Macro_Lin
Semiconductor Analyst, AI Chip Design, Ex-Quant/Portfolio Manager
Chinese semiconductor equipment makers such as Naura and AMEC are the market's main line because they address the central problem in Chinese semiconductors: advanced capacity and equipment localization. Solving that problem runs through equipment and materials, so the pricing focus of capital in Chinese stocks will center on those segments. x.com
Chinese semiconductor equipment makers such as Naura and AMEC remain a structural rather than cyclical story, since memory capex is a multi-year trend and equipment makers sit in the best seat. After a two-month run, though, valuation is doing more of the work, so the shares are not worth chasing the way they were in April, though existing positions can run. x.com
Japanese materials and component suppliers will inevitably cede share to China because they are too cautious about expanding capacity. Sinocera said its key raw materials for high-end MLCCs passed qualification at some customers; those customers may keep using Chinese suppliers through a downcycle, increasing pressure on Japanese firms. Taiwanese stocks are more attractive than Japanese materials and components plays; unlike Chinese firms, Taiwanese companies expand capacity and return capital. … Show more
Chip-equipment makers look cheap given supply-chain shortages and demand visible toward 2029-30. At Semicon West, no one raised demand concerns; suppliers' suppliers lacked capacity, while several high-quality names trade below the S&P multiple. Per Lynx's KC, customers are asking about delivery three to four years out. For Lam Research's report, bottlenecks, pricing and visibility beyond 2027 matter more than demand. x.com x.com
Lam Research's record results suggest the equipment cycle is not ending despite its stock selloff. Revenue reached $8.22B, up 54% year over year and over 20% sequentially, while EPS rose 75%; ASML and TSMC also report customers needing more tools. Overweight with a $355 target and 35% upside, but the selloff is a gift only if Lam guides December higher. x.com x.com
Lam Research's non-China demand growth and steady earnings estimates make its lower multiple a rebound setup if its guide holds. China's revenue share fell from 43% to 26% as Taiwan and Korea grew, while the fiscal 2027 earnings multiple fell from about 37x to 28x on nearly unchanged estimates. An in-line quarter and December guide near consensus would probably lift the stock; a guide below $8.5bn would back the selloff. x.com
Chip-equipment makers are first in line to benefit from Samsung and SK Hynix's largest-ever capacity expansion, which sent Applied Materials, KLA and ASML sharply higher. The Korean buildout is just beginning and has not reached the earnings phase, so markets trade expected demand for equipment, cleanrooms and materials first. That mirrors NVIDIA last year, when trading expectations before earnings lifted its supply chain for a full year. x.com x.com
Qnity Electronics is a picks-and-shovels way to invest in AI without picking which chipmaker wins, because it supplies the materials chipmakers consume throughout manufacturing. Its photoresists, CMP pads and slurries, packaging and thermal materials, Kapton films and specialty chemicals are consumables replenished as wafers move through fabs, creating recurring demand across a diversified customer base. Risks include chip spending cycles, intense competition and geopolitical exposure in Asia. … Show more
SMIC is one of the few low-valued Hong Kong-listed leaders of China's full-stack AI supply chain, and AI chip foundry should enter a long boom. China's AI capex is a tenth of the US's, and the binding constraint is chip manufacturing, specifically foundry capacity, not money, power, applications or materials. Solving it would let capex expand quickly. SMIC is catching up, with strong demand and tight capacity. Huawei and T-Head are unlisted and Cambricon looks pricey. x.com
Leading-edge wafer demand is bullish for semiconductor equipment makers because TSMC is already at over 100% utilization on those nodes. Per Ben Bajarin, rack-scale pods drive more wafers across categories. Close collaboration at the leading edge also gives equipment makers and TSMC visibility into plans years ahead. x.com x.com
Chinese semiconductor localization names like ACM Research and NAURA look like attractive opportunities for the second half of 2026 because CXMT's IPO should channel capital their way. Chinese sell-side analysts say CXMT's market cap right after listing could reach at least RMB 5 trillion, a frenzy Western investors underestimate, and most of the money it raises will likely flow into localization stocks. x.com
ACM Research is the best idea under $5B in market cap right now because China is going to keep pushing for localization. Ongoing dilution of its stake in its Shanghai subsidiary is a valid concern, but a necessary one. x.com x.com
