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STMicroelectronics shares plunged on weaker-than-expected Q2 results. The company posted Q2 revenue of USD 3.49 billion and net profit of only USD 222 million, with gross margin at 34.8%. Its stock tumbled 17% in a single trading session amid market concerns over an inflection point in demand for power semiconductors and automotive-grade chips.
GlobalWafers suspended operations at its Italian 8-inch silicon wafer fab following a fire. A blaze broke out at the Novara plant on July 21, halting the 8-inch production line and introducing fresh disruption to global silicon wafer supply.
BlackRock turns bullish against market sentiment, arguing the sell-off in chip stocks is “overdone”. The world’s largest asset manager contends markets are conflating “shifts in the AI competitive landscape” with a “collapse in AI investment”, and recommends focusing on AI bottleneck segments including power infrastructure, semiconductors and data centers.
Google raised its full-year capital expenditure guidance to USD 195–205 billion, an increase of USD 15 billion from the prior range. It also signalled that capital spending will “rise materially” in 2027, underscoring persistent robust demand for AI computing power.
The Chinese Academy of Sciences achieved the first synthesis of lanthanide MXene two-dimensional material. Exhibiting both semiconducting properties and ferromagnetism, the findings were published in Nature, opening a new avenue for research on innovative semiconductor materials.
In-depth Analysis
Optical Communication & Optical Chips：No major updates for the sector today. The latest relevant developments include the volatile rebound of the CPO concept on July 14 (Changhua Laser surged 10%), and the acquisition of InP business assets of Qingdao Liyang by a subsidiary of Xingye Technology for RMB 55 million on July 23.
The target primarily produces 2/3-inch indium phosphide substrates, while its 4-inch products are still undergoing customer verification, with downstream clients mainly consisting of epitaxial wafer manufacturers. As indium phosphide serves as a core substrate material for EML lasers inside optical modules, this transaction signals sustained industrial capital deployment in upstream materials for optical chips.
Overall, the optical communication sector has mostly moved in tandem with broader market corrections recently. Leading players such as Innolight and Zhongji Innolight recorded net capital outflows on July 23.
Advanced Packaging：No standalone major updates today. The advanced packaging sector has tracked the semiconductor market downturn recently. Core names including Tongfu Microelectronics and JCET Group saw notable synchronous pullbacks on July 23.
ASE Group announced on July 1 price hikes of up to over 20% for advanced packaging services covering CoWoS and FoCoS, amid an estimated 10% supply-demand gap. This fundamental logic has not been invalidated, yet near-term market sentiment continues to weigh on sector valuations. Domestic capacity expansion projects press ahead: JCET’s RMB 7.8 billion project and Forehope Electronic’s RMB 10.3 billion expansion. The upward trend of backend capital expenditure remains intact.
SiC & Third-Generation Semiconductors：No major updates today. There have been no new industrial newsflow across SiC and GaN recently, and the sector is under pressure alongside power semiconductors. STMicroelectronics, one of the global SiC leaders, released weaker-than-expected Q2 earnings with subdued guidance, dampening market sentiment toward SiC and automotive-grade semiconductors. Investors need to watch whether its Q4 revenue guidance contains signals of recovery in the SiC business.
Memory & Computing Chips：The PHLX Semiconductor Index (SOX) opened lower and rebounded into positive territory on July 23. SK Hynix rose more than 5%, while Western Digital and Micron gained over 3%, showing signs of oversold rebound across the memory segment. In its Q2 earnings release, Google raised its 2026 capital expenditure guidance to USD 195–205 billion (up from the prior range of USD 180–190 billion) and expects a “material increase” in capital spending for 2027, directly confirming robust demand for AI computing power. News dated July 21 that Samsung has begun mass production of V10 NAND and supplies the product to NVIDIA confirms accelerated technical iteration for NAND flash.
Semiconductor Equipment & Materials：A fire at GlobalWafers’ Novara plant in Italy on July 21 suspended its 8-inch silicon wafer production line. All staff evacuated safely, yet the timeline for resumption remains undetermined. As the world’s third-largest silicon wafer supplier, GlobalWafers’ 8-inch wafers are widely adopted in automotive, industrial and power device applications. The production halt may exacerbate supply tightness for specific wafer specifications.
Intel’s CFO also indicated on the same day that the company’s equipment procurement budget for 2026 will rise by 40% versus 2025, pointing to resilient demand for semiconductor equipment. The E-Fund Semiconductor Equipment ETF attracted net subscriptions of 765 million shares against market trends on July 23, reflecting clear investor appetite for bargain hunting.
Policy & Macro Environment：Singapore’s GIC stated it will focus on advanced semiconductor manufacturing and design, while taking a prudent stance on AI investments, targeting physical AI infrastructure including data center power facilities and power grids.
The A-share semiconductor sector extended corrections on July 23; the STAR 50 Index fell 3.78%, Hua Hong Semiconductor slumped over 12%, and main funds recorded net outflows exceeding RMB 18.7 billion across the electronics sector. BlackRock maintained an “overweight” stance on US equities, arguing strong economic growth and earnings expansion underpin the medium-to-long-term value of chip stocks.
Daily Investment Tips
1. Risk Alert: STMicroelectronics’ weaker-than-expected results mark the first demand warning from a global leader in power semiconductors since July. If peers including Infineon and onsemi release similarly soft earnings later, it may signal a phase-down in demand for industrial and automotive semiconductors, creating divergence from the AI-fueled boom in memory and computing chips. Monitor whether this “divergent prosperity” pattern is validated by more corporate earnings reports.
2. Opportunity Highlights: Google’s upward revision of capital expenditure guidance resonates with Intel’s planned increase in equipment procurement, further boosting demand visibility for semiconductor equipment and materials. The A-share semiconductor equipment ETF continues to attract net subscriptions amid market declines, indicating institutional investors remain willing to build positions during sector pullbacks. The “pick-and-shovel” thesis for semiconductor equipment and materials amid the AI computing expansion cycle remains robust.
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