Wall Street Insight Breakfast FM-Radio | July 2, 2026

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Market Overview

On Wednesday, global risk assets showed divergent trends. U.S. stocks retreated from record highs, with the AI hardware sector facing profit-taking and the three major indexes mixed. Storage chip stocks, the "shovel sellers," saw rare sell-offs: Micron fell 10.57%, SanDisk dropped 10.62%, and the Nasdaq 100 reversed 1.5%. Capital shifted to software, with the S&P 500 down only 0.19% and the Dow flat. Gold rose 0.6%, while WTI fell 2.2% amid U.S.-Iran talks.

Safe-haven sentiment and rate hike expectations intertwined, with U.S. bond yields rising, gold rebounding, oil continuing to fall, and the yen hitting a 40-year low.

During the Asian session, the Shanghai Composite rose then fell, closing up 0.4%. Brokerage stocks surged, while the ChiNext fell nearly 2%. Computing hardware stocks saw collective adjustments in the afternoon, and Sungrow Power Supply once hit the daily limit down.

Highlights

> China > > Wang Yi spoke with U.S. Secretary of State Marco Rubio by phone. > > Rare joint statement! China and the EU announced the launch of a trade and investment consultation mechanism. > > China's June RatingDog Manufacturing PMI expanded for the seventh consecutive month, with Q2 posting its strongest quarterly performance since 2020. > > Next Monday, A-shares will bid farewell to the 5% price limit. > > Overseas > > Waller: Inflation has cooled in the past four weeks, AI is reshaping the economy, and forward guidance has lost its necessity. Waller appointed former Bank of England Governor King to co-chair a newly established communications working group. Hassett: Some Fed officials may vote "against Trump," Waller does not want to raise rates but faces divided opinions. > > The U.S. and Iran held indirect talks in Doha. Trump: The two countries are "getting along very well." > > USMCA changes: The U.S. abandons renewal, shifting to annual reviews, raising uncertainty in North American supply chains. > > "Small non-farm" cools! U.S. June ADP private payrolls added 98k, far below expectations. U.S. June ISM Manufacturing expanded for the sixth consecutive month, with the cost index posting its largest decline in nearly four years. > > Eurozone June CPI fell to 2.8%: Urgency for rate hikes diminishes sharply, ECB enters a "data-dependent" neutral period. > > Reports say Meta is planning to enter the cloud computing market to sell excess AI computing resources, sending Meta shares up 8.8%. AI infrastructure stocks plunged, with SanDisk and CoreWeave falling over 10% intraday, as markets began to worry about overcapacity in computing power. > > After crossing the safety red line, restart: Anthropic Fable 5 fully integrates with GitHub Copilot, betting on long-cycle autonomous programming. > > Micron CEO again "subtly criticizes" Apple: Once aggressively pressured prices to a third, leaving the industry unable to expand production. > > Musk to make a phone? Reports: SpaceX showcases an AI device prototype similar to a phone, thinner than the iPhone. > > KOSPI index fell nearly 4% intraday, South Korean government urgently denies rumors of "profit sharing among chip giants." South Korean stock market hit by "fake news": National Pension Service reportedly to start rebalancing in July, potentially selling up to 74 trillion won in domestic stocks. Behind South Korea's stock market surge of over 100% in half a year: Foreign capital fled 148 trillion won, retail investors leveraged nearly 100 trillion won to take over. > > Panasonic: Over the next two years, it will invest 500 billion yen in AI infrastructure.

Market Close

U.S. Stocks: S&P 500 fell 0.22% to 7483.23 points. Dow fell 0.03% to 52305.24 points. Nasdaq fell 0.66% to 26040.031 points.

A-shares: Shanghai Composite rose 0.44%, Shenzhen Component fell 0.53%, ChiNext fell 1.89%. Total turnover was 3.66 trillion yuan, about 390 billion yuan more than the previous day. Large financials like brokerages and insurance led gains, with over 4,300 stocks rising; in the afternoon, computing hardware, chip semiconductors, and the photovoltaic supply chain collectively adjusted, with the STAR 50 once falling nearly 4%.

European Stocks: European STOXX 600 fell 0.38% to 639.31 points, retreating from the previous day's record high.

U.S. Bonds: U.S. 10-year Treasury yield rose 0.99 basis points to 4.4752%. Two-year Treasury yield was roughly flat at 4.1702%.

Commodities: WTI crude fell 1.32% to $68.58/barrel, Brent crude fell about 2.4% to $71.19/barrel. In late New York trading, spot gold rose 0.57% to $4030.87/oz. Spot silver rose 0.90% to $59.0942/oz.

Details

Global Heavyweight

China

Wang Yi spoke with U.S. Secretary of State Marco Rubio by phone. Wang Yi pointed out that both sides should always uphold the spirit of equality, respect, and mutual benefit, transforming the important consensus of the two heads of state into concrete policies and practical measures. Building a constructive and stable strategic relationship is not just a slogan; it requires joint action, mutual effort, and sustained commitment. To this end, both sides should lengthen the list of cooperation, create more positive agendas, while shortening the list of problems and managing various risks and hidden dangers.

