Analysis of the Significance of Innoscience's Leading Rally and the Subsequent Trend of Hong Kong Stock Semiconductor Sector

Based on market data and industry information, I systematically analyze the significance of Innoscience’s leading rally and evaluate its subsequent trends for you.

Innoscience is a semiconductor company focusing on

technology, with unique advantages in the third-generation semiconductor field. From industry dynamics, the company has reached a cooperation agreement with ON Semiconductor to become its GaN wafer supplier, which reflects that its technical strength in the global semiconductor industry chain is gaining recognition [1].

has broad application prospects in power semiconductors, RF devices, and other fields, especially suitable for:

• High-efficiency power management systems
• Fast charging technology
• 5G communication devices
• Power systems for new energy vehicles

Innoscience’s performance of rising over 9% may reflect the following fundamental factors:

:

• GaN technology is gradually replacing traditional silicon-based devices in high-power and high-frequency application fields
• Third-generation semiconductors align with the global trends of energy efficiency improvement and carbon neutrality
• China’s independent R&D capabilities in the GaN field are increasing

:

• Against the backdrop of international supply chain restructuring, domestic semiconductor enterprises are accelerating the realization of self-reliance and controllability
• Enterprises focusing on niche areas such as Innoscience have formed competitive advantages at specific technical nodes

From macro data, the semiconductor industry has indeed shown some positive signals:

• According to SEMI’s forecast, the global semiconductor manufacturing equipment sales are expected to reach $133 billion in 2025, an increase of 13.7% year-on-year, and are expected to continue to climb to $145 billion and higher levels in 2026 and 2027 [2]
• Sustained growth in demand for AI chips drives investment in advanced processes and packaging technologies
• Strong demand from downstream applications such as data centers, new energy vehicles, and industrial automation

Take the industry leader

as an example for analysis [0]:

:

• Year-to-date increase of 147.59%
• 1-year increase of 120.25%
• 3-year increase of 334.62%
• 6-month increase of 60.09%

:

• Drop of 6.14% in the past 3 months
• Drop of 19.91% recently (Oct-Dec)
• Underperformed the Hang Seng Index by 14.21 percentage points

:

• The above chart shows that SMIC experienced significant adjustment from October to December
• The stock price fell from about HK$90 in early October to HK$71.80 at the end of December
• The 20-day moving average turned downward in early November, indicating a weakening medium-term trend
• The cumulative return curve continued to decline, reflecting the adjustment pressure over these three months

:

• The comparison chart shows that SMIC’s performance was significantly weaker than the Hang Seng Index from October to December
• The Hang Seng Index fell by 5.70% during this period, while SMIC fell by 19.91%
• The semiconductor sector’s excess return relative to the broader market was -14.21%, indicating that semiconductor stocks were under pressure during this period

:
✅ Global semiconductor equipment sales forecast shows industry prosperity is recovering
✅ Emerging applications such as AI drive long-term demand growth
✅ Clear domestic substitution trend and continuous policy support
✅ Technological breakthroughs in some niche areas (such as third-generation semiconductors like GaN and SiC)

:
❌ Hong Kong stock semiconductor leaders have experienced significant adjustments recently
❌ Southbound Capital has phased net outflows from the semiconductor sector
❌ Global macroeconomic uncertainty still exists
❌ U.S. semiconductor tariff policies on China may continue to exert pressure [3]
❌ After valuation repair, some companies’ stock prices have reflected more expectations

From the data, Southbound Capital in 2025 showed the characteristics of

:

• Annual dimension
  : Southbound Capital’s net purchases within the year were close to HK$1.41 trillion, setting a new historical record [4]
• Short-term dimension
  : Recent single-day net outflow of HK$512 million, indicating that funds are leaning towards defense or profit-taking in the short term
• Sector differences
  : Funds showed net inflows to semiconductor leaders like SMIC (e.g., single-day net inflow of HK$491 million)[5], but there was profit-taking in some tech growth stocks

