中国半导体：现在是重新布局的时候，晶圆制造设备需求激增而市场情绪正在重置

China Semicap: Time to reload now, WFE demand explodingwhile sentiment being reset After a robust rally in the first two weeks of the year, we suggested investors to step backand avoid chasing momentum,anticipating a near-term pullback.Local vendors indeedtoned down'26 order outlook and highlighted intensifying competition, which resetsentiment and led to about 10%correction in stockprices.However,our latest channelchecks revealfar stronger-than-expectedWFEdemandacross theboard; we suggestinvestors should reload on China Semicapnow.Here weupdate our China WFEmodelreinforcing our bullish view on NAURA, AMEC,Piotech.Updated China WFE model can bedownloaded here. +85221232654qingyuan.lin@bernsteinsg.com +12135595917stacy.rasgon@bernsteinsg.com +8522918 5704david.dai@bernsteinsg.com andexpect2028WFEdemandmaygoupfurther.NowweexpectChinaWFEdemandtobeUSD50/55/59/61bn from2025-28,with furtherupsiderisks.Incontrasttoourpriorrevisions, wherewe still flagged potential equipment digestion risks as a key concern,years. Even accounting for existing WFE stock up in fabs, we expect surging demand willdrive China WFE spending to new highs till 2028.While local and global vendors remaincautious in their outlooks for China WFE demand, we attribute this to limited visibility andstrategically tryto be conservative rather than weak underlying fundamentals. History ispoised to repeat: just as in 2025, bothlocal and global vendors guide soft but ultimatelydeliverresultsfarexceedguidance.Wealsoexpectthat in2O26,thelocalizationinDRAMand Matured Logic will increase significantly, NAND to just increase slightly dueto highhighlight from the lessons we learned from global peers that there will be limited newentrants,and beyond competition theproduct mix should widen the GPM,thus webelieveconcern is overdone. +85221232694zheng.cui@bernsteinsg.com +85221232626francis.ma@bernsteinsg.com +1917344 8454alrick.shaw@bernsteinsg.com Arpadvon Nemes+1 917 344 8461arpad.vonnemes@bernsteinsg.com Juho Hwang+85221232632juho.hwang@bernsteinsg.com ThepushforAlchiplocalizationhingesonan unprecedented expansion ofChina's advanced logic capacity. As we detailed in our latest China Al chip supply- demand analysis, closing the structural supply gap will require exponential growth inChina's advanced logic capacity. Incrementally we saw another critical positive point: theChinese government won't allow H200 to flood the China market and disrupt localizationtrends bylimiting the amount ofchips thatis approved andforcing local CSPto pairtheH2OOpurchasewithlocalchippurchase.Thisshouldgivelocalfoundriesconfidencetoaccelerate their capacity expansion.Compounding this bullishmomentum,themarkethas alsounderestimated China's advanced logic capex requirements forthreereasons:1)withoutEUV,Chinamustdeploy2-3timesmoreWFEthangloballeaderstobuild7nmlines through DUV multiple patterning; 2) Al chip yields in China remain 2-3 times lowerthan international peers, for the same computing power output more wafers willbe needed;3) intense rivalry between China's multiple foundries and local governments trying to takea bigger share of advanced logic in China creates a self-reinforcing cycle of competitiveexpansion which will lead to over-build in the sector. This will benefit NAURA the most,as40%of NAURA's2025WFEorderis fromadvanced logic. Carmine Milano+44 20 7762 1857carmine.milano@bernsteinsg.com DRAM players and is incentivizing them to expand far more aggressively. This isa stark contrastto the past fewyears when a roughly5 yeartechnologygap in DRAMbetween China and global vendors prevented Chinesevendorsfrom achieving significantcommercial success and limited their ability to scale expansion.For instance, CXMTposted negativeGPM in 2024 in their prospectus recentlyreleased,leaving themajoritythe Chinese government. We are now seeing the memory supercycle exerta massive,transformative impactonlocal DRAMnames across threekeyareas:1)Addressablemarket: the market local vendors can address has grown substantially,as improved pricinghas enabledthemtogaincommercialmomentum inhigher-endproductswhereloweryields previously barred entry; 2) Funding: with funds raised through IPOs and their ownpositive operating cash flows in 2026,they will be ableto add 3-5xleverage on thesefundsto secure externalcommercial investmentbeyondgovernment support; 3)New entrants:JHICC andYMTC to add DRAM capacity starting in 2026 as well,driving additional upsidein capacity expansion through increased competition.BothNAURA/AMEC will benefit, theyhave~13/20%ofWFEorderfromDRAM in2025,respectively. expansion,andwe now see multipleclearsigns offurtheracceleration.As localleaderYMTC does not have technology gap comparedto global peers (as NAND doesnot rely on cutting edge lithography),the commercial potential for NAND is far betterthan DRAM.Ontop ofthat, tear downanalysis confirmed the company resumed 232Lvendors (such the High Aspect Ratio etching tool), we don't see any constrain for YMTC toadd ca