Rare joint statement! China and the EU announced the launch of a trade and investment consultation mechanism. According to Global Times, China and the EU reached multiple consensuses, formally establishing the China-EU Trade and Investment Consultation Mechanism, which includes four working groups: trade and investment balance, export controls, intellectual property rights, and WTO reform. The joint statement said that as key trading partners, the main purpose of establishing the China-EU Trade and Investment Consultation Mechanism is to "strengthen ministerial-level trade and investment policy dialogue to stabilize bilateral relations and make them more balanced."

China's June RatingDog Manufacturing PMI expanded for the seventh consecutive month, with Q2 posting its strongest quarterly performance since 2020. This data shows multiple positive signals: employment growth is the fastest since August 2023, procurement activities have exceeded the long-term average for the fifth consecutive month, and the input price inflation that has troubled manufacturers for months has significantly cooled, helping to ease corporate cost pressures. RatingDog founder Yao Yu said the manufacturing sector maintained steady expansion in June, benefiting from sustained growth in new orders, easing cost pressures, and improved labor market conditions.

Next Monday, A-shares will bid farewell to the 5% price limit. Starting July 6, the price limit for risk-warning stocks on the main board will be adjusted from 5% to 10%, consistent with other main board stocks. At the same time, the Shanghai market will implement a closing call auction for fund tail-end trading, and after-hours fixed-price trading will be extended to all Shanghai A-shares and ETFs. The Shenzhen Stock Exchange and Beijing Stock Exchange will also adjust relevant rules simultaneously. This revision has limited impact on investors' trading operations, but attention should be paid to changes in fund tail-end trading and after-hours fixed-price trading mechanisms, and cautious participation in risk-warning stock trading.

Overseas

Waller: Inflation has cooled in the past four weeks, AI is reshaping the economy, and forward guidance has lost its necessity. Fed Chair Waller clearly stated at the ECB Forum that the Fed will abandon interest rate forward guidance, and future decisions will rely entirely on real-time economic data. He noted that the risk of inflation in the U.S. has declined over the past four weeks, but the ultimate impact of AI on the economy and inflation still requires data judgment. Waller reiterated that the Fed's independence is not subject to political pressure and emphasized that it will continue to promote balance sheet reduction and internal reforms to adapt to the rapidly changing economic environment.

Fed Chair Waller makes a heavyweight move: appoints former Bank of England Governor King to co-chair the newly established communications working group. King served as Governor of the Bank of England from 2003 to 2013, leading the bank through the 2008-2009 financial crisis, and was a key figure in shaping the Bank of England's communication style, pioneering a shift from the traditional "mystery and secrecy" to transparent communication.

Hassett: Some Fed officials may vote "against Trump," Waller does not want to raise rates but faces divided opinions. White House National Economic Council Director Hassett criticized Fed decisions as potentially politically motivated; Waller does not want to tighten policy but must face a decision-making committee with internal disagreement. Hassett also said that if the Fed chooses to raise rates, it would be a "macroeconomic mistake."

The U.S. and Iran held indirect talks in Doha. Trump: The two countries are "getting along very well." U.S. President Trump told media on July 1 that the U.S. is currently "getting along very well" with Iran and said recent talks in Qatar were "going well." Trump said: "The process of denuclearizing Iran is progressing well, with very good talks between the two sides. We'll see."

Iran sells oil globally with fanfare, but the Hormuz leverage is weakened? U.S. media says daily oil throughput at the Strait has returned to 98k barrels. According to U.S. media, U.S. officials said crude oil transported through the Strait of Hormuz has exceeded 10 million barrels per day. According to Iranian media, Iranian officials said Iran is prepared to export oil to all countries except Israel, hoping to "establish a stable, long-term cooperative relationship with India"; it will "maximize" the U.S.'s 60-day sanctions exemption and very much hopes for an extension.

USMCA changes: The U.S. abandons renewal, shifting to annual reviews, raising uncertainty in North American supply chains. The Trump administration formally abandoned renewing the USMCA, opting instead for annual reviews, but the agreement remains in effect for ten years. Future negotiations over rules governing cross-continental North American supply chains and key low-tariff treatment will be fraught with uncertainty, particularly important for automakers, agriculture, and energy companies. U.S. lobbying groups like the Chamber of Commerce have been pushing governments to strengthen and preserve the agreement.

"Small non-farm" cools! U.S. June ADP private payrolls added 98k, far below expectations. U.S. private sector employment increased by 98k in June, below economists' expectations of 119k, compared to a previous increase of 122k. Employment has increased for the 12th consecutive month, indicating that the labor market cooling has not yet turned into a significant slowdown.

U.S. June ISM Manufacturing expanded for the sixth consecutive month, with the cost index posting its largest decline in nearly four years. U.S. manufacturing expanded for six consecutive months, the longest streak since 2022. The June manufacturing PMI fell 0.7 points from the previous month to 53.3, below the expected 53.9 but still near a four-year high. Falling oil prices pushed the ISM prices paid index down 9.1 points to 73, compared to an expected 77.5, the largest single-month drop since July 2022.

Eurozone June CPI fell to 2.8%: Urgency for rate hikes diminishes sharply, ECB enters a "data-dependent" neutral period. Eurozone inflation fell more than expected in June, with the overall CPI dropping to 2.8% year-on-year and core CPI falling to 2.4%. Services inflation fell from 3.5% to 3.2%. After the data release, market bets on further ECB rate hikes cooled significantly. Although energy risks have eased, officials remain cautious, emphasizing the need to observe the transmission of energy prices to the services sector and wage growth.

