The AI opportunity is broadening beyond a handful of US technology platforms to span the value chain and markets, including Asia and China.
Supportive policy, a large market for AI applications and growing demand for home-grown technology give China a distinct AI investment story.
The CSI STAR & ChiNext Artificial Intelligence Index brings together 50 companies across both boards, and an ETF tracking this may offer a simple way to access the theme.
This article is the third of a 5-part series on the ETF Connect program. The first article introduced the program and the second covered why China dividend and low-volatility strategies are attracting investors.
Artificial intelligence (AI) is becoming a key driver for global markets, and the opportunity reaches well beyond the technology giants that dominate the headlines. China is a vital part of this shift and may offer a distinctive AI investment story. The CSI STAR & ChiNext Artificial Intelligence Index brings that story together, connecting investors with companies across China’s AI value chain.
The global AI build-out is gathering pace, supported by sustained capex investment from hyperscalers and growing adoption across industries. While the path is not expected to be linear and market volatility is part of the journey, we believe the long-term investment theme remains intact. Bloomberg projects the high-bandwidth memory (HBM) market could reach US $641 billion by 20301, while leading memory makers report that most of their 2027 supply is already committed2. This points to the scale of demand ahead as agentic AI expands.
Source: Morgan Stanley Research, March 2026, estimates may not come to pass.
The next chapter of AI is therefore about more than a handful of US technology platforms. Opportunities are spreading across the value chain, from chips and computing infrastructure to real-world applications, and across global markets. Asia, including China, is expected to play an integral part in this development. As more countries make AI a strategic priority, the investment opportunity appears broad and global.
China may offer a distinct vantage point on the next wave of AI development. Three drivers stand out: supportive policy, a large market for AI applications and growing demand for home-grown technology. Together, they create opportunities both to develop AI capabilities and to deploy them at scale.
Policy initiatives are encouraging AI adoption and China’s industrial base provides a wide range of potential uses. In September 2026, the Ministry of Industry and Information Technology issued three AI policies in quick succession, including the “AI + Software” action plan, while multiple regions released AI-related 15th Five-Year special plans.3 The push for domestic alternatives is also supporting investment in semiconductors, computing infrastructure and software. China’s AI opportunity is therefore more than just an extension of a global trend. It also reflects the growth of the domestic technology ecosystem, supported by local demand and industrial capabilities.
This evolving ecosystem brings the STAR and ChiNext boards into focus. China’s largest DRAM maker, CXMT, debuted on the STAR Market in July 2026, while DeepSeek is reportedly preparing for a STAR Market IPO.4 As more AI-related businesses seek access to public markets, new listings could broaden the investment universe across these two innovation boards, giving investors more ways to participate in China’s AI development.
China’s AI champions are spread across two innovation boards, each with its own strengths. STAR is home to core technology players in chips and equipment, while ChiNext hosts leaders in high-speed connectivity, such as optical modules that link computing systems inside AI data centers.
The CSI STAR & ChiNext Artificial Intelligence Index spans both boards, bringing 50 major AI companies together in a single portfolio. This dual-board design means the index covers different parts of the AI value chain, from semiconductors and computing infrastructure to enabling technologies and real-world applications, all backed by the scale of China’s economy and manufacturing base. The index focuses on large companies, more than 60% of the companies have a market capitalization of above US $10 billion, and offers concentrated AI exposure, with around 95% of companies in the information technology sector.5 Modified market-cap weighting and semi-annual rebalancing helps keep the portfolio balanced, providing investors with a structured way to follow this evolving investment theme.
AI creates different opportunities at different stages of its development. The index captures multiple parts of this ecosystem, rather than focusing on a single product or application, letting investors own both the “picks and shovels” that power AI and the applications that bring it to everyday users.
Value chain layer | Role in AI | Representative index constituents |
|---|---|---|
Computing chips | Processing power to train and run AI models | Hygon |
Chip design IP | The building blocks of specialised AI chips | VeriSilicon |
Interconnect & memory | Moving and storing data at high speed | Montage Technology, Ingenic |
Optical modules | High-speed connections between computing systems, including 800G and 1.6T technologies. | Eoptolink, Zhongji Innolight |
Data centres | Physical infrastructure supporting AI computing | Range Technology |
Applications | AI-enabled devices and office software | Sharetronic, Kingsoft Office |
Source: CSI, as of 30 June 2026. Holdings are subject to change and should not be taken as buy or sell recommendations.
Identifying individual winners across chips, networks and software can be challenging, and single stocks can be highly volatile. An ETF tracking the index could simplify access by bringing a basket of companies across both boards into a single investment, reducing reliance on any one stock.
Short-term swings come with any high-growth theme. For investors taking a longer-term view, however, we believe the index could offer a clear framework for exploring China’s AI opportunity: not just the applications attracting attention today, but the connected businesses helping build what comes next.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Change site/location
