HK Stock Market Move | Chip stocks fell in early trading, with Semiconductor Manufacturing International Corporation (00981) dropping more than 4%. Institutions say that the recovery of profit margins for wafer foundry may lag behind revenue growth.

Chip stocks fell in the morning session. As of the time of writing, HUA HONG SEMI (01347) fell 4.48% to HK$19.82; Semiconductor Manufacturing International Corporation (00981) fell 4.33% to HK$29.8; SHANGHAI FUDAN (01385) fell 3.91% to HK$13.78; ASMPT (00522) fell 1.69% to HK$75.65. On the news front, on January 3, the Big Fund Phase III successively invested in two funds, Guotou Ji Xin and Huaxin Ding Xin, with a total scale of 160 billion RMB, marking the first investment since the fund was established in May last year. CASC Securities stated that the Big Fund Phase III will focus on three main areas: wafer manufacturing in heavy capital expenditure, expansion of advanced wafer fabs; focusing on key bottleneck areas, emphasizing domestically low localization rates of semiconductor equipment, materials, and components, with a focus on specific segments like lithography equipment and photoresists; and in the AI field, AI computing power will receive greater support from the national Big Fund Phase III, with advanced packaging and high-end storage (such as HBM) deserving attention. China International Bank released a research report stating that by 2025, the growth of China's semiconductor industry will achieve a mean regression based on the level in 2024. However, due to the rise of artificial intelligence and the domestic semiconductor supply chain, the industry still has the potential for outstanding market performance in 2025. For wafer foundries, constrained by economic uncertainty and excess capacity of mature processes, the recovery of product unit prices and profit margins may lag behind revenue growth. The bank believes that the core drive for China's wafer foundries in 2025 lies in potential government stimulus programs and more detailed policy support for the Chinese semiconductor industry.