Reports say Meta is planning to enter the cloud computing market to sell excess AI computing resources, sending Meta shares up 8.8%. Meta plans to enter the cloud infrastructure market through a newly formed organization called "Meta Compute," selling its excess AI computing power and model access, built from billions of dollars in investment. This move challenges the underlying market narrative of "computing scarcity," dragging down hardware peers like Nvidia in pre-market trading on Wednesday. Goldman Sachs pointed out that market logic is shifting to reward companies that cut capital expenditures, potentially causing reflexive stagnation in the hardware capex cycle.

• Meta news triggers sell-off! AI infrastructure stocks plunge, with SanDisk and CoreWeave falling over 10% intraday. Is the market starting to worry about overcapacity in computing power? According to reports, Meta is discussing building a new cloud computing business that could directly sell its excess AI computing power to external customers. This has led some investors to worry: Has Meta purchased too many GPUs? Is AI computing power shifting from shortage to surplus? Will tech giants slow capital expenditure in the future? However, some brokerages point out that Meta selling computing power is essentially seeking a commercial outlet for its massive AI capex, rather than implying a slowdown in AI investment.

After crossing the safety red line, restart: Anthropic Fable 5 fully integrates with GitHub Copilot, betting on long-cycle autonomous programming. GitHub suspended all GitHub Copilot users' access to Claude Fable 5 on June 12. On July 1 EST, it announced that the model is now fully back online on GitHub Copilot.

U.S. "unblocks" Anthropic Fable 5's top-tier model. Anthropic: Access restored starting Wednesday. On Tuesday, June 30, local time, the U.S. Department of Commerce sent a letter to Anthropic co-founder Tom Brown, formally announcing the lifting of export restrictions on Fable 5 and Mythos 5. Anthropic confirmed receipt of the Commerce Department notice on Tuesday via X platform and said it would restore access starting the next day, "thanks to users for their patience."

Trading "castration" for "unblocking"? Fable 5 returns on Wednesday, but it's no longer the original Fable 5. The new model is equipped with strict safety classifiers, causing a large number of programming and debugging requests to be automatically downgraded to older models like Opus 4.8, significantly narrowing the actual usage scenarios for core capabilities. Developers generally believe that the nominally "unblocked" Fable 5 has been substantially weakened, with significantly reduced usability compared to the original, more like a limited compromise version than a true return of capability.

Anthropic admits it! Claude Code Trojan horse caught, rolled back on Thursday. Anthropic secretly hid invisible code in Claude Code for over three months. After being caught, the Claude Code leader defended it, saying it was all a misunderstanding and would be removed immediately!

Oracle's AI anxiety: Built hundreds of billions of data centers, but fears OpenAI can't pay the bills. Oracle is betting on AI infrastructure expansion but warns of the risks behind massive data center investments: If core customers cannot pay bills or renew contracts, the company may face expensive idle computing assets that are difficult to re-lease or repurpose.

Micron CEO again "subtly criticizes" Apple: Once aggressively pressured prices to a third, leaving the industry unable to expand production. Micron Technology's CEO said that "some customers" previously pushed storage chip prices to extremely unreasonable levels, resulting in product prices being only a third of the original. This aggressive price-cutting strategy severely eroded storage manufacturers' gross margins and directly undermined the entire industry's ability to expand capacity and make new investments.

Musk to make a phone? Reports: SpaceX showcases an AI device prototype similar to a phone, thinner than the iPhone. According to reports, SpaceX has shown investors an AI handheld device prototype that is thinner and lighter than the iPhone, equipped with a proprietary operating system, integrates xAI, and will use Qualcomm Snapdragon chipsets. This move is seen as Musk's latest attempt to reduce dependence on third-party device makers like Apple and Google, integrate his business empire, and build an AI-driven "universal app" ecosystem.

KOSPI index fell nearly 4% intraday, South Korean government urgently denies rumors of "profit sharing among chip giants." South Korea's Kospi index plunged nearly 4% intraday. The South Korean Ministry of Trade, Industry and Energy said the online rumor that "Seoul has sent letters to Samsung Electronics and SK Hynix requesting the establishment of a government-led think tank for profit sharing" is "completely untrue" and announced that it will refer the deliberate dissemination of false information to investigative authorities.

• South Korean stock market hit by "fake news": National Pension Service reportedly to start rebalancing in July, potentially selling up to 74 trillion won in domestic stocks. South Korean media reported that the National Pension Service (NPS), due to a surge in KOSPI leading to an overweight in domestic stock positions, is expected to start rebalancing and reducing holdings in July. According to institutional estimates, if KOSPI rises back to 9,000 points, NPS could sell up to 74.4 trillion won in Korean stocks. Subsequently, NPS Chairman clarified that the claim was unfounded and emphasized a gradual, capped market-stabilizing strategy to minimize impact.
• Behind South Korea's stock market surge of over 100% in half a year: Foreign capital fled 148 trillion won, retail investors leveraged nearly 100 trillion won to take over. South Korea's KOSPI surged 101% in the first half of the year, ranking first globally. However, beneath the bright numbers, undercurrents surged: driven by rebalancing and exchange rate pressures, foreign investors made record net sales of 148 trillion won and fled, while retail investors boldly took over with nearly one quadrillion won in leveraged funds. Goldman Sachs pointed to this as a "self-reinforcing feedback loop," warning that Asian leverage demand has pushed the global financing chain to its limit.

