According to the financial information app, Galaxy Securities released a research report stating that in May 2024, the global semiconductor industry's sales revenue was $49.1 billion, a year-on-year increase of 19.3%, not only achieving continuous year-on-year growth for seven months, but also achieving the largest year-on-year increase since April 2022. The month-on-month increase was 4.1%, an increase of 3 percentage points from April, and the semiconductor industry's recovery trend has slightly accelerated. The bank believes that the semiconductor industry sector has undergone continuous adjustments, and multiple signs indicate an upsurge in the semiconductor industry cycle. Regarding the semiconductor material, equipment, and testing sector, the bank believes that it is currently of value for allocation.

Galaxy Securities' viewpoint is as follows:

Industry data tracking: 1) Semiconductor: In May 2024, the global semiconductor industry's sales revenue was $49.1 billion, a year-on-year increase of 19.3%, not only achieving continuous year-on-year growth for seven months, but also achieving the largest year-on-year increase since April 2022. The month-on-month increase was 4.1%, an increase of 3 percentage points from April, and the semiconductor industry's recovery trend has slightly accelerated. 2) Integrated circuits: In June 2024, China's integrated circuit import amount was $31.028 billion, basically the same year-on-year, and an increase of 0.32% month-on-month. The number of imports was 45.2 billion, a year-on-year increase of 10.5%, and a decrease of 1.09% month-on-month. 3) Semiconductor equipment: In June 2024, China's semiconductor equipment import amount was $3.197 billion, a year-on-year increase of 12.5%. The number of imports was 5023 units, a year-on-year increase of 1%, and the market is still recovering. 4) Storage chips: From April to June 2024, the prices of 64GbNANDFlash and DDR4 are stable at a high level, and the current NAND price has risen by 22.83% compared to the low point in the middle of 2023, while the DDR4 price has risen by 30.39% compared to the low point in the middle of 2023.

Industry news: 1) Taiwan Semiconductor proposes the "wafer foundry 2.0 concept": "wafer foundry 2.0" includes the IDM industry for packaging, testing, mask making, and chip manufacturing excluding memory chips. According to the new definition, TSMC itself calculates that its market share of wafer foundry business in 2023 is only 28%. 2) Continuous investment in the semiconductor industry: SK Hynix plans to invest KRW 103 trillion (approximately USD 74.8 billion) by 2028, of which about 80%, or KRW 82 trillion, will be used to invest in high-bandwidth memory (HBM). Sicrystal and Globalwafers are building silicon carbide and silicon wafer production lines. 3) Additional export controls in Japan: Japan's Ministry of Economy, Trade, and Industry officially announced the revised order based on the classified list of goods and technologies related to the "Export Trade Control Order" and the annex to the "Foreign Exchange Order" developed on July 8th last year, adding 5 specific semiconductor-related items and technologies to the export control list.

Sector tracking: 1) Performance of the semiconductor index in the past month: In terms of the level of rise and fall, the semiconductor industry index outperformed the CSI 300 index by 3.82 percentage points and the electronic sector index by 1.39 percentage points. In terms of specific data, the semiconductor industry index rose by 2.41%, the electronic industry index rose by 1.02%, and the CSI 300 index fell by 1.41%. 2) Performance of the semiconductor index in the past year: In terms of the level of rise and fall, the semiconductor industry index underperformed the CSI 300 index by 5.93 percentage points and the electronic sector index by 4.32 percentage points. In terms of specific data, the semiconductor industry index fell by 18.85%, the electronic industry index fell by 14.53%, and the CSI 300 index fell by 12.92%.

Investment advice: The semiconductor industry sector has undergone continuous adjustments, and multiple signs indicate an upsurge in the semiconductor industry cycle. Regarding the semiconductor material, equipment, and testing sector, the bank believes that it is currently of value for allocation. It is recommended to pay attention to semiconductor material companies: Huahaichengke (688535.SH), Jiangsu Yoke Technology (002409.SZ), Qingyi Optoelectronics (688138.SH), and Konfoong Materials International (300666.SZ); semiconductor equipment companies: Naura Technology Group (002371.SZ), Tongfu Microelectronics (688072.SH), and JCET Group Co., Ltd. (600584.SH); and integrated circuit testing and packaging companies: Tongfu Microelectronics (002156.SZ), Jiangsu Changdian Technology Co., Ltd. (600584.SH), and Jiaxing City Enda Electronic Technology Co., Ltd. (688362.SH).

Risk reminder: The risk that the semiconductor industry's recovery is below expectations, the risk of intensified international trade frictions, the risk of technology replacement and product certification being below expectations, and the risk of capacity constraints.