China Galaxy Securities: Focus on the fundamentals of declining congestion and are optimistic about semiconductor equipment components and advanced packaging in the medium term
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that after a slight increase in the semiconductor sector in August, the fluctuation leveled off, absorbed the high level of capital congestion, and declined in volume. Looking at the breakdown, the monthly increase ranking is analog chip design > semiconductor materials > integrated circuit packaging and testing > integrated circuit manufacturing > semiconductor equipment > digital chip design. The September proposal focuses on the direction of high fundamentals and low congestion: inflection points in simulated power performance and opportunities to adjust performance targets due to disruptions in delivery. Optimistic about semiconductor equipment components and advanced packaging in the medium term.
The main views of China Galaxy Securities are as follows:
August Market Review
In August, the Shanghai and Shenzhen 300 rose 0.46%, and the electronics industry rose 10.24%, with the semiconductor sector rising 6.95%. Looking at the breakdown, the monthly increase ranking is analog chip design > semiconductor materials > integrated circuit packaging and testing > integrated circuit manufacturing > semiconductor equipment > digital chip design.
Digital chip design
The sector rose 5.72% in August. In terms of computing power, Nvidia's FY2027Q2 revenue was US$96.2 billion (+106% year over year), and both performance and guidance exceeded expectations; Tencent's Q2 capital expenditure was 52.8 billion yuan, saying that Q3 computing power purchases were greatly increased; Alibaba's AI revenue grew by three digits for 12 consecutive quarters, and global computing power investment is still increasing. In terms of storage, DRAM prices rose month-on-month and slowed down at the end of the month; SanDisk revealed a long-term financial model; SK Hynix repurchase and cancellation of 40 trillion won; Samsung implemented a 90-110 trillion won shareholder return framework, strengthening storage dividend attributes; Changxin Technology's interim report greatly exceeded expectations.
Analog chip design & discrete devices
In August, the analog chip design sector rose 21.85%, and the discrete device sector rose 26.6%. The analog sector rose by about 17% and discrete devices rose by about 28% throughout the month, leading all segments. In August, ADI, TI, and STMicroelectronics successively issued price increase notices; interim reports such as VeriConnect Integrated, Nanochip, and Sirip showed a month-on-month increase in revenue and a positive or significant improvement in profits in 2026Q2. The analog and power sectors are in the early stages of performance, and flexibility is worth looking forward to.
Integrated circuit manufacturing
The sector rose 8.12% in August. SMIC and Huahong Hongli exceeded expectations. Revenue growth accelerated in 2026Q2 and gross margin increased month-on-month; World-Advanced and UMC confirmed the 2027 OEM price increase trend; Samsung raised OEM prices by up to 15%. The global pure wafer foundry market was +29% year-on-year in 2026Q2, with TSMC, Samsung, and SMIC shares of 73%, 7%, and 5%. Benefiting from high demand for AI and rising prices, the performance of domestic fabs is expected to improve quarterly.
Integrated circuit sealing and testing
The sector rose 13.55% in August. Advanced closed testing is the core track. TSMC mass-produced 5.5 times mask CoWOS, the yield stabilized at over 98%, production capacity was over 80%, and plans to export the CoW process to major manufacturers such as Sun Moon Light; Xingke Jinpeng is preparing price adjustments; Changdian and Huatian 2026Q2 profits improved markedly from month to month; Tongfu Microelectronics plans to jointly build an advanced packaging R&D center with Fujitsu. Advanced packaging has become a core bottleneck in the industry, and the global supply and demand gap continues to expand.
semiconductor equipment
The sector rose 7.19% in August. The performance of Fanlin and Applied Materials exceeded expectations and accelerated growth; on August 1, Japan implemented the third round of semiconductor export controls, and domestic substitutions accelerated for high-end advanced packaging equipment; North China Huachuang's interim report fell short of expectations, mainly due to limited parts supply, but order demand was still strong; China Micro and Tuojing's mid-term reports met expectations, with 2026Q2 revenue +35.5% and +44.6% year-on-year. The rise in the economy is compounded by the promotion of localization, and it continues to be optimistic.
Semiconductor materials & electronic chemicals
The sector's gains in August were 18.12% and 22.3%, respectively. Prices of photoresist increased during the month, indium phosphide substrates were out of stock, and the gap between tungsten hexafluoride supply and demand increased, and Ajinomoto cut ABF film supply to China by 30%; Taiwanese manufacturers such as Global Wafer released signals of silicon wafer price increases in late May, and domestic silicon wafer manufacturers are expected to follow suit in Q3. It is recommended to focus on categories where global supply and demand are tight.
Risk warning: downstream demand for AI falls short of expected risk; domestic semiconductor substitution progress falls short of expected risk