from 2021 to 2025 were 7.73%, -42.51%, 4.75%, 35.54%, and 60% respectively, with corresponding annualized volatility of 34.39%, 40.99%, 34.21%, 47.7%, and 35.93%. Index constituents are adjusted in accordance with the index methodology, and backtested historical performance does not indicate future index performance. The fund manager rates the risk level of the STAR Chip Design ETF Hwabao, STAR Chip ETF Hwabao, HK Connect Information Technology ETF Hwabao, Hong Kong Internet ETF Hwabao, ChiNext AI ETF Hwabao, STAR AI ETF Hwabao, and HK Connect Automobile ETF Hwabao as R4 (medium-high risk), suitable for aggressive (C4) and above investors. The fund manager assesses the Fintech ETF Hwabao, Intelligent Manufacturing ETF Hwabao, Information Technology Application Innovation ETF Hwabao, Big Data ETF Hwabao, Electronics ETF Hwabao, and General Aviation ETF Hwabao as R3 (medium risk), suitable for balanced (C3) and above investors. These funds are issued and managed by Hwabao Fund, and distribution agencies do not bear responsibility for product investment and redemption. Investors should carefully read the fund contract, prospectus, fund product information summary, and other fund legal documents to understand the risk-return characteristics and select products appropriate to their own risk tolerance. Sales institutions (including the fund manager's direct sales institutions and other sales institutions) evaluate the risk of these funds in accordance with relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by sales institutions and rely on their matching results. The suitability opinions of different sales institutions may not be consistent, and the fund product risk rating results issued by fund sales institutions must not be lower than those issued by the fund manager. Differences may exist between the risk-return characteristics described in the fund contract and the fund risk rating due to different consideration factors. Investors should understand the fund's risk-return profile and carefully choose fund products based on their own investment objectives, time horizon, investment experience, and risk tolerance, bearing the risks themselves. The registration of these funds by the China Securities Regulatory Commission does not indicate that it has made substantive judgments or guarantees regarding their investment value, market prospects, or returns. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for any investment decisions they make on their own. Any views, analyses, and forecasts in this article do not constitute investment advice to readers and shall not be held liable for any direct or indirect losses arising from the use of the content. The past performance of these funds and their net asset values do not indicate future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of these funds' performance. Funds carry risks; invest with caution!