Written by: Rita

Guide to Trends

Berenberg released its global semiconductor equipment monthly tracking on July 1. The data anchor is Japan's SEAJ's May shipments, where Japanese equipment manufacturers account for about 25% of global WFE, making the data leading. However, the most noteworthy part of the report is not Japan, but rather the uniformly bullish outlook from six companies in the United States and China. American AMAT ($525), LRCX ($340), KLAC ($197.5), and China's North Huachuang (¥680), Zhongwei (¥500), and Tuojing Technology (¥580) all outperform the market. Behind this is the same judgment: capital expenditure in DRAM and NAND is driving up global equipment demand, forecasting a 21.4% increase in WFE for 2026 and +18.2% for 2027. The May data from Japan's SEAJ (year-on-year +11%, testing equipment +41%) validates this judgment.

The Three Growth Lines of America's Three Giants: GAA, HBM, Advanced Packaging

Applied Materials (AMAT) has a target price of $525, with Berenberg optimistic about three drivers: market space growth, service revenue, and capital returns. AMAT is the world's largest semiconductor equipment platform company, involved in several areas including deposition, etching, CMP, and is one of the biggest beneficiaries of the rising capex in DRAM and advanced logic.

LAM Research (LRCX) has a target price of $340, with logic tying GAA, advanced packaging, HBM, and NAND upgrades together. LRCX’s etching equipment has unique advantages in GAA transistors and HBM stacking, and Berenberg believes all these demand directions will materialize simultaneously.

KLA (KLAC) has a target price of $197.5, grounded in structural growth and low risks of Chinese alternatives. KLAC's metrology equipment is an indispensable part of chip manufacturing, with Berenberg noting that Chinese counterparts have limited capabilities to substitute in this field, making KLAC's competitive moat strong.

China's Three Leaders: Domestic Substitution in the Realization Period

North Huachuang has a target price of ¥680 and is described as having the most comprehensive product line, covering deposition, etching, thermal treatment, and cleaning. Zhongwei has a target price of ¥500, focusing on being a leading etching company, expanding deposition, and increasing global recognition. Tuojing Technology has a target price of ¥580, with highlights being its deposition equipment entering the mixed bonding stage of HBM and CoWoS advanced packaging.

All three are rated to outperform the market, indicating that Berenberg believes that domestic substitution in China's WFE has reached a stage where specific targets can be bet on. Tuojing Technology's mixed bonding equipment is particularly noteworthy, as it is a beneficial link in the production expansion of HBM and CoWoS, with very few direct counterparts in the A-share market.

Japanese SEAJ Data Confirms the Direction of the Cycle

In May, Japanese equipment shipments amounted to ¥420 billion, a year-on-year increase of 11%, with a three-month moving average growing by +18%, showing a clear trend. Among them, testing equipment saw the highest growth rate of +41%, driven by the testing intensity of HBM and Blackwell chips. The front end saw +5%, and packaging saw +12%, with different paces but consistent directions.

Berenberg used a regression model to predict that Tokyo Electron’s June quarterly revenue might see a quarter-on-quarter decrease of 15%, below the market expectation of +7%, while Advantest is projected to grow +10%, exceeding the market expectation of +3%, with an R² of 0.99, supported by its position as the exclusive supplier for HBM testing. Japan also has Disco (packaging cutting, 85% market share), Kokusai (batch ALD, driven by GAA and NAND), and Lasertec (mask inspection) all rated to outperform the market.

Trends Perspective

The most valuable aspect of Berenberg’s report is the signal that all six targets in China and the U.S. outperform the market. In the global WFE sector, Berenberg simultaneously provides a positive outlook on the seemingly contradictory logics of "U.S. technology barriers" and "Chinese domestic substitution."

The three giants of the U.S. win through technical depth and overall benefits from the rising capex in memory. The three leaders in China succeed from the certainty of domestic substitution and the new growth in advanced packaging, with Tuojing's mixed bonding being particularly noteworthy. The common foundation of both lines is the same judgment: the upward cycle of global WFE is not yet over, with growth in 2026 to 2027 supported by continued investments in DRAM and NAND.

For Chinese investors focused on U.S. semiconductor stocks and A-share equipment, this report offers a rare dual perspective of the U.S. and China. In a time when the logic between China and the U.S. pulls against each other in most sectors, WFE is one of the few areas where both sides can find targets that outperform the market.

Disclaimer

This article is a整理与解读 of third-party brokerage research reports by Trend Research. The ratings, target prices, earnings forecasts, and related judgments quoted in the text are the views of the brokerage analysts and represent the positions of their institutions, not the views of Trend Research, and do not constitute any investment advice. Market risks exist, and decisions need to be independent. This article should not be used as a basis for buying or selling any securities.