Panasonic: Over the next two years, it will invest 500 billion yen in AI infrastructure. Panasonic is accelerating its transformation into the AI infrastructure sector, planning to invest about 500 billion yen over the next two years, aiming to increase AI-related sales to 1.4 trillion yen within three years. Its core entry points are energy storage systems, circuit materials, and electronic components needed for AI data centers, using storage batteries to balance the high power consumption of GPUs. The company aims for AI business revenue to account for 30% within the next decade, making it a new generation growth pillar.

Research Highlights

Starting July 1, the semiconductor industry has entered a second round of price hikes. On June 30, Silan Micro sent a letter to customers, citing cost increases and surging demand from AI and new energy, leading to sustained capacity tightness, deciding to raise product prices by 15%-25% in Q3, the second price hike this year. Earlier, Starpower Semiconductor, Yangjie Technology, and Silan Micro had also issued notices for a second round of price hikes this year. According to incomplete statistics, over 20 domestic and international semiconductor companies have issued first-round price hike letters in the first half of the year.

Nomura refutes "semiconductor peak theory": "Epic gap" is coming, price hikes and profit upgrades remain the biggest catalysts. Nomura warns that the AI semiconductor cycle is far from peaking, and the second half of 2026 may see an "epic" supply chain mismatch. As cloud vendor capex continues to expand, shortages of components like advanced packaging, PCBs, and CCLs will drive price hikes and profit upgrades.

The cheaper AI gets, the more expensive chips become. Claude Sonnet 5 delivers 90% of flagship performance at 40% of the price. On the same day, the U.S. semiconductor index rose nearly 4%, and storage chips have increased sixfold over the past year. In the past, there was a line in the AI narrative: reasoning efficiency would kill chip demand. However, the reality is that the cheaper AI is, the more valuable physical computing power becomes—every dollar model makers spend on price wars ultimately flows into the pockets of chip and wafer fabs.

SemiAnalysis founder: Reasoning may surpass oil to become the largest global market; by 2040, space data centers will dominate global computing power. The AI reasoning market will surpass oil, computing power will forever be scarce, and by 2040, over half of incremental computing power will move into space—the SemiAnalysis founder made a series of shocking judgments. He revealed that hardware-software co-design is the true source of hundredfold efficiency improvements; the "incompatibility" between DeepSeek and TPU reveals the deep moat of the GPU ecosystem; and Jensen Huang's promotion of emerging cloud vendors is essentially a strategic move to prevent computing power monopoly.

Don't just watch rate hikes—the real split in Sintra is deeper than interest rates. "Forward guidance" is ending, and central banks in the U.S. and Europe are diverging: Lagarde shifts to "framework guidance" with clear reaction functions; Waller ushers in a return to monetarism, retreating to "rule-based silence." This is not an interest rate game but a paradigm shift at the fundamental level, and global market pricing models are about to experience a major shock.

The U.S. stock rally is extreme; even the most bullish are starting to guard against a "summer storm." With factors like quarter-end rebalancing pressure, the closing of corporate buyback windows, unclear Fed policy paths, and sharply inflated leveraged positions stacking up, market vigilance over a "summer storm" in Q3 is rising. Several Wall Street strategists, while maintaining a bullish stance, have begun to warn of a 5% to 20% pullback risk.

AI bubble, interest rates—who will be the "killer" to end this bull market in U.S. stocks? U.S. stock valuations have reached extreme levels—the P/E ratio is at a 60% premium to historical averages—but strategist Ian Harnett warns that high valuations alone are not enough to end a bull market. The real "killer" would require a sharp 2 to 4 percentage point rise in interest rates or a systemic collapse in AI client profitability, and neither condition currently holds. This bull market may be entering its endgame, but the endgame is not over yet.

Domestic Macro

South Korean investors heavily buy Chinese assets. In the first half of this year, South Korean investors actively deployed in Chinese assets through ETFs. In the A-share market, the ChinaAMC CSI 5G Communication Theme ETF, with a net purchase of $4.3764 million, topped the list of net purchases by South Korean investors, becoming the most favored A-share ETF. International capital's concentrated addition to Chinese tech-related assets stems from deep recognition of China's industrial core competitiveness by global sovereign funds and professional investment institutions.

Domestic Companies

Buying brokerages equals buying tech? ChangXin, Yushu, and others are queuing for listings; brokerages are ushering in a "big year for investment banking." The wave of hard-tech IPOs is reshaping brokerage valuation logic. ChangXin's 29.5 billion yuan fundraising, Yushu Technology, Yangtze Memory, and other star projects are advancing intensively, and the trading narrative of "buying brokerages equals buying discounted tech stock baskets" is spreading rapidly. Under the mandatory follow-on investment system for the STAR Market, the floating profit elasticity of direct investment and follow-on investments by top brokerages is astonishing—for just one deal involving ChangXin, China Merchants Securities' theoretical return is 13.2 billion yuan. Currently, brokerage P/B is only 1.20 times, at historical lows. The triple logic of short-term elasticity, medium-term reserves, and long-term ROE uplift resonates, and the window for overweighting may have opened.

