ETF Spotlight: Broad exposure to China's onshore technology, powered by AI hardware

Why China A-share technology still has room to run

Policy support is creating a multi-year foundation for domestic AI hardware investment. The 15th Five-Year Plan period from 2026 to 2030 reinforces China's focus on technological self-reliance. The 2026 Government Work Report identifies AI+ as a standalone priority for the first time, designates integrated circuits as an emerging pillar industry and embodied intelligence as a future industry. Special treasury bonds are also being directed towards technological innovation and computing infrastructure.

Local procurement targets are helping translate these priorities into potential demand. Reported targets include Shanghai's goal of sourcing 70% of data-centre chips from domestic designs or production by 2027, Guiyang's 90% target for new facilities, and Beijing's goal of achieving 100% autonomous and controllable intelligent computing centre capability by 2027. Together, these initiatives support a multi-year shift towards domestic suppliers of semiconductors and AI infrastructure.

Export controls are adding urgency to China's push for technological self-reliance. Tighter access to high-end chips is accelerating efforts to build domestic capabilities across AI models, computing infrastructure and semiconductor equipment. Constraints at leading-edge manufacturing nodes are also encouraging system-level approaches, including logic folding and advanced interconnects, to support high-performance computing using more mature process technologies. China has also developed strengths in optical interconnects, another area of relevance as AI infrastructure expands.

Growing AI investment is beginning to translate into clearer demand visibility for hardware suppliers. Chinese cloud providers are committing substantial capital to computing capacity. Alibaba's management has described the return visibility of its AI computing investment as very high, with around RMB 190 billion of its RMB 380 billion three-year investment plan deployed by June 2026. Weekly token calls for domestic large language models have also exceeded 4.6 trillion, pointing to growing demand for AI computing.

This spending is creating opportunities across the domestic hardware supply chain. Alibaba's in-house chips are expected to account for a rising share of new data-centre capacity, supporting the development of domestic AI chip capabilities. Meanwhile, the opportunity is broadening beyond the sector's best-known chipmakers. While semiconductor manufacturers and AI chip designers have attracted much of the initial attention, earnings growth is increasingly spreading to printed circuit boards (PCBs), copper-clad laminates and optical components. As AI infrastructure becomes more complex, demand across these supporting components is becoming an increasingly important part of the investment case. This broadening of earnings drivers favours exposure across the hardware supply chain rather than a concentrated bet on any single segment.

The sell-off since July has reset share prices without necessarily weakening underlying demand for AI hardware. As earnings leadership rotates across different parts of the supply chain, identifying individual winners becomes increasingly challenging. A diversified approach allows investors to capture growth across the broader ecosystem while reducing exposure to company-specific risks, including export controls, customer concentration and technological disruption.

The CSI All-Share Information Technology Index provides this breadth, covering companies across semiconductor equipment, memory, AI chips, servers, PCBs and optical components. The GF CSI All-Share Information Technology ETF offers a single vehicle for accessing these different layers of China's AI hardware supply chain, aligning exposure with the broader expansion of domestic AI infrastructure rather than relying on any one segment to lead.

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Introducing the GF CSI All-Share Information Technology ETF (SZSE: 159939)

The GF CSI All-Share Information Technology ETF tracks the CSI All-Share Information Technology Index, providing investors with broad exposure to China's onshore technology sector through a single investment vehicle. Managed by GF Fund Management, the ETF holds leading semiconductor, electronics and computing companies listed in Shenzhen and Shanghai.

Table 1: GF CSI All-Share Information Technology ETF characteristics

Attribute	Detail
Listing Date	5-Feb-15
Index	CSI All-Share Information Technology Index
Number of Holdings	181
AUM	RMB 757 million
Management and Custody Fees	0.50% and 0.10% per year
Average Daily Turnover (20 Days)	RMB 25 million
Fund Manager	GF Fund Management
Exchange	Shenzhen Stock Exchange (SZSE)
Source: GF Fund Management, Morningstar, Sina Finance, Lixinger, iFAST Compilations. AUM and turnover as of 12 Oct 2026; number of holdings as of 30 Jun 2026.

