The mainland’s chip-focused gauge, better known as Star50, now trades at 57 times forward earnings, above its five-year average of 41
[HONG KONG] Chip manufacturers and cloud stocks are among the major beneficiaries of China’s push for homegrown technology.
Shares such as artificial intelligence (AI) chip designer Cambricon Technologies and production gear maker Naura Technology Group have soared this quarter as traders bet the nation’s drive for self-reliance will supercharge sector growth. Their optimism also sent the SSE Science and Technology Innovation Board 50 Index, a gauge heavy on onshore chipmakers, surging by a record 28 per cent last month.
The gains have been fuelled by Beijing’s support for emerging tech and as large firms such as Alibaba Group Holding increasingly turn to domestic chips. Officials have also urged local companies to avoid using Nvidia’s H20 processors, citing security concerns and uncertainty over the Trump administration’s export curbs.
Still, investors have been questioning the rally’s longevity as valuations balloon. The mainland’s chip-focused gauge, better known as Star50, now trades at 57 times forward earnings, above its five-year average of 41.
China’s decoupling from the US in semiconductors will take years, but will “create great investment opportunities”, said Jian Shi Cortesi, a fund manager at GAM Investment Management in Zurich. “I would not chase at the current levels, and will await for the opportunities to buy at more attractive valuations.”
Here are the potential winners from China’s chip boom:
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Chip manufacturers
Three consecutive months of advances have lifted Semiconductor Manufacturing International’s Hong Kong shares up 83 per cent this year, while Hua Hong Semiconductor’s have more than doubled.
The sector’s share-price rallies reflect investors’ expectations that more products will be made at home, said Bush Chu, an investment manager at Aberdeen Investments.
The US’s decision to revoke Taiwan Semiconductor Manufacturing’s authorisation to freely ship essential gear to its main Chinese chipmaking base has also further reinforced the rise of local manufacturing.
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Chip designers
Shares of Cambricon, known as China’s “little Nvidia”, have been boosted by the country’s pivot from H20 chips.
The stock has spiked 87 per cent this year and briefly became the priciest onshore share last month. It now trades at more than 140 times forward earnings, and has drawn scrutiny from regulators worried about how any sharp stock reversal could inflict heavy losses on retail investors.
“Nvidia will ultimately find ways to re-enter China through reselling chips as there’s too much to lose, but the pause on the H20 has opened a near-term window for local companies,” said Dave Mazza, chief executive officer at Roundhill Investments in New York.
While Huawei Technologies leads in AI chip design, local peers such as Cambricon and Hygon Information Technology are benefiting from market attention, especially since Huawei is not publicly traded.
Semiconductor production equipment
Equipment suppliers are one way to gain exposure to the chipmaking ecosystem, as these companies tend to be “customer agnostic”, according to Oliver Cox, the manager of the US$2.1 billion Asia-Pacific Equity Fund at JPMorgan Asset Management in Hong Kong.
Beijing-based Naura Technology and Advanced Micro-Fabrication Equipment in Shanghai produce a suite of tools across the chip-manufacturing process. Both stocks are outperforming global peers, Applied Materials and Tokyo Electron in 2025.
Meanwhile, optical transceiver makers Eoptolink Technology and Zhongji Innolight have skyrocketed by triple digits. Testing equipment firm Beijing Huafeng Test & Control Technology, better known as AccoTest, has jumped roughly 60 per cent, outpacing Japan’s Advantest.
Cloud providers and data centres
Server and cloud firms stand to gain as they power the backbone of intelligent systems, said Bloomberg Intelligence analyst Robert Lea.
Hong Kong-listed shares of Alibaba, a key player in the cloud space, climbed 40 per cent from an April low after delivering a surge in revenue from China’s AI boom. A report saying the company had created a chip capable of operating AI services also supported the stock.
Tencent Holdings and TikTok owner ByteDance could also profit from the focus on cloud services. AI server providers include Huawei, Lenovo Group and IEIT Systems. BLOOMBERG