June electric vehicle report cards: Leapmotor retains new energy vehicle sales crown, Harmony Smart Mobility deliveries return to over 50k, NIO and XPeng exceed 40k, Xiaomi 30k. In June, Leapmotor retained the crown of new energy vehicle sales with global deliveries of 93,376 units, up 95% year-on-year; NIO and XPeng delivered 40,597 units (up 62.9% year-on-year) and 40,126 units (up 15.9% year-on-year), respectively. Li Auto recorded 30,895 units, with both year-on-year and month-on-month declines.

Overseas Macro

Fighting inflation with statistics bureaus? The U.S. revises the PCE calculation method, and May core inflation is expected to fall by 13 basis points. In September, the U.S. Bureau of Economic Analysis will adjust the calculation method for portfolio management fees in the PCE price index, bringing a signal of cooling to Fed Chair Waller. This technical correction is expected to lower the May core PCE inflation reading by 13 basis points while revising up the May real personal consumption expenditure growth rate by 6.4 percentage points, also slightly boosting GDP growth.

Inflation cooling and oil price collapse dismantle rate hike consensus; ECB internal opinions split; September may become a policy watershed. ECB hawkish officials believe that inflation pressures from the U.S.-Iran conflict are still being transmitted and may be delayed through wages, food, and service prices; dovish officials believe that oil prices have fallen back to pre-war levels and there will be no obvious second-round inflation, as evidenced by the sharp drop in eurozone inflation in June. Markets expect the ECB to stand pat in July, but with wage data released before the September meeting, divergence may escalate.

South Korean exports post the largest increase in nearly 50 years; AI chip demand pushes monthly volume to exceed $740k for the first time. South Korea's June exports surged 70.9% year-on-year to $102.25 billion, breaking the $1.48M mark for the first time in a single month, the fastest growth in half a century. Semiconductor exports hit a record $44.8 billion in a single month, and computer shipments more than quadrupled year-on-year. The pull effect of AI-related demand on South Korean exports is extending from storage chips to a broader range of tech hardware.

Japan's top currency official: Market intervention two months ago was effective; some U.S. officials also supported it. Japanese Ministry of Finance Vice Minister for International Affairs Atsushi Mimura defended the recent currency intervention, saying the effect met expectations, and stated that the U.S. side did not object and even expressed support. Mimura did not repeat the Japanese Ministry of Finance's usual phrases like "ready to respond to excessive volatility." Analysts believe that officials are deliberately downplaying verbal warnings, possibly to preserve the element of surprise for future interventions. Markets generally view 164 to 165 as the next likely intervention range.

Overseas Companies

Stark contrast! U.S. chip stocks post "best quarter in history," while Nvidia "lags far behind." The Philadelphia Semiconductor Index surged 88% in Q2 and doubled in the first half, the strongest annual performance since the 1999 dot-com bubble. SanDisk soared 857%, and Micron's market cap exceeded $1 trillion. However, cracks are appearing in this feast—AI chip king Nvidia, with a 7% year-to-date gain, is at the bottom, as hedge funds exit at the fastest pace in a decade and retail investors flood in, pushing the volatility index to 83. An epic celebration and historic risk are unfolding simultaneously.

OpenAI cuts reasoning costs by 50%, launching a price war externally while keeping secrets internally. "This is a very important core secret recipe for them, and they don't even want to tell other employees inside OpenAI. Because if these things leak, they could quickly be adopted by other labs, and they could also use them to reduce costs."

PJM, the largest U.S. power grid, advances data center power supply plans; electricity capacity prices have surged over 1,000% in two years. Capacity prices at PJM, the largest U.S. grid operator, have soared over 1,000% in two years, with explosive electricity demand from AI data centers pushing regional grids to a tipping point. PJM members recently voted to advance a "backstop purchasing" plan, requiring data centers to choose one of two options: pay for grid expansion themselves or accept mandatory power outages during peak hours. The power supply game between tech giants and grid operators has entered a white-hot phase.

Samsung's HBM4E yield exceeds 70%; seventh-generation AI memory development enters a stable phase. Samsung's AI memory has another "blockbuster"! The HBM4E test yield has broken 70%, entering a stable period. The next-generation DRAM process aims for mass production certification in November, securing a head start on Nvidia's next-generation AI chip dividends.

Breaking industry practice! Reports: SK Hynix long-term contract prices "without upper limit," pricing game intensifies. SK Hynix's long-term agreements (LTAs) break from convention by having no "price ceiling," making it the only memory manufacturer that can fully enjoy the benefits of spot price surges during supply tightness. At the same time, it has extended LTA terms to 3 to 5 years. In contrast, although Micron's new LTAs set a ceiling based on the Q2 2026 market price, its price floor corresponds to a gross margin far exceeding historical peaks. The two giants have different pricing models, but both reflect a systemic increase in bargaining power.

Korean semiconductor substrate makers: Samsung and SK Hynix are reportedly demanding a price cut in the second half of the year, potentially reversing the 3% to 4% increase from early this year. Samsung and SK Hynix are negotiating with upstream substrate makers, leaning toward lowering or even withdrawing the average 3% to 4% price increase from early this year, completely offsetting the price adjustments brought about by the surge in gold and copper costs in Q1. Since many mid-sized companies operate outside cost-linked mechanisms, substrate makers face the dual dilemma of high raw material costs and falling delivery prices.

