Fangzheng Securities: AI drives demand growth for semiconductor equipment and accelerates domestic substitution

The Zhitong Finance App learned that Fangzheng Securities released a research report stating that global demand for semiconductor equipment continues to grow strongly, benefiting from accelerated investment in AI infrastructure, increased device architecture complexity, and high-performance demand such as HBM. According to the SEMI report, global semiconductor equipment sales are expected to reach a new high of 165.9 billion US dollars in 2026, with a year-on-year increase of 23.2%, and the equipment market size will reach 229.5 billion US dollars in 2028, achieving five consecutive years of growth; supply-side domestic manufacturers have achieved breakthroughs in increasing localization rates in the fields of etching, deposition, cleaning, CMP, etc., but the localization rate is still low in advanced processes, gluing, measurement, and ion implantation.

Fangzheng Securities's main views are as follows:

Since the 2020 pandemic, fab production has continued to expand in 21-22 to support the growth in demand for terminals such as high-performance computing and automobiles. Furthermore, various regions have continued to invest to avoid semiconductor supply chain restrictions during similar pandemics

In 2023, South Korea's capital expenditure declined significantly due to weak downstream demand and storage inventory adjustments. Entering 2024, equipment sales recovered strongly, benefiting from the expansion of advanced logic, mature logic, advanced packaging, high bandwidth storage (HBM) production capacity and a significant increase in Chinese investment. Beginning in 2025, thanks to increased device architecture complexity, accelerated penetration of advanced/heterogeneous packaging, and stringent performance requirements for AI and HBM, demand for equipment continued to grow strongly, but demand for some consumption, automobiles, and industries continued to weaken.

According to the SEMI report, global semiconductor equipment sales are expected to reach a new high of 165.9 billion US dollars in 2026, up 23.2% year on year, up from 15.1% in 25

The equipment market is expected to reach US$229.5 billion by 2028, achieving five consecutive years of growth. This optimistic growth forecast is mainly due to the acceleration of investment in AI infrastructure, as well as increased investment in advanced logic, storage, and back-end technology required for higher computing densities, high-bandwidth storage (HBM) investments, and more complex device architectures.

In terms of market segments

In recent years, benefiting from the construction of cutting-edge node production capacity for AI accelerators, high-performance computing, and high-end mobile processors, sales of front-end equipment used in Foundry and Logic applications have grown steadily. SEMI expects equipment sales in this field to increase by 18.9%, 18.1%, and 13.6% respectively in 26-28. In the field of storage-related equipment, DRAM is driven by HBM demand, advanced DRAM node migration, and NAND technology transformation. At the same time, 3DNAND layer migration and higher density architecture investment are also driving growth in NAND equipment investment.

From the demand side

On the one hand, under the AI development trend, driving storage and logic are driving the increase in demand for equipment. On the other hand, from the perspective of technological iteration, advanced manufacturing processes have greatly increased the complexity and process volume of wafer manufacturing. In the field of FLASH memory chips, as the mainstream manufacturing process has evolved from 2DNAND to 3DNAND structures, the demand for thin film deposition equipment is also gradually increasing. From the supply side, domestic semiconductor equipment manufacturers have experienced years of product polishing in etching, deposition, cleaning, CMP and other fields have already achieved breakthroughs in increasing the localization rate. Some domestic manufacturers have even made the leap from domestic substitution to export, and many leading companies have developed to platform-based development, such as Beifang Huachuang, China Micro, Changchuan Technology, etc., but in the field of advanced manufacturing processes, as well as processes such as coating, measurement, and ion implantation, the localization rate is still low. Overall, the market space for demand-side equipment is broad+strong downstream demand+technology iteration, supply-side domestic substitutation+exports, making semiconductor equipment at the forefront even in many booming machinery and equipment tracks, and is relatively sustainable.

Investment advice

It is recommended to focus on pioneering equipment platformization companies Beifang Huachuang and Zhongwei, low localization rate links such as Huahai Qingke in the ion implantation process, Zhongke Fei Measurement, Precision Measurement Electronics, Tianzhun Technology, etc. in the field of core source micro and measurement equipment in the gluing and imaging process, and Tuojing Technology, Microconductive Nano, and Shengmei Shanghai in the film deposition process. Backend packaging testing equipment focuses on Changchuan Technology, Huafeng Measurement and Control, and Jingzhida. The equipment parts section focuses on Fuchuang Precision, Zhengfan Technology, Yingjie Electric, Qiangyi Co., Ltd., Zhenbao Technology, Gaokai Technology, Ultrapure Materials, Torrance, Silicon Electric Co., Ltd., Kema Technology, Xinlai Materials, etc.

Risk warning: Technological progress falls short of expectations, downstream demand falls short of expectations, macroeconomic fluctuations, and industry competition exacerbate risks