The technology sector is under pressure, with Cambrian dropping over 4%! The Sci-Tech Innovation Chip ETF Huatai Securities (588750) fell more than 2.8%, attracting over 93 million yuan in net inflows for two consecutive days! Storage chips see both price and volume increases, driving the semiconductor trillion-dollar market.

April 2, the A-share market saw choppy pullbacks; the technology sector faced pressure. The China Innovation Chip ETF by Huitianfu (588750) fell by more than 2.8%. Funds continued to flow in against the trend, and the China Innovation Chip ETF by Huitianfu (588750) recorded two consecutive days of strong net inflows exceeding RMB 93 million.

Most of the constituent stocks of the China Innovation Chip ETF by Huitianfu (588750) underlying index saw pullbacks. Cambricon Technology and AIC Microsystems both fell by more than 4%. Pingtou Technology, Hygon Information, and SMIC all fell by more than 3%. Yuanjie Technology, Rapid Space Storage, etc. fell by more than 2%. Ruentex Technology, and Socionext, etc. also pulled back.

【Top 10 constituent stocks of the China Innovation Chip ETF by Huitianfu (588750) underlying index】

As of 15:00, constituent stocks are shown for display purposes only and do not constitute investment advice.

Regarding constituent stock news: On the evening of March 30, 2025 annual financial results disclosed by AIC Microsystems, a leading domestic semiconductor equipment company, showed that for the full year, the company achieved operating revenue of RMB 12.385 billion, up 36.62% year over year, setting a record high; attributable net profit was RMB 2.111 billion, up 30.69% year over year.

In addition, South Korea’s March export value grew 48.3% year over year, reaching a record US$86.13 billion, the strongest growth rate since August 1988. Driven by rising memory chip prices and increased AI investment, the semiconductor export value surged 151.4% year over year, reaching a record US$32.83 billion.

【AI demand may bring the trillion-dollar market forward by four years; storage is the main incremental driver】

Huatai Securities noted that SEMI expects global semiconductor sales to grow 23% to US$975 billion in 2026, bringing the near-trillion milestone forward by four years. Rising both quantity and price of memory is one of the main drivers of the semiconductor industry’s growth beyond expectations. TrendForce forecasts that in 1Q26, DRAM contract prices will rise 90–95% quarter over quarter. According to Digitimes, DRAM prices in 2Q26 may further increase by 70%; IDC believes the shortage may persist through 2027. Huatai Securities believes that unless there is a significant downturn in consumer electronics demand, the situation of storage price increases alongside tight supply and demand is likely to continue throughout the year. (Source: Huatai Securities 20260401, “SEMICON China 2026: Advanced Packaging and Optical Interconnect Leading a New Cycle of AI Semiconductors”)

【How should we look at the favorable outlook for storage chips?】

Everbright Securities is optimistic that the favorable cycle for storage chips will continue. In 2025Q4, storage chips entered a new round of price increases. The three major memory giants, Micron, Samsung, and SK Hynix, have successively raised the contract prices for their DRAM and NAND Flash products, and related spot prices have continued to rise in tandem. When reviewing historical cycles, storage chip price increases in 2016–2018 were directly driven by upgrades in smartphone configurations. In 2020–2023, the upturn in storage markets was supported by higher terminal shipments such as PCs, driven by the online economy and work-from-home scenarios, combined with the demand for supply-chain destocking during the pandemic. Different from the earlier storage cycle logic that relied on a single driver, the third storage cycle that began in 2024 shows a multi-factor profile driven by factors such as intensified capital expenditures by cloud vendors catalyzing an explosion in AI server demand, and ongoing upgrades in smartphone configurations. Summarizing historical patterns, we find that iPhone memory capacity typically completes an iteration upgrade every 2–4 years; storage capacity is upgraded every 4 years. After iPhone completes a storage capacity upgrade in 2025, we expect its memory capacity to undergo another upgrade. Such dense and continuous upgrades are expected to carry the global memory chip price-increase cycle into 2026. (Source: Everbright Securities 20260401, “Balancing Cycles and Growth, Optimistic About the Sustained Favorable Outlook for Storage Chips — 2026 Spring Strategy Report for the Electronics Industry”)

With AI demand plus domestic substitution as the two-line catalysts for the China Innovation Chip sector, you may consider index-based investing approaches to solve issues such as complex supply-chain links and the difficulty of investment analysis!

There are many chip-related indices in the market. If you compare popular indices today such as China Innovation Chips and semiconductors, you can see that although they all focus on the chip sector, their index construction differs significantly. In one sentence: The China Innovation Chip index focuses on the core chip segments, with a higher “chip-content,” stronger upside/downside elasticity, and higher growth potential.

