Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Insights - The importance of advanced packaging equipment is increasing, and wafer manufacturing equipment is continuously upgrading. Key players are deepening their layout in advanced packaging equipment, which is expected to see significant market growth [3][8] - Domestic companies are enhancing their innovation capabilities in wafer manufacturing equipment, responding to the upgrade demands in etching and thin film deposition [8] Summary by Sections Investment Recommendations and Targets - Key investment targets include: - 北方华创 (Northern Huachuang) - Buy - 中微公司 (Zhongwei Company) - Buy - 盛美上海 (Shengmei Shanghai) - Buy - 拓荆科技 (Tuojing Technology) - Buy - 华海清科 (Huahai Qingke) - Not Rated - 百傲化学 (Bai'ao Chemical) - Not Rated - 芯源微 (Xinyuan Micro) - Buy - ASMPT - Not Rated - 精测电子 (Jingce Electronics) - Buy [3][9] Industry Developments - At the SEMICON China 2026 event, leading semiconductor equipment manufacturers showcased advancements in advanced packaging equipment, with notable product launches such as: - 北方华创's 12-inch Qomola HPD30 hybrid bonding equipment - 拓荆科技's 3D IC series products focusing on advanced logic chip applications - ASMPT's new bare wafer processing system ALSI LASER1206 [8] - Domestic companies are making significant strides in wafer manufacturing equipment, with innovations such as: - 北方华创's new generation 12-inch NMC612H ICP etching equipment - 中微公司的 new generation ICP etching equipment solutions for advanced storage chips [8]

Core Viewpoint - ASML is expected to report strong second-quarter results on July 16, with significant order volume driven by potential demand from China and TSMC's recovery, but Morgan Stanley anticipates limited growth in the medium to long term due to slow increases in EUV technology layers, maintaining a "hold" rating with a target price of €660 [1] Group 1: Orders and Revenue Expectations - Morgan Stanley predicts ASML's order volume will exceed €4 billion in Q2 2025, primarily due to the Chinese market and TSMC [1] - The firm expects the sales proportion from the Chinese market to increase from approximately 20% to 25% in FY 2025 [1] - The consensus for ASML's revenue in FY 2025 and FY 2026 aligns with Morgan Stanley's forecast, maintaining stability [1][2] Group 2: EUV Technology and Performance - ASML's revenue grew from approximately €9 billion to about €28 billion from 2017 to 2023, with a compound annual growth rate of around 20%, significantly outpacing wafer fabrication equipment (WFE) growth of about 11% [3] - Following the introduction of EUV technology in 2019, revenue acceleration was notable, but Morgan Stanley now expects performance improvements to rely more on system performance rather than layer count increases, indicating a potential limit to layer growth [3] Group 3: Market Dynamics and Future Growth - The current cycle may differ significantly from the previous one due to a lack of clear growth drivers, with ASML relying on capacity expansion and continued subsidized spending in China [4] - Strong infrastructure spending has a limited impact on leading-edge equipment expenditures, and a lack of support from end markets like PCs and smartphones suggests that TSMC's capital expenditure growth seen in FY 2022 is unlikely to recur until FY 2027 [4] - Morgan Stanley forecasts ASML's revenue growth rate to remain between 11% and 13% from 2024 to 2027 [4]