A-share semiconductor stocks surge, Hua Hong Semi hits intraday record high

A-share semiconductor stocks surge, Hua Hong Semi hits intraday record high

A-share semiconductor stocks experienced a significant surge on July 2, 2025, with Hua Hong Semi hitting an intraday record high. This upward trend can be attributed to several key factors, including the growing demand for AI semiconductors and geopolitical shifts that are reshaping the sector's dynamics.

The AI semiconductor sector is at a pivotal inflection point, driven by the explosive demand for generative AI, data center expansion, and geopolitical realignments. Two key players—Marvell Technology and Alibaba—are reshaping their strategies to capitalize on this growth while navigating near-term headwinds. For investors, understanding their distinct approaches and the broader industry dynamics is critical to positioning portfolios for long-term gains [1].

Alibaba's recent development of a RISC-V-based inference chip marks a strategic pivot toward reducing reliance on U.S. semiconductors, particularly in the wake of export restrictions and rising U.S.-China tensions [1]. This move aligns with China’s national goal to triple AI chip output by 2025, a policy-driven tailwind that could accelerate Alibaba’s market share in the domestic cloud sector, where it already commands 33% [2]. The company’s $53.1 billion three-year AI investment plan, with $5.4 billion deployed in Q2 2026 alone, underscores its commitment to building a vertically integrated AI infrastructure [1].

However, Alibaba’s strategy is not without risks. Its current chip focuses solely on inference tasks, leaving training workloads dependent on Nvidia and other U.S. vendors [2]. This hybrid approach mitigates short-term supply chain disruptions but exposes the company to volatility if U.S. export controls tighten further. Additionally, while Alibaba’s cloud revenue grew 26% year-over-year, its AI product revenue—though growing at triple-digit rates—remains a small fraction of total sales [3].

Marvell’s Q2 2026 revenue of $2.006 billion—a 58% year-over-year surge—highlights its successful pivot to AI-focused data center markets, now accounting for 74% of total revenue [4]. The company’s $2.5 billion divestiture of its Automotive Ethernet business has freed capital to accelerate R&D in custom AI chips, advanced packaging, and co-packaged optics (CPO) [4]. With over 50 active AI design opportunities and $75 billion in projected lifetime revenue, Marvell is targeting 20% of the $55 billion custom AI chip (ASIC) market by 2028 [1].

Marvell’s vertically integrated model—spanning R&D, manufacturing, and packaging—provides a competitive edge in delivering high-performance, low-power solutions for hyperscalers like AWS and Microsoft [4]. Its 3nm process and HBM investments further position it to meet the escalating compute demands of generative AI. Yet, the company’s success hinges on maintaining design wins in a sector dominated by Nvidia and TSMC, where the top 5% of firms capture most economic profits [2].

The AI semiconductor sector is projected to grow from $700.9 billion in 2025 to $1 trillion by 2030, driven by generative AI and advanced packaging technologies like TSMC’s CoWoS [1]. However, this growth is unevenly distributed. While leaders like Nvidia and ASML dominate, smaller players face margin pressures and geopolitical risks, such as export controls on advanced manufacturing tools and supply chain bottlenecks for rare earths [3].

Investors seeking exposure to the AI semiconductor boom must prioritize companies with scalable AI-specific capabilities, geopolitical resilience, and strong balance sheets to weather near-term volatility [1].

References:
[1] Navigating AI Semiconductor Sector: Strategic Opportunities and Risks [https://www.ainvest.com/news/navigating-ai-semiconductor-sector-strategic-opportunities-risks-marvell-alibaba-ai-ambitions-2508/]
[2] China's AI Chip Self-Sufficiency Drive: Geopolitical Tailwinds and Undervalued Semiconductor Stocks [https://www.ainvest.com/news/china-ai-chip-sufficiency-drive-geopolitical-tailwinds-undervalued-semiconductor-stocks-2508/]
[3] Alibaba’s cloud-computing business is thriving [https://www.morningstar.com/news/marketwatch/20250829214/alibabas-cloud-computing-business-is-thriving-and-it-has-a-new-ai-chip-in-the-works-the-stock-is-rising]
[4] Marvell Posts Record Sales on AI Focus [https://www.aol.com/finance/marvell-posts-record-sales-ai-220455891.html]