Sinolink: The semiconductor super expansion cycle begins, equipment enters the super era.

Sinolink released a research report stating that the expansion of global AI computing power and HBM storage capacity is driving high demand for semiconductor equipment, with strong growth prospects in both backend testing and frontend wafer inspection. In terms of the industry chain, testing is a core quality control link in the midstream packaging process, with testing equipment accounting for about 63% of the value in backend testing equipment. The Taow Law is reshaping the distribution of industry value, with backend FT testing equipment being driven by 3D stacking and Chiplet technology, leading to a significant increase in testing complexity and individual machine value. The global market is expected to grow at a CAGR of 7.5% from 2026E to 2030E. Meanwhile, frontend wafer inspection equipment provides quality control throughout the wafer production process, accounting for 13% of the global semiconductor equipment market value, and is expected to grow at a CAGR of 10.8% from 2026E to 2030E. Currently, both sectors are highly monopolized by overseas industry leaders, with the top two storage testing giants holding a combined global market share of 99%, while the domestic wafer inspection equipment has a localization rate of only 1%-10%, lagging behind in terms of substitution progress. With downstream storage capacity expansion, overseas equipment delivery shortages and continuous technological breakthroughs, there is ample space for domestic substitution of FT testing and wafer inspection equipment. Sinolink's main points are as follows: - The storage expansion cycle has begun, driving increased demand for semiconductor equipment. - Storage chip prices and production are rising, leading to a structural adjustment in global capital expenditure. On the demand side, the rise in AI computing power is driving a surge in demand for high-end storage, with AI server DRAM and NAND volumes significantly higher than traditional servers. On the supply side, overseas storage leaders are tilting most of their advanced production capacity towards HBM and high-end DDR5, squeezing general storage capacity and widening the supply-demand gap, leading to a simultaneous increase in storage chip volume and prices. In this context, overseas capital expenditure by leading companies is rising significantly, with Micron planning a capital expenditure of $27 billion by 2026, a year-on-year increase of 70.3%. Combined with the imminent listing of two domestic storage companies, global storage manufacturers are expected to see a structural increase in capital expenditure. - The semiconductor equipment market is expanding across the board, with testing showing strong growth performance. - SEMI data shows that the global semiconductor equipment market will continue to expand from 2024 to 2027E, with the market size growing from $116.6 billion in 2024 to $155.6 billion in 2027E. Testing equipment is showing strong growth elasticity, with a compound annual growth rate of 21.1% from 2024 to 2027E. It is expected that with the surging demand for AI chips and automotive power devices, the demand for chip testing will continue to rise, driving sustained high growth in the medium to long term for testing equipment. - Overseas manufacturers face supply-demand mismatches, providing new opportunities for domestic substitution in semiconductor equipment. - Overseas equipment delivery is under pressure, providing an opportunity for domestic manufacturers to expand internationally. In 2026, the global semiconductor component supply cycle has significantly lengthened, with delivery times for automotive 32-bit MCUs exceeding 52 weeks, and SiC and analog integrated circuits taking 25-40 weeks and 20-48 weeks, respectively. Overseas semiconductor equipment companies are constrained by shortages of core components and saturated capacity, with delivery times for mainstream frontend and storage equipment stretching to 12-24 months, accompanied by price increases. Leading companies such as Samsung, SK Hynix, and Micron are constrained by equipment supply bottlenecks in their expansion plans, urgently seeking a diverse range of equipment suppliers to ensure capacity deployment. Leveraging technological advances, efficient delivery, and cost advantages, domestic semiconductor equipment companies are facing an opportunity for faster international validation and order delivery, which may open up incremental space for growth. - The process of domestic substitution for semiconductor equipment is accelerating, with significant growth in core company orders. - Due to high technological barriers in lithography, photoresist development, and wafer inspection, there is still significant room for improvement in localization rates. For example, the current localization rate for wafer inspection is only 1%-10%, and for lithography, it is only 0%-1%. With ongoing technological breakthroughs by domestic companies, the semiconductor equipment sector is facing a golden window for domestic substitution. From an order perspective, from 2020 to 2025, the contracts and liabilities of leading domestic equipment companies have been continuously increasing, with companies such as Advanced Micro-Fabrication Equipment Inc. China, Piotech Inc., and Skyverse Technology significantly expanding their order pipeline. Overall, in the first quarter of 2026, orders have remained at high levels. The continued growth in contracts and liabilities and sufficient orders in hand fully demonstrate the strong willingness of downstream wafer and storage production lines to procure domestically, and the logic of domestic substitution via the batch import and industrialization of domestic equipment has been fully validated. Risks: - Global wafer fab capital expenditure falls short of expectations. - Slow progress in high-end equipment technology research and customer validation. - Geopolitical trade and supply chain fluctuation risks.