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US semiconductor stocks tumbled, with optical communication and memory names leading the decline. On September 14, the Philadelphia Semiconductor Index closed down 5.86% at 11,114.65, marking its steepest single-day drop since July 1. Corning fell over 13%, Coherent more than 12%, Lumentum roughly 10%, and Ciena over 8%. SK Hynix and Marvell dropped more than 7%, while Intel and Micron lost over 5%. The selloff was triggered by public calls from CEOs of top US AI firms to slow down technology development, coupled with the Fed’s September rate-hike probability climbing to 92.4% and the 10-year US Treasury yield hitting a three-year high.
TSMC unveiled its capacity expansion roadmap for next year for the first time: monthly 2nm capacity will rise from 90,000 wafers at year-end this year to 110,000 wafers by mid-next year (+22%), and 3nm capacity will increase from over 180,000 wafers to 210,000 wafers (+16%). Supply of advanced processes continues to expand.
Divergence emerges in advanced packaging routes. Samsung Electro-Mechanics and Qualcomm are co-developing 2.1D packaging based on an embedded organic bridge. It uses organic materials to replace EMIB silicon bridges to cut costs and circumvent patents, with over one year of R&D and qualification completed. Samsung Electro-Mechanics and LG Innotek are simultaneously testing products to enter Intel’s EMIB-T packaging substrate supply chain.
1.6T optical module order backlog extends into next year. 1.6T modules took center stage at CIOE. Full-year demand forecasts have been revised upward from roughly 10 million units at the start of the year to more than 25 million units. The final FCC rules have been officially published; leading domestic optical module makers are not on the restricted list, putting an end to prior extreme bearish assumptions.
Memory price hikes spread to niche segments. A September 14 TrendForce report states that AI chip demand is consuming wafer capacity and slowing NOR Flash bit output. Supply-demand imbalance will persist in H2 2026, and prices for high-capacity variants are expected to nearly double (+110%).
In-depth Analysis
Optical Communications / Optical Chips: CIOE confirmed the industrial roadmap: pluggable modules (1.6T mass shipment) → NPO (800G small-batch commercial rollout) → CPO (2026 as the window for mass commercialization) → OIO (die-to-die bare-chip interconnection, the ultimate form). Jiwei’s in-depth OIO forecast: the global optical interconnection market stood at approximately USD 15.38 billion in 2025 and will reach USD 43.14 billion by 2034. Within this, the OIO chip subsegment will grow from USD 0.831 billion to USD 12.083 billion (CAGR of 47.1%). NVIDIA invested USD 2 billion each in Lumentum and Coherent to lock in light sources. Its Spectrum-X Photonics CPO switch will enter full mass production in 2026 (laser count reduced by 75%, overall system power consumption cut to one-fifth). Supply chain breakdown: TSMC for silicon photonics fabrication, Lumentum for laser chips, TFC subassembly packaging, SPIL for packaging & testing, and Hon Hai for system assembly. Silicon photonics penetration will exceed 50% in 2026, hitting 60% for 800G and 80% for 1.6T. The overnight selloff in US optical communication stocks was a valuation and sentiment-driven correction; order visibility for the industry remains unchanged.
Advanced Packaging & Testing：In addition to the Samsung Electro-Mechanics and Qualcomm organic bridge solution, Xingji Micro Equipment stated at its earnings briefing that high-end PCB equipment orders are robust in H2, and advanced packaging equipment has entered validation and deployment phases. Capacity expansion for AI servers and substrates next year will continue to bring incremental demand. Huahai Qingke shipped China’s first fully automatic panel-level CMP mass-production tool to an advanced packaging fab. On the packaging and testing side, Qipai Tech projected Q3 net profit of around RMB 21.5 million, returning to profit year-on-year (revenue up 61.26% YoY, driven by higher packaging & testing demand). Kaiyuan Securities maintained an Overweight rating on ASMPT, noting its leading position in HBM/CoWoS bonding equipment. Its revenue and profit in 2026 Q2 rose 52.1%/177% YoY, with a long-term TCB market share target of 35%–40%. No major new updates on ABF films/substrates today. The prior thesis — JSR cutting ABF film supply to mainland China and domestic CBF/NBF/GBF films undergoing accelerated qualification — remains intact.
SiC / Power Semiconductors: No major new developments today. Ongoing updates: Tianyue Advanced develops SiC for thermal interposers in advanced packaging leveraging its high thermal conductivity. Unigroup Guowei plans to acquire Ruineng Semiconductor for RMB 1.9 billion (the domestic leader in SiC rectifier market share) to advance its transition to a “Fabless + IDM” model. A subsidiary of Lightec acquired an 86.15% stake in Jisheng Micro for RMB 3.2666 million; Jisheng Micro has laid out SiC materials and components.
Storage & Compute Chips: Per Omdia, global semiconductor revenue reached USD 425 billion in 2026 Q2, up 31.4% quarter-on-quarter, and is projected to surpass USD 500 billion in Q3. DRAM, NAND and NOR all posted record quarter-on-quarter growth for the period. Kioxia is reportedly considering a US ADR IPO to raise roughly USD 10 billion. Micron and SanDisk are recruiting HBM and NAND design talents in South Korea, while Samsung uses performance bonuses and equity incentives for talent retention. In the first half of NVIDIA’s current fiscal year, three customers each contributed over 10% of revenue, together accounting for 44% (versus two customers totaling 36% in the prior fiscal year), reflecting rising customer concentration. HBM boasts more than 15 test channels, compared with 3–4 for conventional DRAM; test equipment consumption is about 5–6 times that of standard DRAM.
Equipment & Materials: Nanda Optoelectronics disclosed that its ArF photoresist revenue rose 48% YoY in H1 2026. Juhe Materials plans to contribute RMB 300 million to join Guju Tonghui, lifting its total subscribed capital to RMB 950 million to build semiconductor material capabilities. Order visibility for equipment remains solid, though the segment tracked the US market downward.
Wafer Fabrication: TSMC’s 2nm/3nm capacity expansion plan has been finalized. Per TrendForce, its global foundry market share hit a new high of 72.5% in Q2 (Samsung:5.9%, SMIC:5.4%). Pricing power for advanced processes continues shifting toward foundries and upstream suppliers.
Policy & Macro Environment: The final FCC rules did not include domestic optical module vendors on the restricted list, easing tail risks from overseas regulation. Public calls by US AI firm CEOs to “slow down development” triggered the overnight market plunge. The probability of a Fed September rate hike stands at 92.4%, and the ECB has raised rates by 25 bps. Tightening global liquidity weighs on high-valuation tech assets. A-shares priced this in early on Sep 14: the STAR 50 Index fell 2.0%, the communications sector saw RMB 6.981 billion in net main capital outflows, with Innolight topping the sell list at RMB 2.643 billion in net selling.
Daily Investment Tips
1. Risks: The current correction is driven by two factors — rate-hike pricing and cooling AI sentiment (CEO remarks calling for slower development) — rather than deterioration in industrial fundamentals. Optical communication and memory sectors have borne the brunt given their high beta. Be alert to a second leg of downside during the de-crowding process. In the short term, use order visibility and earnings delivery (1.6T ramp-up, contracted HBM/DRAM pricing) as the defensive anchor.
2. Opportunities: The domestic substitution thesis for advanced packaging materials and equipment gains stronger traction amid market headwinds. New processes including glass substrates, organic bridge structures and panel-level CMP create incremental demand for equipment and materials, which is decoupled from overseas AI capex expectations. On the memory front, track the sustainability of price hikes spreading from mainstream DRAM/NAND to niche segments such as NOR Flash.
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