In a dramatic display of market confidence, Semiconductor Manufacturing International Corp (SMIC), China’s premier chipmaker, saw its shares hit the 20% daily limit on the Shanghai STAR Market. This surge propelled the company’s total market capitalization across its dual-listed A and H shares to a staggering 730 billion RMB. The record-breaking performance on May 25 underscores the intensifying fervor surrounding China’s domestic semiconductor sector, which has become the centerpiece of the nation’s industrial strategy.
The rally was supported by massive liquidity, with daily transaction volumes exceeding 35 billion RMB. This level of trading activity indicates that the surge is not merely speculative but driven by institutional capital pivoting toward 'national champion' firms. As Beijing accelerates its 'domestic substitution' campaign to bypass Western export restrictions, SMIC has emerged as the indispensable vanguard of the country’s high-tech supply chain.
Market observers note that the enthusiasm for SMIC is part of a broader upward trend in the Sci-Tech Innovation (STAR) Chip Index. Investors are increasingly betting on the success of China’s 'Big Fund'—the Integrated Circuit Industry Investment Fund—and other state-led initiatives designed to achieve self-reliance in advanced lithography and AI chip production. The convergence of AI-driven demand and the strategic necessity of a localized supply chain has created a potent narrative for market participants.
However, the valuation peak also brings heightened scrutiny to SMIC’s technical capabilities. While the company has made significant strides in 7nm-class production despite sanctions, the gap between it and global leaders like TSMC remains a critical factor. The current market euphoria reflects a belief that state support will eventually bridge this technological divide, transforming SMIC from a domestic supplier into a global powerhouse capable of weathering geopolitical storms.