Dongguan Securities·2025-04-28 09:04Investment Rating - The report maintains an "Overweight" rating for the semiconductor equipment industry, highlighting the ongoing domestic substitution and demand growth driven by downstream capacity expansion [1][2]. Core Insights - Semiconductor equipment is a critical upstream segment of the semiconductor industry, with wafer fab expansions driving demand growth. Equipment investment accounts for 70%-80% of capital expenditures in an integrated circuit production line, and the market size is expected to grow faster than the overall semiconductor market [2][10]. - Domestic substitution of semiconductor equipment has made progress, particularly in etching, thin film deposition, and cleaning equipment, with domestic market share reaching over 20%. However, the localization rate for photolithography, measurement, coating, and ion implantation equipment remains low, indicating significant future potential for domestic substitution [2][36]. - Major US equipment manufacturers have a high revenue share from China, with over 35% of their revenue coming from the mainland. The new international trade landscape may lead to increased import costs for US equipment, providing opportunities for domestic manufacturers to accelerate substitution [2][52]. Summary by Sections 1. Semiconductor Equipment: Upstream Supportive Segment - Semiconductor equipment is essential for integrated circuit manufacturing and advanced packaging, directly influencing chip manufacturing capabilities and yield rates. The capital expenditure structure shows that equipment investment constitutes a significant portion of overall spending in the semiconductor industry [10][18]. 2. Progress in Domestic Substitution - The report notes that China's integrated circuit exports have outpaced imports, indicating initial success in domestic substitution. In 2024, China's integrated circuit imports were $358.6 billion, while exports reached $159.5 billion, with the export growth rate exceeding that of imports [36][37]. - The localization rates for various equipment types are as follows: photolithography (<3%), measurement (<5%), coating (<10%), and ion implantation (<10%). In contrast, etching and thin film deposition equipment have achieved around 20% localization [38][39]. 3. Company Introductions - Notable domestic companies include: - North Huachuang (002371): A platform enterprise for semiconductor equipment, with a revenue increase of 39.51% in 2024 [46]. - Zhongwei Company (688012): A leading etching equipment manufacturer, with a revenue increase of 36.27% [46]. - Shengmei Shanghai (688082): A leader in semiconductor cleaning equipment, with a revenue increase of 44.62% [46]. - Tuojing Technology (688072): A dual leader in thin film deposition and hybrid bonding, with significant revenue growth [46]. - Changchuan Technology (300604): Comprehensive testing equipment layout with rapid profit growth [46]. - Xinyuan Micro (688037): Leading in coating and developing equipment, facing profit pressure due to rising costs [46]. 4. Investment Recommendations - The report suggests focusing on companies such as North Huachuang, Zhongwei Company, Shengmei Shanghai, Tuojing Technology, Changchuan Technology, and Xinyuan Micro, which are well-positioned to benefit from the ongoing domestic substitution and demand growth in the semiconductor equipment sector [2][46].