The ETF's portfolio is tilted towards the hardware end of the technology value chain. Semiconductors account for 39.7% of the portfolio, making them the largest industry allocation. Together with electronic components (13.5%), industrial machinery (9.1%) and telecommunications equipment (6.1%), the four largest industries account for 68.4% of the portfolio.

Figure 1: Portfolio composition by industry

Despite its semiconductor exposure, the ETF is not concentrated in a handful of companies. Its 10 largest holdings account for 31.8% of the portfolio, with GigaDevice Semiconductor, the largest holding, representing 4.5%. The index methodology caps any single stock at 15% and the five largest holdings at 60%, helping limit concentration at the index level.

The holdings also span several parts of the AI hardware chain, including memory (GigaDevice Semiconductor and Montage Technology), AI chips (Cambricon Technologies and Hygon Information Technology), semiconductor equipment (Naura Technology Group and AMEC), foundry services (SMIC), electronics hardware (Luxshare Precision Industry and Suzhou Dongshan Precision Manufacturing), and displays (BOE Technology Group). This breadth allows investors to participate in different sources of growth as demand moves across the supply chain.

Table 2: Top 10 holdings of the GF CSI All-Share Information Technology ETF

Rank	Holding	Weight (%)
1	GigaDevice Semiconductor	4.5
2	Cambricon Technologies	4.2
3	Naura Technology Group	3.2
4	Luxshare Precision Industry	3.0
5	Montage Technology	3.0
6	Advanced Micro-Fabrication Equipment (AMEC)	2.9
7	Hygon Information Technology	2.9
8	Suzhou Dongshan Precision Manufacturing	2.8
9	Semiconductor Manufacturing International (SMIC)	2.7
10	BOE Technology Group	2.6
Source: Bloomberg, iFAST Compilations. Data as of 30 Jun 2026.

Why 159939 is the broadest way to own China’s onshore technology sector

The Global X China Semiconductor ETF (HKEX: 3191) and the VanEck China Semiconductor ETF (SMHC) also target China’s AI hardware opportunity, but focus exclusively on semiconductor companies. They hold 21 and 25 constituents, respectively, compared with 181 holdings in 159939. Their portfolios are also more concentrated, with their largest holdings accounting for 9.7% and 8.8%, respectively, against 4.5% for 159939. Neither offers comparable exposure to the broader hardware ecosystem, including PCBs, servers and other electronics components, where earnings growth is increasingly spreading beyond semiconductor companies.

Table 3: 159939 versus the closest China semiconductor ETFs

Metric	GF ETF (SZSE: 159939)	Global X ETF (HKEX: 3191)	VanEck ETF (NASDAQ: SMHC)
Index	CSI All-Share Information Technology	FactSet China Semiconductor	MarketVector China Semiconductor 25
Number of Constituents	181	21	25
Largest Holding	4.5% (GigaDevice)	9.7% (Cambricon)	8.8% (Cambricon)
AUM	RMB 757 million	HKD 2,345 million	USD 19.9 million
Inception	Feb-15	Aug-20	Jun-26
Annual Fee	0.60%	0.68%	0.65%
Listing	SZSE (RMB)	HKEX (HKD)	Nasdaq (USD)
Source: Sina Finance, Bloomberg, Global X, VanEck, StockAnalysis, iFAST Compilations. Data as of 12 Oct 2026 (159939), 21 Oct 2026 (3191) and 18 Sep 2026 (SMHC).

The ETFs also differ in structure and track record. Since its launch in 2020, 3191 has used synthetic replication and can hold derivatives of up to 50% of net assets. SMHC, launched in June 2026, has a shorter operating history. By comparison, 159939 has been listed since 2015 and charges an annual fee of 0.60%, below the 0.68% for 3191 and 0.65% for SMHC.

For investors looking to participate in China’s domestic AI ecosystem through its onshore technology companies, 159939 stands out as a broad-based alternative to more narrowly focused semiconductor ETFs. Its established track record, lower annual fee relative to the two peers discussed and more balanced portfolio make it a compelling option for investors seeking diversified exposure to China's onshore technology sector. While near-term performance will depend on shifting market leadership and the pace at which AI investment translates into earnings, 159939 offers a practical way to invest in the sector's longer-term development without having to pick individual winners.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.