Introduction: Chip Investment at the Forefront of the Era
On July 28, 2026, the global semiconductor market continues to heat up. With the accelerated penetration of emerging technologies such as AI, IoT, and 5G/6G, chips as the "heart" of the digital economy are increasingly prominent in strategic status. From recent industry dynamics, the chip investment boom has not faded but has shown a more diversified and rational trend. Combining the latest news events, this article analyzes why investing in chips remains one of the most certain investment directions from the perspectives of industry trends, domestic substitution, and technology barriers.
AI Computing Demand Explodes, Chips Become the Strongest "Water Seller"
In July 2026, multiple tech giants released earnings reports showing AI-related revenue growth exceeding expectations. AI chip makers like Nvidia and AMD saw data center revenue grow over 50% year-on-year. Meanwhile, foundries like TSMC and Samsung continue to run at full capacity for advanced processes, with orders for 3nm and below scheduled into 2027. This data confirms AI's insatiable demand for computing power, and chips are the core carrier providing that power.
Industry analysis points out that AI large model training and inference have exponentially increasing demand for GPUs, HBM high-bandwidth memory, and AI accelerators. For example, a new-generation large model training cluster requires tens of thousands of high-end AI chips, with investment often in the tens of billions of dollars. This "arms race" demand brings stable long-term orders to companies across the chip supply chain.
Latest News: Global AI Chip Investment Reaches New High
According to Reuters on July 25, SoftBank Group announced the establishment of a $100 billion AI chip investment fund, focusing on advanced process chip design, lithography technology, and data center chips. In addition, on July 27, the European Commission approved the second phase of the "European Chips Act" with a total of €43 billion, focusing on R&D and mass production of 2nm and below processes. These messages indicate that major economies are elevating the chip industry to a national strategic level. Driven by both policy and capital, the long-term growth of the chip track is beyond doubt.
Domestic Substitution: Golden Opportunity from "Bottleneck" to Self-Controlled
In July 2026, the US further escalated semiconductor export controls on China, expanding restrictions to advanced EDA software, lithography machine parts, and specific types of AI chips. This move highlights the urgency of achieving self-control in the semiconductor supply chain. For China's chip industry, domestic substitution has shifted from "forced choice" to "active offensive."
Data shows that in H1 2026, China's domestic semiconductor equipment adoption rate rose to 30%, doubling from 2020. Domestic lithography machines, etchers, and thin-film deposition equipment have made breakthroughs. Companies like Huawei and SMIC are accelerating their deployment in advanced packaging and RISC-V architecture. These advances mean domestic chip companies are penetrating from low-end to mid-to-high-end markets, with investment opportunities expanding from traditional IC design to equipment, materials, EDA, and the entire supply chain.
Industry Interpretation: Domestic Substitution Enters Deep Water, Focus on "Bottleneck" Breakthroughs
Leading domestic semiconductor equipment companies such as NAURA and AMEC recently reported H1 2026 revenue and net profit growth of over 40% year-on-year. Meanwhile, domestic semiconductor materials firms like NSIGE and Anji Technology continue to gain market share in silicon wafers, photoresists, etc. Investors should focus on companies achieving breakthroughs in high-technology-barrier and high-import-dependency areas (e.g., lithography machines, ion implanters, high-purity chemicals), as they are likely to reap the biggest benefits from domestic substitution.
Technology Barriers: The Track with the Deepest Moat and Longest Run
The chip industry has extremely high technology and capital barriers, meaning once leading companies establish competitive advantages, they are hard to surpass. For example, TSMC leads rivals by at least two generations in advanced processes, making major clients like Apple and Nvidia almost irreplaceable; ASML maintains a monopoly in high-end EUV lithography machines, with each unit priced over €300 million. This "winner-takes-all" nature gives chip leaders strong pricing power and long-term profitability.
From an investment perspective, technology barriers bring not only moats but also excess returns. Over the past decade, the global semiconductor index has annualized returns exceeding 15%, significantly outperforming the S&P 500. Especially during each technology generation shift (e.g., from 14nm to 7nm to 3nm), companies that break through first often gain multiple-fold increases. Currently, 2nm processes, Chiplet advanced packaging, and silicon photonics are on the eve of commercialization, offering investors a window to position early.
Risk Warning: Rational Understanding of Cyclical Fluctuations and Technological Uncertainty
Of course, chip investment is not risk-free. The semiconductor industry has obvious cyclical characteristics; the 2023-2024 downturn hurt some investors. Additionally, technology iteration risks cannot be ignored—for example, if quantum computing makes a breakthrough, it could disrupt traditional chip architectures. Therefore, investors should choose leading companies with continuous R&D investment, stable customer bases, and diversified product lines, and diversify risk through methods like regular investment in index funds (e.g., Philadelphia Semiconductor Index ETF).
Long-Term Growth: Three Engines of Chip Demand
Looking ahead to the next decade, chip demand growth comes from at least three engines: first, AI and data centers, with the AI chip market expected to grow to $1.2 trillion by 2030; second, smart cars, with each EV equipped with over 2,000 chips, 10 times that of traditional fuel vehicles; third, IoT, with global connected devices rising from 30 billion in 2026 to 50 billion by 2030. These trends mean the chip industry's market size will continue to expand, with significant long-term investment value.
Conclusion: Seize the Pulse of the Era, Time to Position in Chips
In summary, the core logic of chip investment lies in the triple resonance of "technology-driven + demand explosion + domestic substitution." At present, although valuations of some chip stocks are not cheap, given high growth in the coming years, long-term returns are still promising. For ordinary investors, participating in this track through index funds or selected leading stocks via regular investment is a feasible way to share the growth dividend of the semiconductor industry. As Warren Buffett said, "The best investment is to invest in things you understand." Chips, as the food of modern industry, deserve every investor's deep understanding and long-term holding.