our reporter gu mengxuan, Xia Xin, Guangzhou, Beijing

After a series of declines, the semiconductor sector has finally recovered. Since February 19, A shares have stabilized and rebounded, and semiconductors have moved higher. From February 19 to March 17, the Wind Semiconductor Index and the Semiconductor Industry Index rose 13.16 percent and 17.52 percent, respectively.

A relevant person from China Asset Management said in an interview with a reporter from China Business News that the rebound in the semiconductor sector is mainly due to the following reasons: First, storage is the first to bottom out and rebound, and downstream promotes upstream demand. Since 2024, DRAM (dynamic random access memory) memory chip prices continue to rise, Chinese customers accept price increases, the storage industry is expected to usher in a new round of boom cycle. Second, the demand for AI (artificial intelligence) computing power is expanding, and future increments are expected. AI applications have led to a significant increase in the demand for computing power, especially the introduction of Sora(OpenAI's artificial intelligence video model) has triggered the demand for computing power, and AI chips are expected to become a new driving force for the growth of the semiconductor industry. Third, earnings-driven sentiment picks up. Recently, a number of semiconductor materials companies disclosed performance reports, growth exceeded market expectations. Domestic investment and support for the lithography machine industry chain continues to increase, the development of domestic high-end lithography machine is expected to be promoted, the semiconductor equipment industry chain will be expected to benefit simultaneously.

First down, then up

According to a report released by the Semiconductor Industry Association (SIA), the global semiconductor industry's total sales in 2023 were $526.8 billion, down 8.2 percent from the total of $574.1 billion in 2022, which was the highest annual total in the industry's history.

In terms of categories, in 2023, several semiconductor product areas stood out, with logic products reaching $178.5 billion million in sales, making it the largest product category in terms of sales. Memory products came in second with $92.3 billion in sales. Microcontrollers (MCUs) grew 11.4 percent to $27.9 billion. Sales of automotive integrated circuits rose 23.7 percent year-on-year to a record $42.2 billion billion.

As far as the domestic situation is concerned, the semiconductor's previous days were not easy. In addition to the "big climate" of the global semiconductor industry-the downward cycle of the semiconductor industry that runs through 2022, the Observer Network Times column also pointed out that China's semiconductor industry is suffering from the impact of geopolitical "microclimate". In October 2022, the United States issued a semiconductor export control policy to China, which launched an unprecedented containment of China's imports of high-end semiconductor equipment and big computing chips, and further increased in 2023, even before the effective date of the "window guidance" to stop the operation of ASML lithography machine export license to China, for the so-called "free trade" "market economy" "rule of law society" provides a new fresh note.

In early February, SMIC (688981.SH) and Hua Hong (688347.SH) simultaneously released their 2023 annual results, of which SMIC's total operating income in 2023 fell 8.61 percent year-on-year, and its net profit fell 60.25 percent year-on-year. Huahong's operating income fell 3.3 percent in 2023 and its net profit fell 35.64 percent. In terms of performance, the semiconductor industry is still in a downward cycle.

The index performance of the semiconductor sub-sector shows that semiconductors will fall first and then rise in 2024. In January 2024, for example, all sub-sectors were down, with the semiconductor equipment index down 22.09 per cent in January, the branded consumer electronics index down 16.5 per cent, the panel index down 15.16 per cent, the optical components index down 29.61 per cent and the analog chip index down 31.53 per cent.

But since February 2024, each of these sub-indices has started a surge pattern, up more than 15 per cent. Among them, as of March 17, the optical components index rose 30.74 percent since February, ranking first in the semiconductor sub-sector index.

The inflection point of the chip industry cycle has reached

benefit from the overall performance of the sector, the performance of the semiconductor theme fund has finally risen. The reporter noticed that whether it is passive index funds or active equity funds, the performance of semiconductor-themed funds has rebounded to varying degrees in the past month.

Wind data show that the whole market 50 only contains the theme of "semiconductor", the last month all achieved positive returns. Among them, the highest income is Cathay Pacific China Securities Semiconductor Materials and Equipment Theme ETF, with a 12.6 per cent return in the latest month, 44 with a return of more than 10 per cent in the latest month, with a minimum return of 8.17 per cent.