This divergence between “expectation of fundamental improvement” and “short-term capital outflow” may stem from:

:

• After the sharp rise in 2025, the valuation of some semiconductor stocks is already at a high level
• SMIC’s P/E ratio reached 130.55 times, showing valuation pressure [0]

:

• Market style may switch between high-growth and defensive sectors
• At the end of the year, funds tend to lock in gains and avoid risks

:

• External factors such as the Fed’s policy path and Sino-US relations affect foreign capital flows
• The Hong Kong stock market is more sensitive to foreign capital flows

: Volatile differentiation, select individual stocks carefully

:

1. Valuation digestion pressure
   : Stocks with large gains in the early stage need time to digest their valuations
2. Performance verification period
   : The 2025 annual report and 2026 Q1 report will be key verification windows
3. Increased capital game
   : Divergences among Southbound Capital, foreign capital, and local capital are increasing

:

• Focus on targets with high performance fulfillment
• Attach importance to the matching degree between valuation and growth
• Be alert to the risks of stocks炒作 based on pure themes

: Structural bull market, intensified differentiation

:

1. Upward industry cycle
   : Global semiconductors enter a new boom cycle
2. Deepening domestic substitution
   : Technology blockades accelerate the process of self-reliance and controllability
3. AI-driven demand
   : Applications such as large models and autonomous driving drive demand for high-end chips

:

• AI chip industry chain
  : Computing power chips, high-speed interconnection, advanced packaging
• Automotive electronics
  : Intelligence and electrification drive demand for automotive-grade chips
• Third-generation semiconductors
  : Penetration of GaN and SiC in new energy, fast charging and other fields
• Equipment and materials
  : Localization of wafer manufacturing equipment and semiconductor materials

:

1. Geopolitical risk
   : U.S. semiconductor管制 on China may further escalate
2. Macroeconomic risk
   : Global economic recession expectations affect end demand
3. Technology iteration risk
   : Changes in technical routes may lead to adjustments in investment directions
4. Valuation fluctuation risk
   : The Hong Kong stock market has weak liquidity, leading to large valuation fluctuations

Innoscience’s leading rally

, but should be regarded as:

• An independent trend of leaders in niche areas
• A microcosm of accelerated domestic substitution of third-generation semiconductors
• A reflection of the trend of “de-retailization and institutionalization” of Hong Kong stock tech stocks

“Dumbbell-shaped” allocation idea:

: Allocate to leading companies with high performance certainty and reasonable valuations

• IDM or foundry enterprises with global competitiveness
• Companies that have formed technical barriers in niche areas
• Companies with abundant cash flow and continuous R&D investment

: Lay out growth companies driven by emerging applications

• AI chip design companies
• Third-generation semiconductor enterprises
• Semiconductor equipment and material companies

: Theme stocks with excessively high valuations and low performance fulfillment

• Standard allocation
  : Maintain a neutral allocation to the semiconductor sector (accounting for about 15-25% of the stock portfolio)
• Phased layout
  : Gradually build positions using market adjustment opportunities
• Dynamic adjustment
  : Flexibly adjust positions according to performance verification and valuation changes

The Hong Kong stock semiconductor sector is in , with a clear trend of fundamental improvement, but the characteristics of intensified internal differentiation and increased valuation fluctuations are significant.

Against the background of short-term net outflows of Southbound Capital, investors should:

1. Downplay short-term fluctuations
   and focus on the long-term growth logic of the industry
2. Select high-quality targets carefully
   and attach importance to performance fulfillment and valuation matching
3. Do a good job in risk management
   by controlling positions and diversifying allocations
4. Be patient
   ; the full recovery of the semiconductor industry takes time to verify

2026 will be a key year to verify the strength and sustainability of the industry recovery, and it is recommended that investors pay close attention to industry data, company performance, and policy trends.

---

[0] 金灵API数据 - 中芯国际(0981.HK)行情数据、公司概况、历史价格数据
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