Apple's India partner leaks: Over 200k confidential documents on the dark web, extensive details of iPhone 18 Pro exposed. Apple's supply chain suffered a major leak. The hacker group "World Leaks" published over 200k internal documents from Tata Electronics on the dark web, including R&D materials and test photos for the iPhone 18 Pro, some with Apple's "confidential" watermark. Apple has launched an investigation and is working with Tata to strengthen security measures, including restricting system access and conducting digital forensics.

Industry/Concepts

1. Passive Components | According to Shanghai Securities News, major passive component maker Yageo has raised prices across its entire capacitor product line, including tantalum capacitors, MLCCs, aluminum capacitors, solid aluminum capacitors, film capacitors, and supercapacitors. The affected products cover about 50% of Yageo's revenue, and this price increase for the first time includes direct customers (EMS/OEM). Multiple Yageo distributors, including Dongguan Chaoxiang Electronics and Shenzhen Hefengxin Technology, stated that this adjustment extends from distributors to direct customers, meaning spot and contract prices rise simultaneously.

Comment: CITIC Securities reports that Yageo's announcement of broad price hikes for MLCCs and other capacitors, covering both channels and direct customers, suggests that a wave of price increases by original manufacturers before and after July this year will gradually materialize. Driven by Yageo, this MLCC cycle is expected to last over a year, with price increases potentially doubling or even tripling significantly.

2. Smart Wearables | According to Shanghai Securities News, on July 1, the Shanghai Economic and Information Technology Commission, along with the Municipal Publicity Department, the Municipal Commerce Commission, the Municipal Culture and Tourism Bureau, and the Municipal Market Supervision Administration, issued the "Shanghai Action Plan for Promoting High-Quality Development of the Fashion Consumer Goods Industry (2026-2028)." The plan states a focus on trends in proactive intelligence, seamless interaction, unified protocols, and end-cloud collaboration, promoting smart linkage across "home, office, and travel" scenarios. It aims to tackle end-side AI chips, lightweight models, AR spatial computing, and flexible display technologies, developing lightweight and stylish AI phones, AI PCs, smart speakers, and other terminals, as well as smart glasses, smart earphones, and other wearable products, while deploying home service and companion robots.

Comment: CICC believes that various smart glasses have the potential to become the next mobile terminal, leading a new wave of development in smart wearables. According to estimates, global shipments of AI smart glasses could reach 80 million units by 2030, with a market penetration rate of about 4.3%.

3. Intelligent Driving | According to Shanghai Securities News, on July 1, Avatr Technology announced that it had obtained an L3 autonomous driving test license, and its vehicle-related road testing work has been fully implemented steadily as planned. At this stage, Avatr will rely on the open public test sections in Chongqing to conduct L3 autonomous driving field verification, simultaneously advancing actual road access reliability tests, deeply adapting to the complex road conditions and diverse traffic environments in China.

Comment: CICC research points out that the intelligent driving sector has opened a new chapter of L3 competition among automakers, with dual potential positive catalysts from Tesla FSD and Robotaxi evolving. Kaiyuan Securities estimates that the domestic Robotaxi market size will approach nearly 500 billion yuan by 2030.

4. Fluorochemicals | According to China Securities Journal, industry sources say that TSMC, Samsung, and SK Hynix are all scrambling to buy electronic-grade hydrofluoric acid (HF). Reports say that since the beginning of this year, geopolitical tensions in the Middle East have pushed up prices of sulfur, sulfuric acid, and anhydrous hydrofluoric acid, raising the cost of electronic-grade HF. Some suppliers have successively raised selling prices by about 20% to 30%. In the high-spec G5 spot market, prices have surged from about 120k yuan/ton at the beginning of the year to over 210k yuan/ton, an increase of more than 75% in half a year.

Comment: Electronic-grade hydrofluoric acid, as a high-end fluorochemical material and an important cleaning and etching agent for semiconductor chips, is called a "chemical key" and is an indispensable wet electronic chemical for wafer manufacturing. High-purity electronic-grade hydrofluoric acid is used in wafer cleaning and etching processes, ranking among the top three wet electronic chemicals by usage volume. With the continuous expansion of AI GPUs, HBM high-bandwidth memory, and advanced logic chips, the usage of high-purity electronic-grade hydrofluoric acid per wafer increases, making it an important strategic material in the AI semiconductor supply chain. However, high-end capacity release is slow, exacerbating the supply-demand mismatch.

5. Chip Packaging | According to China Securities Journal, AI-driven semiconductor demand is pushing up prices for advanced packaging. Global leading outsourced semiconductor assembly and test (OSAT) provider ASE Technology has again adjusted packaging quotes, with price increases exceeding 20%. This round of price hikes covers various advanced packaging technologies, including CoWoS and FoCoS, and has also affected major U.S. customers. Markets generally expect other packaging and testing companies to follow suit.

