Favorable policies are frequently introduced, and the investment boom in hard technology is sweeping across. Experts predict that the localization of semiconductors and artificial intelligence is expected to accelerate.

Recently, the themes of independent control and localisation substitution have gained traction.

As of the close on April 25, the STAR Market Semiconductor Materials and Equipment Index (950125) and the CSI Information Technology Innovation Index (931247) returned to positive territory, with gains of 0.79% and 1.20%, respectively.

On the same day, the Political Bureau of the CPC Central Committee held a meeting, emphasizing the need to strengthen financing support, cultivate and expand new quality productive forces, develop a batch of emerging pillar industries, innovate and launch the "Technology Board" in the bond market, and accelerate the implementation of the "Artificial Intelligence+" initiative.

"The launch and further development of the 'Technology Board' in the bond market will provide a steady stream of capital for technology enterprises, supporting breakthroughs in China's critical core technologies," said a market analyst.

With policy support, sectors such as semiconductors and other "hard technology" areas are expected to see development opportunities.

Huafu Securities predicts that the global semiconductor equipment market size will grow 10% YoY in 2024, reaching an all-time high of $117.1 billion in annual sales. Domestically, as the largest semiconductor equipment market, investment is expected to grow 35% YoY, reaching $49.6 billion. "Domestic semiconductor equipment and materials companies have already covered a wide range of product lines, with continuous advancements in technology, and localisation substitution is expected to accelerate."

The STAR Market Semiconductor Materials and Equipment Index (950125) serves as a key indicator reflecting the overall performance of publicly listed firms in the semiconductor materials and equipment sectors on the STAR Market. The semiconductor equipment and materials industry is a critical area for localisation substitution, characterized by low localisation rates and high substitution potential, benefiting significantly from the expansion of semiconductor demand driven by the artificial intelligence revolution.

Currently, the semiconductor equipment and materials market faces both challenges and opportunities. The localisation rate of semiconductor equipment is less than 20%, remaining relatively low. For areas such as lithography, metrology/detection, coating and developing, and ion implantation equipment, the localisation rate is estimated to be below 10%.

Thanks to policy support, the domestic semiconductor sector has received more resource allocation. From the perspective of primary market IPO fundraising, from 2022 to 2024, the annual fundraising amount of semiconductor companies consistently accounted for over 10% of the total fundraising in the A-share market.

Recently, the "China Investment Development Report 2025" (hereinafter referred to as the "Report"), jointly released by the China Jianyin Investment Research Institute and the Social Sciences Academic Press, also stated that in 2025, hard technology fields represented by semiconductor integrated circuits will remain a key investment focus for various institutions, with the proportion of investment expected to rise to over 80%.

The STAR Market semiconductor materials and equipment sector includes numerous subcategories, such as substrate materials, process materials, packaging materials, material manufacturing equipment, and packaging and testing equipment.

Yu Tengda, fund manager of Cathay Fund's Cathay Golden Prosperity Fund, stated in an interview with the "STAR Market Daily" that in selecting individual stocks, sub-sectors, and mid-level industries within the hard technology field, the evaluation is primarily based on the "space-prosperity-valuation" system. Preference is given to targets with large potential, high prosperity, and reasonable valuation metrics. Among these, potential is the most critical factor, as greater potential leads to larger market opportunities. Meanwhile, short-term prosperity determines the speed of expectation realization.

"Valuation may act as a temporary constraint, but in growth stocks, it is often offset by better-than-expected performance. We use these three factors to assess the investment value of hard technology growth stocks. It is worth noting that during an upward cycle in prosperous large-potential industries, higher company valuations can be tolerated. However, if a stock is only cheap in valuation, it is not recommended to buy it lightly," Yu Tengda added.

Looking ahead, at the release conference of the "China Investment Development Report 2025," Zhang Zhiqian, Director of the China Jianyin Investment Research Institute, told the "STAR Market Daily" that they believe the A-share market will stabilize and rebound in 2025, with an increase of over 10%, potentially reaching a peak of 4,000 points.

Zhang Zhiqian further analyzed that domestic capital market reforms are expected to deepen, driving value enhancement and valuation restructuring. The A-share market is transitioning from valuation-driven to profit-driven. "Currently, A-share valuations are not high. With the profitability of publicly listed firms, a rebound is expected. The current monetary and capital easing, aimed at addressing uncertainties, will further ease the market, benefiting the stock market."