Based on the semi-annual reports, why are those 'hidden champions' in the new materials sector—buried within financial statements—easily overlooked by retail investors?

A-share semi-annual reports are being released progressively, and many new materials enterprises have delivered impressive results: numerous companies achieved several-fold year-on-year growth in net profit, making them one of the strongest-performing segments within the ‘new quality productive forces’. Yet they continue to receive insufficient attention from ordinary retail investors. The new materials sector is a quintessential ‘invisible track’: the general public rarely comes into direct contact with its end products, as it primarily supplies upstream industries such as chips, semiconductors, new energy, and aerospace. Market attention consistently focuses on downstream integrated equipment manufacturers, often overlooking upstream foundational materials. However, whether the entire industrial chain can achieve self-reliance and controllability hinges precisely on this materials segment—the most critical bottleneck. Judging from already disclosed earnings previews, multiple niche sub-sectors—including high-temperature alloys, copper-clad laminates, and cemented carbides—have seen substantial profit growth among numerous enterprises. This trend stems from explosive downstream demand driven by AI computing power expansion and the new energy industry boom, which has triggered surging demand for upstream materials. Yet this track harbors many pitfalls: many companies merely ride the wave of hype without possessing core technologies, relying entirely on cyclical industry tailwinds for their performance. When the cycle turns downward, their earnings quickly deteriorate.

Amid the technological wave, how can investors identify investment certainty within this sector?

Within this year’s sweeping tech bull market in A-shares, a clear trend has emerged: as time progresses, market attention increasingly shifts upstream—to materials. Initially, investors focused more on optical modules, PCBs, optical fibers, and memory-related concepts; later, attention grew increasingly granular. From silicon wafers and indium phosphide substrates to tungsten hexafluoride, sputtering targets, glass substrates, industrial diamonds, and photoresists—materials have gradually taken center stage in the market. This shift reflects a simple yet profound truth: advanced materials constitute the ‘industrial staple food’ of high-end manufacturing, determining the performance ceiling of entire industries. From an investment perspective, if one seeks highly certain opportunities across the broader tech sector, upstream core materials—combining both high technological barriers and essential industrial demand—are undoubtedly where the core value of the industrial chain resides. For investors looking to allocate capital into this sector, the STAR Market Materials Index (000689) serves as an excellent window for observing market dynamics. 01 STAR Market Materials: A Core Track Within the Tech Narrative The primary drivers behind this year’s tech rally are two intertwined themes: the expansion of computing infrastructure and the push for industrial self-reliance and controllability. The STAR Market Materials Index sits precisely at the ‘intersection’ of these two themes—making it a core track spanning the entire industrial chain. This is evident from the index’s construction methodology. Comprising 50 constituent stocks, the STAR Market Materials Index covers listed companies in sectors including advanced steel, advanced non-ferrous metals, advanced chemicals, advanced inorganic non-metallics, and other strategic key materials—reflecting the overall performance of representative new materials enterprises listed on the STAR Market. As of now, the top 10 index weightings are drawn from fields such as semiconductor silicon wafers, electronic specialty gases, silicon carbide, and copper foils—all categories that have attracted intense market attention this year. The reason markets focus on these material categories lies in their exceptionally critical position within the industrial chain. Take electronic specialty gases, for example: every process step—from silicon wafer to finished chip—relies on them. Producing a complete 12-inch chip requires over one hundred types of electronic gases, categorized into six major groups: doping, etching, thin-film deposition, cleaning, photolithography support, and protection. Tungsten hexafluoride—a type of electronic gas drawing significant market attention this year—is a critical material used in chemical vapor deposition (CVD) during chip fabrication. Driven by massive global expansions in AI server and memory wafer production, demand for tungsten hexafluoride surged this year. Meanwhile, constrained supply pushed prices sharply upward—triggering a ‘spectacular’ rally in the share prices of select A-share electronic gas companies in the first half. Similar narratives have unfolded repeatedly across other critical materials—from silicon wafers and high-end copper-clad laminates to silicon carbide substrates. Surging market demand, coupled with technological barriers limiting production capacity, has sustained price increases for these materials—and translated directly into stock price gains. According to Wind data, the STAR Market Materials Index rose approximately 74% cumulatively in the first half of this year. 02 Import Substitution: Vast Growth Potential and High Certainty Materials also represent a sector with exceptionally high future certainty and an extremely high ‘ceiling’. On the demand side, the rapid development of the semiconductor industry is fueling robust growth in materials demand. In 2025, global wafer fab capacity will accelerate expansion, while demand for mature-process products rebounds.

Are Basic Materials Stocks Lagging Element Solutions (ESI) This Year?

Jun 8, 2026

Element Solutions Inc significantly outperformed the Basic Materials sector year-to-date with a 59.4% return compared to the sector's 10.8% average, while holding a Zacks Buy rank.