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The Philadelphia Semiconductor Index tumbled more than 5% on July 27, closing at its lowest level since May 20. SK Hynix fell below its IPO price merely 12 trading days after listing. The optical communications and memory sectors led the decline, and panic selling intensified across global semiconductor stocks.
Samsung Electronics confirmed that HBM5 will deploy base chips built on the 2nm GAA process. It delivers over 50% faster speed than HBM4E alongside higher-density Through-Silicon Vias (TSV), further clarifying its technology roadmap.
Shenzhen secured another two RMB 10-billion-level semiconductor projects. Zhen Ding Technology will invest over RMB 10 billion to build an intelligent manufacturing base for AI circuit boards, while TCL Zhonghuan plans to invest RMB 11.96 billion in a 12-inch semiconductor silicon wafer project. Capacity expansion for domestic semiconductors continues to accelerate.
NVIDIA rolled out multiple strategic initiatives. It invested USD 5 billion in Ilya Sutskever’s AI startup and co-founded the Open AI Safety Alliance together with Palantir, IBM, SpaceX and other parties. CEO Jensen Huang will travel to Capitol Hill this week for meetings with lawmakers.
In-depth Analysis
Optical Communication & Optical Chips：U.S.-listed optical communications sector suffered a sharp sell-off on July 27. Lumentum slumped more than 6%, while Coherent and Ciena fell over 3%. Judging from recent reports by CLS.cn, there were no major industrial developments for optical communications and optical chips over the past two trading days. The view from SemiAnalysis that large-scale rollout of CPO will be postponed to 2028–2029 continues to be priced in by the market. No significant industrial updates emerged today.
Advanced Packaging：No new material industrial events for the advanced packaging sector in the past two days. The market has fully absorbed ASE’s July 1 announcement of packaging price hikes of up to over 20% for CoWoS and FoCoS. The roughly 10% supply-demand gap for CoWoS remains unchanged. China’s leading packaging and testing firm Tongfu Microelectronics established a new microelectronics subsidiary in Shenzhen with registered capital of RMB 1 billion, continuing the capacity expansion trend among domestic packaging leaders. No fresh major updates today.
SiC & Third-Generation Semiconductors：BASIC Semiconductor (listed on the Hong Kong Stock Exchange) announced on July 28 that it has signed an EPC contract with a contractor for its silicon carbide module packaging production base project, with a total contract value of RMB 193.3 million. This marks the substantive launch of domestic production capacity construction for SiC module packaging. Beyond that, the expansion of China’s SiC industry continues, with no other major new developments in the past two days. Limited incremental information; overall sentiment stays stable.
Memory & Computing Chips：Koo Ja-hyun, Head of Samsung Electronics’ Device Technology Center, confirmed in an interview on July 27 that base chips for HBM5 will adopt the 2nm GAA architecture, delivering over 50% higher speed than HBM4E. The development will leverage experience accumulated from 4nm-based HBM4 base chips for early adoption. The remarks clarify Samsung’s HBM technology roadmap and demonstrate sustained investment in integrating advanced process nodes with HBM. In the secondary market for memory stocks, SK Hynix ADR plunged more than 7% on July 27, falling below its IPO price just 12 trading days post-listing. Sandisk tumbled over 11%, and Kioxia ADR retreated more than 57% from its late-June peak. The memory sector saw its steepest correction recently.
Semiconductor Equipment & Materials：ASML and Besi triggered automatic trading halts on Euronext Amsterdam after falling 8%–8.7% intraday on July 27, showing European semiconductor equipment stocks are also under pressure. Domestically, TCL Zhonghuan plans to invest RMB 11.96 billion to build a semiconductor silicon wafer project for integrated circuits in Shenzhen. Earlier, Zhen Ding Technology launched an intelligent manufacturing base for high-end AI carrier boards and flexible circuit boards in Shenzhen with investment exceeding RMB 10 billion. Domestic capacity expansion persists in semiconductor upstream materials and carrier board segments.
Policy & Macro Environment：The Philadelphia Semiconductor Index closed over 2% lower on July 27, hitting a fresh low since May 20, after sliding more than 5% intraday. NVIDIA dropped roughly 5%, marking its worst single-day decline since June 5; AMD fell over 8.5%, Intel over 5%, and Lam Research over 7%.
Brent crude futures settled nearly 9% lower. Easing expectations surrounding tensions in the Middle East weighed on oil prices yet failed to lift sentiment for tech stocks. NVIDIA CEO Jensen Huang will travel to Capitol Hill this week for meetings with lawmakers; the agenda has not yet been disclosed. Synopsys launched an autonomous AI agent workflow for chip design, accelerating AI adoption within the EDA sector.
Daily Investment Tips
1. SOX Enters Deep Correction Zone; Watch Risks of Confirmation for a Technical Bear Market: The Philadelphia Semiconductor Index’s cumulative decline from its June 22 all-time high is nearing the 20% threshold for a technical bear market. Signals including the memory sector leading the slump, SK Hynix falling below its IPO price, and Kioxia ADR halving highlight widening market divergence over the sustainability of the memory cycle. If the SOX confirms entry into a technical bear market, additional quantitative and technical selling may be triggered. Nevertheless, it is important to note that the current correction differs fundamentally from the semiconductor downturn in 2024. The underlying AI demand-driven logic remains intact, and the pullback is more akin to valuation digestion and position clearing.
2. Notable Divergence: Expanding Domestic Capacity vs. "East Rising, West Falling" Trend for US-listed Semiconductors While the Philadelphia Semiconductor Index undergoes a deep correction, investment in domestic semiconductor projects remains robust. A slew of projects are advancing, including TCL Zhonghuan’s RMB 11.96 billion investment, Zhen Ding Technology’s investment of over RMB 10 billion, Huike’s RMB 4 billion initiative, and Tongfu Microelectronics’ establishment of a new subsidiary. The upward capital expenditure cycle for equipment and materials across China’s semiconductor industrial chain contrasts with valuation compression in overseas markets. It is critical to monitor whether this divergence evolves into a medium-to-long-term trend.
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