【China Innovation Chips: Higher “chip-content”】

From the selection universe perspective, compared with other indices that sample across the entire market, the underlying index’s selection universe for the China Innovation Chip 50 ETF (588750) is the STAR Market. The STAR Market focuses on “hard technologies,” and is the home base for A-share chip companies. Over the past three years, among chip-listed companies, on average more than 90% chose to list on the STAR Market, and the average market-cap share is 96%.

From the industry distribution perspective, the underlying index of the China Innovation Chip ETF by Huitianfu (588750) focuses on the “high-end” upstream-to-midstream segments of the chip value chain, with a core-segment weight as high as 95%, higher than other indices.

From the rebalancing frequency perspective, the underlying index of the China Innovation Chip ETF by Huitianfu (588750) uses quarterly rebalancing, allowing it to reflect the development trend of the chip industry chain more nimbly.

As of 2026/2/27

【China Innovation Chip index: Stronger growth potential】

Because the underlying index of the China Innovation Chip 50 ETF (588750) focuses on the upstream-to-midstream segments of chips that are “high-end and cutting-edge,” and under the cycle growth plus accelerated domestic substitution, it demonstrates stronger growth potential.

The underlying index of the China Innovation Chip 50 ETF (588750) recorded net profit growth of as high as 94% in the first three quarters of 2025. In 2026, full-year expected attributable net profit growth is as high as 100%, significantly outperforming peers—stronger growth potential!

As of 2026/02/27

【China Innovation Chip index: Strong upside elasticity】

The China Innovation Chip 50 ETF (588750) has a long 20cm “leg,” rebounds faster. The upside repair elasticity is stronger than that of other indices in the same industry. From September 24, 2024 to today, the maximum gain is as high as 229%! In terms of the Sharpe ratio and maximum drawdown, the China Innovation Chip index not only shows better risk-adjusted returns, but also has a relatively stable trend.

Statistical period: 2024/9/24–2026/02/27

We are bullish on core chip technology. Consider $China Innovation Chip ETF by Huitianfu (588750), tracking and replicating the China Innovation Chip index. The upside/downside elasticity of the fund reaches 20%, covering the core segments of the chip industry chain, with high purity, high precision, and high elasticity! For those with limited barriers to entry, invest in core segments of China Innovation Chips to efficiently capture the big opportunities of “new quality productive forces,” rebounding one step ahead! Off-exchange investors may consider the linked fund (A: 020628; C: 020629), which allows subscription and redemption 7*24.

Risk disclosure: Funds involve risk; investment should be made with caution. This material is for publicity purposes only and does not constitute any legal document. Investment involves risk. The fund manager undertakes to manage and use fund assets according to the principles of honesty, credibility, diligence, and responsibility, but does not guarantee that the fund will always make a profit or guarantee any minimum returns. Past performance of the fund does not indicate future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of performance for this fund. Investors should carefully read legal documents such as the 《Fund Contract》, 《Prospectus》, and 《Product Information Summary》 to understand product information in detail. The underlying index cannot fully represent the entire stock market. The average return of the underlying index’s constituent stocks may deviate from the average return of the entire stock market. Please pay attention to the risks of index-based investing and the risks of holding concentrated positions in index constituents. Please note the risks associated with higher weights and higher concentration of certain index constituents. Also pay attention to risks related to index-based investing, ETF operation risks, and the unique risks of investing in specific products. When the fund invests in STAR Market stocks, it will face unique risks arising from differences in investment targets, market systems, and trading rules under the STAR Market mechanism, including but not limited to market risk, liquidity risk, the risk of STAR Market companies being delisted, and policy risk. Depending on investment strategy needs or changes in market environment, the fund may choose to invest some fund assets in STAR Market stocks or may choose not to invest fund assets in STAR Market stocks; fund assets are not necessarily invested in STAR Market stocks. This fund is a product in the medium-to-high risk category (R4), and is suitable for investors whose risk tolerance level assessment result is Growth type (C4) and above. For the customer–product risk level matching rules, please refer to the Huitianfu official website. When subscribing through distribution institutions, the investor should follow the risk rating rules of the distribution institutions. When investors apply for subscription/redemption of ETF fund shares, the subscription/redemption agent securities firms may collect commissions according to a standard not exceeding 0.50%, which includes relevant fees collected by the stock exchange, the registration institution, and so on. For sales fees of other funds, please refer to the corresponding legal documents such as the relevant fund prospectus and product information summary.