Comment: The AI investment cycle is reshaping the semiconductor value chain, accelerating the industry toward the "foundry 2.0" era. The core feature of foundry 2.0 is the deep integration of wafer manufacturing, advanced packaging, and testing capabilities. As advanced packaging capacity becomes a key bottleneck in the AI supply chain, leading OSAT vendors are gaining more growth opportunities. Especially against the backdrop of semiconductor giants like TSMC and Samsung Electronics continuously adding capacity, advanced packaging technologies represented by CoWoS still face supply-demand gaps. Currently, leading domestic equipment manufacturers have made substantial breakthroughs in this track.

6. Xinchuang (IT Application Innovation) | According to China Securities Journal, effective July 1, the "Measures for the Management of Password Use in Electronic Certification Services" officially came into effect, an important regulatory document in the field of electronic certification service password management. The Measures primarily regulate the use of passwords by electronic certification service institutions, covering aspects such as the use of cryptographic products, application of cryptographic technologies, and security management requirements, aiming to ensure the security, reliability, and legality of electronic certification services.

Comment: Driven by the convergence of national security strategy, data element circulation, and digital transformation, the cryptography industry is transforming from "compliance-driven" to "value-driven." With the advancement of new infrastructure, commercial cryptography is accelerating its penetration into seven emerging scenarios: IoT, IoV, industrial internet, smart cities, blockchain, 5G security, and cloud computing. With the implementation of the Cryptography Law and the newly revised "Regulations on the Administration of Commercial Cryptography," the application of commercial cryptography has entered a legislative and standardized stage. Operators of critical information infrastructure are mandatorily required to conduct security assessments of commercial cryptography applications (cryptography assessments). According to estimates, cryptography assessments and supporting national cryptography transformation could bring over 1M yuan in incremental market space annually. Under strong demand, the Chinese commercial cryptography market size is expected to exceed 200 billion yuan by 2027, with an average annual growth rate of over 27%.

7. Industrial Mother Machines (Machine Tools) | According to China Securities Journal, on June 30, the Hong Kong-listed company Tsugami China rose over 15%. The company recently released its FY2026 annual report, with operating revenue of approximately 51.84 billion yuan, up about 21.6% year-on-year, and net profit reaching 36.6k yuan, up about 39.9% year-on-year, both hitting record highs. After a previous cycle of adjustment, the domestic machine tool industry officially entered an upward recovery channel in 2026. According to MIR Databank data, in Q1 2026, both the market size and sales volume of CNC metal cutting machine tools achieved double-digit growth, with demand from downstream industries such as automotive, electronics, aerospace, and general machinery fully recovering. At the same time, emerging tracks such as AI liquid cooling, humanoid robots, semiconductors, and commercial aerospace are gradually becoming new sources of growth for the machine tool industry.

Comment: Taking AI liquid cooling as an example, the demand for processing parts such as liquid cooling connectors, liquid cooling plates, elbows, brackets, valve sleeves, and valve cores has increased. As heat dissipation power and processing accuracy requirements increase, traditional sliding-headstock lathes are gradually unable to meet the processing needs of some complex parts. High-end equipment such as turn-mill centers, turret lathes, and five-axis machine tools are expected to benefit from the dual logic of "demand volume increase + equipment upgrade." At the same time, the significant extension of lead times for upstream core components can also confirm the high prosperity of machine tool demand. On the performance side, in Q1 2026, the earnings growth rates of listed machine tool companies generally turned positive. The macro side also provides support: in June, domestic PMI returned above the boom-bust line, and manufacturing PMI rebounded to expansion territory. Multiple positive factors resonate, and the medium- to long-term growth space for the machine tool industry is worth watching.

8. Industrial Mother Machines | According to China Securities Journal, affected by the continuous surge in international APT prices, the global CNC tool market is undergoing a new round of price reassessment. Mitsubishi Materials recently officially announced a price increase letter, planning to significantly raise cemented carbide tool prices by 50%-85% starting July 1, with tungsten carbide drill bits and cemented carbide end mills increasing by 32% and 41%, respectively. Behind this move is the hard constraint of global tungsten raw material supply and the concentrated transmission of cost pressures. APT prices are approaching the $3,000 mark, forcing overseas giants to pass costs downstream through sharp price hikes and warning that a second round of price increases may start in the second half of the year, marking the official entry of the CNC tool industry into a strong price increase cycle.

Comment: Against the macro background of "tungsten rising makes tools expensive," the inflation logic of the domestic CNC tool sector is accelerating. From the price side, the annual price increase of domestic leading CNC tools in 2025 has reached 10%-20%, with a continuous 40% price hike in the first half of 2026. The aggressive price adjustments by overseas majors further open up room for domestic prices to follow upward. From the sales side, the high price increases of overseas products are sharply accelerating the process of domestic substitution. Currently, the domestic CNC tool market space is about 98k yuan, with a localization rate of only about 50%, leaving a substitution space of up to 98k yuan. With the structural explosion of demand for high-precision tools in high-end manufacturing fields such as new energy vehicles, aerospace, and semiconductors, the industry is entering a "sweet cycle" of simultaneous volume and price increases.

