Shen Wan Hongyuan: Semiconductor equipment welcomes “AI production expansion+domestic replacement” double click

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the IPO price of Changxin Technology's Science and Technology Innovation Board was determined to be 8.66 yuan/share, and the total amount of capital raised is estimated to be about 57.919 billion yuan. If the full over-allotment option is exercised, the fund-raising project is expected to use 29.5 billion yuan in capital, mainly for technological upgrading and transformation of mass production lines in memory wafer manufacturing. AI demand exploded and compounded the upward cycle, and global semiconductors entered a new cycle of super expansion. SK Hynix 26Q1 net profit increased 397.47% year on year. Changxin Technology expects net profit to mother of 50-57 billion yuan in the first half of 2026, an increase of more than 22 times over the previous year. SEMI predicts that the global semiconductor equipment market is expected to reach US$229.5 billion in 2028. Bernstein data shows that China's WFE localization rate has risen from 16% in 2024 to 21% in 2025, and is expected to rise further to about 26% in 2026. The semiconductor equipment industry is facing a double blow of “AI expansion+domestic replacement”.

Shen Wan Hongyuan's main views are as follows:

Demand for AI has exploded and the superposition cycle has increased, and global semiconductors have entered a new cycle of super expansion

Unlike previous cyclical fluctuations, this round of incremental demand is driven by AI, which on the one hand expands market capacity and lengthens the industry's boom cycle. Due to insufficient supply due to excessive growth in demand, rising semiconductor prices have greatly improved corporate profits. Among them, SK Hynix 26Q1 achieved revenue of 52.58 trillion won (approximately RMB 239.1 billion), up 198.07% year on year, and net profit of 40.33 trillion won (approximately RMB 183.381 billion), up 397.47% year on year, gross profit margin 79.27%, and net profit margin 76.74%; Changxin Technology's revenue for the first half of 2026 is 110-120 billion yuan, an increase of 612.53% - 677.31%, estimated net profit of 50-57 billion yuan, a year-on-year increase of 2244.03%-2544.19%. Improving corporate profits is the biggest driving force for expanding production. The South Korean government, SK Group, and Samsung Group have launched a total investment plan of 20 trillion yuan. Domestic Changxin and Changcun have also launched IPOs to speed up the production expansion process.

The global semiconductor equipment market is expected to reach US$229.5 billion in 2028

According to the release of the “Mid-Year Total Semiconductor Equipment Market Forecast Report”, SEMI predicts that total global semiconductor manufacturing equipment (OEM) sales will reach a record high of 165.9 billion US dollars in 2026, up 23.2% year on year. The growth trend is expected to continue until 2028, and total equipment sales are expected to reach a record 229.5 billion US dollars. The wafer factory equipment (WFE) sector (including wafer processing, fab facilities, and mask/mask equipment) is expected to grow 23.1% to US$143.9 billion in 2026. WFE segment sales are expected to increase by 21.8% in 2027 and 14.1% in 2028, breaking the $200 billion mark. Semiconductor test equipment is expected to grow 31% to 15.3 billion US dollars in 2026, packaging equipment sales are expected to grow 9.6% to 6.7 billion US dollars in 2026. By 2028, test equipment will reach 20.8 billion US dollars, and packaging equipment will reach 8.6 billion US dollars.

Accelerating the localization of semiconductor equipment

According to Bernstein's data, the localization rate of China's wafer manufacturing equipment (WFE) has reached 21% in 2025, an increase of 5 percentage points from 16% in 2024, and is expected to rise further to about 26% in 2026.

Risk Alerts

Risk of cycle fluctuations in the semiconductor industry; risk of production expansion falling short of expectations, etc.