"China’s Semiconductor Equipment Soars... Selective Foreign Equipment Remains Valid Amid Localization" [Click e-Stock]

Hanwha Investment & Securities Withholds Individual Stock Targets

Hanwha Investment & Securities forecasted that this year, capital investment in 300mm (wafer diameter) semiconductor facilities in China will expand to 2.8 times the level of 2020, whereas imports of foreign equipment will only double over the same period. The brokerage said on August 6 that Chinese-made equipment is expected to be the main beneficiary, but also noted, "A selective approach toward core foreign equipment remains valid." The company did not provide target prices or investment ratings for individual stocks.

CXMT logo and Chinese Five-Star Red Flag. Reuters Alliance

The year 2020 marked the start of large-scale facility investment as SMIC, China's largest foundry (semiconductor contract manufacturing) company, was listed on the A-share market in mainland China. This year, a similar phase is being repeated as Chinese DRAM manufacturer CXMT (Changxin Memory Technologies) embarks on capacity expansion following its IPO. CXMT is pushing ahead with plans to build a new DRAM plant in Shanghai and is also planning further expansions in Beijing and Hefei.

Yujin Park, an analyst at Hanwha Investment & Securities, estimated China’s investment in 300mm semiconductor facilities at approximately $33.2 billion, applying a projected 25% share of China in the Semiconductor Equipment and Materials International (SEMI)'s global equipment investment forecast of $133 billion for this year. This is 2.8 times the 2020 midpoint figure of $12 billion.

Imports, in contrast, are lagging behind. In the first half of this year, China imported $13.7 billion worth of front-end semiconductor equipment (used in wafer circuit processing). Assuming this pace continues in the second half, annual imports will only reach twice the 2020 level. The pace of capital investment is surpassing the growth rate of imports.

This gap is being reflected in the performance of Chinese equipment companies. Park expects that this year, Chinese front-end equipment makers will see their sales and net income attributable to controlling shareholders rise by 29.6% and 42.8%, respectively, compared to last year. Sales are projected to reach 8.3 times the level of 2020.

The procurement structure is also being reshaped. The most prominent change is the decline of U.S.-made equipment. U.S. equipment imports are projected to fall by 39% from 2020 levels, with their share of overall imports sharply dropping from 17.6% to 5.3%. The gap is being filled by the Netherlands. Imports of Dutch equipment, especially strong in lithography tools, are expected to reach 2.1 times the 2020 level and account for 20% of total imports. Japanese imports also increased, rising from $4.1 billion to $6.4 billion.

Korean equipment is also drawing attention. While total equipment imports from major countries shrank year-on-year, imports from Korea remained relatively robust. The share of Korean equipment rose from 4.3% in 2025 to 4.8% this year.

Regarding Chinese equipment stocks, Park said, "We expect a double benefit from both market expansion and localization." She added, "For overseas equipment makers, selective investment in companies with process technologies that are difficult for local Chinese firms to substitute in the short term will remain a valid approach."

This content was produced with the assistance of AI translation services.