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The Philadelphia Semiconductor Index (SOX) plunged for the second consecutive trading day: it closed down 5% at 11,774 on July 16. SK Hynix tumbled over 13%, Sandisk shed more than 12%, while Intel, AMD, Broadcom and Micron all lost over 5%. Memory-related stocks have slumped more than 10% in two days. Escalating US-Iran tensions, coupled with hawkish signals from the Federal Reserve, jointly weighed on market risk appetite.
TSMC sharply raised its full-year capital expenditure guidance to USD 60–64 billion, up from the prior range of USD 52–56 billion, and stated its capital expenditure over the next three years will be markedly higher than that of the past three years. On the same day, the US Department of Commerce revealed TSMC’s total investment in the US has reached USD 265 billion, with its facility count rising to 12.
All A-share semiconductor sectors suffered sharp corrections, yet ETF funds kept flowing in against the market trend. The STAR 50 Index fell 4%, and the Semiconductor Materials & Equipment Index dropped 7.3%. Nevertheless, semiconductor equipment ETFs have seen net inflows for five straight days, totaling roughly RMB 4.6 billion. Domestic institutional investors hold the view that domestic order momentum and price hike trends remain intact, with no deterioration in the industrial chain fundamentals.
Multiple semiconductor firms released their H1 earnings and order outlooks: Hygon Information projected a 42%–52% year-on-year net profit increase; Verisilicon secured RMB 6.413 billion in new orders between April 30 and July 16, with AI computing-related orders accounting for over 90%; Moore Threads forecast revenue growth of 135%–149%; A subsidiary of Jingce Electronics signed a RMB 223 million sales contract for semiconductor equipment.
In-depth Analysis
Optical Communication & Optical Chips：No major updates today. Over the past week, CLS has released zero special briefings covering optical chips, optical modules, CPO and silicon photonics. Earlier, SemiAnalysis projected the large-scale commercial rollout of CPO would be delayed to 2028–2029, unexpectedly extending the dividend period for copper cable connectors, leaving the segment in an information vacuum in the short term. Keep track of the mass production progress of TSMC’s COUPE silicon photonics platform and interim report releases from leading players including Innolight and T-Fiber Optics.
Advanced Packaging：No standalone major developments today. After ASE Group announced price hikes of up to over 20% for CoWoS and FoCoS packaging on July 1, the sector entered a phase of market sentiment digestion. TSMC’s sharp upward revision of capital expenditure indirectly benefits the advanced packaging equipment chain, as CoWoS capacity expansion stands as one of the core growth drivers of increased capex.
On the A-share market, JCET, Huatian Technology and Taiji Industrial all hit the daily down limit on July 16 merely amid broader market correction, with underlying fundamental logic intact. Zhuhai Yaya Semiconductor passed the ChiNext Listing Committee review on July 16. The company specializes in IC substrates and will benefit from surging demand for substrates used in advanced packaging.
SiC & Third-Generation Semiconductors：No notable updates today. Recent industry events include Wolfspeed filing a full-line GaN/SiC patent infringement lawsuit against Navitas Semiconductor on July 12, and Luxshare Technology terminating its silicon carbide industrial park project on July 8, marking a phase of differentiation and consolidation across the SiC industry. Dinglong Chemical has secured mass orders for its SiC substrate polishing slurry. The segment lacks fresh catalysts overall.
Memory & Computing Chips：Memory stocks led declines across global semiconductor sectors for two consecutive trading days: SK Hynix slumped over 13%, SanDisk lost more than 12%, Western Digital fell over 9%, and Seagate Technology tumbled 10%. This sell-off occurred just one week after SK Hynix’s successful ADR listing on July 10, reflecting a rapid market shift from the "memory supercycle" narrative to profit-taking. Nevertheless, fundamentals remain robust. TrendForce forecasts Q3 DRAM contract prices to rise 13%–18% quarter-on-quarter and NAND prices to climb 10%–15%. Goldman Sachs maintains its view that memory supply shortages will persist through 2028. On the same day, JPMorgan raised Seagate’s price target to USD 1,095 and Western Digital’s to USD 715, demonstrating sell-side analysts’ sustained optimism over medium-to-long-term demand for memory hardware.
Semiconductor Equipment & Materials：Shanghai Jingce, a controlling subsidiary of Jingce Electronics, signed a RMB 223 million sales contract for front-end semiconductor metrology and inspection equipment. Cumulative contracts signed with the same client over 12 consecutive months have reached RMB 330 million, accelerating the rollout of domestic metrology and inspection equipment. Wells Fargo lifted ASML’s price target to USD 2,500, while Bernstein raised its target to USD 2,859, underscoring lasting market optimism over long-term demand for High-NA EUV. TSMC’s massive capex upgrade delivers systematic positive momentum to the global semiconductor equipment sector.
Policy & Macro Environment：U.S. military airstrikes against Iran entered their fifth consecutive night. Escalating tensions in the Middle East weighed on global risk assets. Federal Reserve voting member Logan stated a preference for moderate interest rate hikes to curb inflation, noting "a single month of softer CPI data is insufficient". The U.S. Department of Homeland Security issued new rules restricting the residence period for foreign students. The 18th meeting of the China-Netherlands Joint Economic and Trade Committee agreed to facilitate corporate negotiations to resolve disputes over Nexperia, safeguarding the security and stability of the global semiconductor supply chain.
Daily Investment Tips
1. Short-term risks: The semiconductor sector is experiencing a sentiment-driven sell-off after overpriced optimistic narratives. Positive factors including the memory supercycle, upward capex revisions and widespread price hikes have all been fully priced in, leaving the market in need of new catalysts. Escalating US-Iran tensions and hawkish Federal Reserve rhetoric create dual downward pressure. The SOX Index has lost more than 9% over two sessions, and volatility is expected to stay elevated in the short run. Watch whether leading players such as SK Hynix and Micron can find support at key moving average levels.
2. Medium and long-term opportunities: The signal of counter-cyclical fund inflows amid the correction merits close attention. A-share semiconductor ETFs have recorded net inflows for multiple consecutive days, while sell-side analysts have simultaneously raised price targets for ASML, Western Digital and Seagate Technology. This reflects a broad institutional consensus on long-term semiconductor demand driven by artificial intelligence. TSMC’s substantial upward revision of its capital expenditure guidance also delivers medium-term earnings visibility to the equipment and materials supply chain.
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