9. Intelligent Driving | According to China Securities Journal, Tesla has officially begun engineering tests of its first batch of production Cybercabs on public roads in Austin, Texas, and these vehicles are not equipped with steering wheels or pedals. This move also releases the clearest signal to date: Tesla's vision of building a driverless taxi fleet is moving from the prototype stage to reality, significantly accelerating the industrialization of L4 dedicated unmanned vehicles. Domestically, Avatr announced on July 1 that it had obtained an L3 autonomous driving test license, and its vehicle-related road testing work has been fully implemented steadily as planned. The company said that at this stage, it will rely on the open public test sections in Chongqing to conduct L3 autonomous driving field verification, simultaneously advancing actual road access reliability tests, deeply adapting to the diverse traffic environments in China, with multiple compliance tests starting simultaneously.

Comment: Overall, the development of intelligent driving at home and abroad is accelerating, with technology verification and commercial implementation proceeding in parallel. The industry's development prospects continue to improve, and the industrial chain is expected to benefit.

10. Water Conservancy | According to China Securities Journal, the Ministry of Water Resources recently issued the "Opinions on Strengthening Water Conservancy Metrology Work." The Opinions propose to focus on the actual needs of the water conservancy industry, aim to achieve precision measurement in the water conservancy field, strive to break through key urgently needed measurement technologies in water conservancy, develop a batch of advanced and practical measurement standard devices and technical specifications, achieve full coverage of management of specialized water conservancy measurement instruments, and significantly improve water conservancy measurement capabilities and levels.

Comment: The "Opinions on Strengthening Water Conservancy Metrology Work" issued by the Ministry of Water Resources is the first systematic top-level document in the water conservancy industry to coordinate metrology capacity building across the entire field. Its core goal is to fill the "weights and measures" gap in water conservancy. The millions of water intake points, hundreds of thousands of irrigation district heads, and tens of thousands of reservoir renovations across the country bring sustained incremental market space, worth paying attention to.

11. Pharmaceutical Manufacturing | According to China Securities Journal, the National Healthcare Security Administration (NHSA) issued a notice on July 1, seeking public comments on the "Requirements for Traceability Codes of Traditional Chinese Medicine Decoction Pieces." It proposes to jointly promote the realization of "one item, one code, full traceability" for TCM decoction pieces. According to the draft for comments, the traceability code for TCM decoction pieces consists of two parts: a product identification code and a production identification code, featuring uniqueness, universality, and scalability. Medical insurance designated medical institutions need to accurately collect, verify, and upload traceability codes to the national medical insurance information platform. Medical insurance departments at all levels will also incorporate traceability codes into the drug centralized procurement and medical insurance fund settlement systems.

Comment: The implementation of this policy marks the beginning of a profound digital transformation for the TCM decoction pieces industry. This move will not only effectively combat fraudulent medical practices and drug substitution schemes that defraud medical insurance funds, plugging fund leakage loopholes, but also force the industry to move from "decentralized and extensive" to "highly concentrated and high-standard." With the full rollout of the traceability system, small workshops lacking digital transformation capabilities will accelerate their exit. Meanwhile, leading companies with full industry chain layout, authentic herbal medicine bases, and digital traceability capabilities will gain greater market voice supported by "high quality, high price" data.

12. White Sugar | According to China Securities Journal, following Thailand and Vietnam, imports of sugar syrup from Laos have also been suspended starting June 29, 2026. From January to May 2026, China imported 404.7k tons of sugar syrup, of which 326.5k tons came from Laos, accounting for over 80%. Globally, multiple meteorological agencies have confirmed that El Niño has officially formed, with extreme high temperatures continuing to develop and a high probability of upgrading to a super El Niño. Extreme weather events such as droughts and heavy rains caused by El Niño have directly impacted major global sugar-producing regions like Brazil and India, while also affecting China's core sugarcane-growing provinces such as Guangxi and Yunnan. The supply-demand pattern remains tight, supporting a synchronized rise in global sugar prices.

Comment: China has a high dependence on foreign sugar, with imports accounting for over 30% of consumption, leading to strong linkage between domestic and foreign sugar prices. El Niño may disrupt the sugar supply side, bringing opportunities for price revaluation.

13. Cotton | According to China Securities Journal, results from a special survey by the National Cotton Market Monitoring System show that the actual cotton planting area nationwide in 2026 is 46.32 million mu, down 3.1% year-on-year, with Xinjiang down 3.4% year-on-year. Additionally, the main producing region in Xinjiang is about to experience the strongest high-temperature process since the beginning of summer, with temperatures in parts of the southern Xinjiang basin and Turpan exceeding 40°C, and locally over 45°C. On the downstream demand side, new spinning capacity in Xinjiang has been concentratedly launched this year, with regional cotton consumption potential continuing to expand, and the incremental demand for cotton is considerable.

Comment: If the outward transportation volume of Xinjiang cotton continues to remain at a high level, combined with the rigid consumption of new local capacity, the Xinjiang region may face a structural supply-demand contradiction of phased cotton shortage in the later period, providing medium- to long-term fundamental support for cotton prices. In addition, global and domestic cotton production is being revised downward simultaneously, with global cotton planting area shrinking. Coupled with El Niño disaster weather disturbances, the new year's global cotton total production estimate has been revised downward, and the production-demand pattern has shifted from surplus to deficit.

Today's Key Events

U.S. June Nonfarm Payrolls.

U.S. Initial Jobless Claims for last week.

U.S. May Factory Orders and Durable Goods Orders.

San Francisco Fed President Daly speaks.

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