Accessible version AMEC (A) Leading etching toolmaker; initiate at Buy on solid WFE demand and localization Initiating Coverage: BUY | PO: 352.00 CNY | Price: 289.20 CNY Leading etching tool maker in China; initiate at Buy We initiate coverage on AMEC, a leading semiconductor equipment company based in China, with Buy rating and price objective (PO) of CNY352 (22% upside potential). Our bullishness on the stock is based on 1) the robust wafer fabrication equipment (WFE) demand in China, esp. given a potenti ...

Summary of China Semiconductor Equipment Imports - September 2025 Industry Overview - **China's Semiconductor Equipment Imports**: In September 2025, semiconductor equipment imports reached $7.1 billion, marking a **42% year-over-year (yoy)** increase and a **68% month-over-month (mom)** increase. This is significantly above the previous three-month average of $4.7 billion and the twelve-month average of $4.5 billion. The year-to-date (YTD) growth for 2025 stands at **9%** [1][53][55]. Key Categories of Imports Front-end Equipment - **Total Imports**: Front-end equipment imports totaled **$5.0 billion** in September, up **28% yoy** and **65% mom**. Key drivers included: - **Process Control**: $750 million, **+123% yoy** and **+95% mom** - **Etching**: $963 million, **+79% yoy** and **+72% mom** - **Deposition**: $1,043 million, **+67% yoy** and **+81% mom** - **Other Front-end**: $543 million, **+60% yoy** and **+16% mom** - **YTD Performance**: Front-end imports for the year reached **$29 billion**, up **7% yoy** [2][3][36]. Back-end Equipment - **Assembly & Packaging**: $485 million, **up 19% yoy** and **up 76% mom**. Notable increases in wire bonder imports and mounting/bonding equipment. - **Wafer Manufacturing**: $103 million, **down 29% yoy** and **down 27% mom**. - **Flat Panel Display**: $965 million, **up 473% yoy** and **493% mom**. - **Spares**: $548 million, **up 40% yoy** but **down 10% mom**. - **Testing**: $57 million, **up 32% yoy** and **up 137% mom** [8][41]. Trends and Insights - **Lithography Imports**: Down **17% yoy** but up **84% mom**. The average selling price (ASP) for lithography machines was **$18.1 million**, significantly higher than the previous average of **$11.4 million** [80][99]. - **Market Share**: In 2024, China accounted for **36.2%** of the global wafer fabrication equipment (WFE) market, highlighting its importance in the global semiconductor landscape [69][70]. - **Country of Origin**: Japan and the Netherlands accounted for **41%** of semiconductor equipment imports into China through September 2025, with Japan holding a **26%** share [67][74]. Potential Risks and Opportunities - **Normalization of Sales**: Most semiconductor equipment suppliers anticipate that sales in China will normalize in 2025, which could impact future growth rates [1]. - **Dependence on Key Suppliers**: The top five semiconductor equipment suppliers' disclosed sales accounted for **76%** of front-end imports in Q3 2025, indicating a concentrated market [77][78]. Conclusion The semiconductor equipment import data for September 2025 indicates robust growth in several categories, particularly in front-end equipment and flat panel displays. However, challenges remain, particularly in lithography and wafer manufacturing segments, which may require strategic adjustments from suppliers to maintain growth momentum in the Chinese market.

Summary of Semiconductor Equipment Imports in China - August 2025 Industry Overview - China's semiconductor equipment imports in August 2025 totaled **$4.2 billion**, reflecting a **15% year-over-year (yoy)** increase but a **18% month-over-month (mom)** decrease. This marks a continuation of the year-to-date (YTD) positive growth of **4%** for 2025, with expectations for normalization in sales for most semiconductor equipment suppliers in China [1][59][61]. Key Import Data - **Front-end Equipment**: - Imports amounted to **$3.0 billion**, up **12% yoy** but down **20% mom**. Key segments included: - **Lithography**: **$750 million** (+55% yoy, -8% mom) - **Other Front-end**: **$469 million** (+27% yoy, +11% mom) - **Process Control**: **$385 million** (+15% yoy, -4% mom) - **Etching**: **$558 million** (+2% yoy, -35% mom) - **Heat Treatment**: **$153 million** (+1% yoy, -10% mom) - **Ion Implanters**: **$118 million** (-34% yoy, -40% mom) - **Deposition**: **$576 million** (-6% yoy, -36% mom) [2][3][8]. - **YTD Front-end Imports**: Totaled **$24.0 billion**, up **3% yoy**. Notable increases were seen in: - **Etching**: **$5.0 billion** (+47% yoy) - **Deposition**: **$5.6 billion** (+8% yoy) - **Other Front-end**: **$3.3 billion** (+9% yoy) - **Process Control**: **$2.8 billion** (+5% yoy) - However, declines were noted in **Lithography** (-17% yoy), **Heat Treatment** (-22% yoy), and **Ion Implanters** (-21% yoy) [3][8]. Category Breakdown - **Assembly & Packaging**: - Imports were **$275 million**, down **24% yoy** and **24% mom**. Wire bonder imports decreased by **36% yoy** and **30% mom**, while mounting and bonding increased by **44% yoy** and **5% mom**. YTD, A&P is up **1% yoy** to **$2.9 billion** [8]. - **Wafer Manufacturing**: - Imports reached **$141 million**, up **10% yoy** but down **28% mom**. YTD imports are up **6% yoy** to **$1.1 billion** [8]. - **Flat Panel Display**: - Imports totaled **$163 million**, up **34% yoy** but down **13% mom**. YTD, imports are down **2% yoy** to **$1.5 billion** [8]. - **Spares**: - Imports were **$610 million**, up **75% yoy** but down **2% mom**. YTD, spares are up **20% yoy** to **$3.9 billion** [8]. - **Testing**: - Imports were **$24 million**, down **41% yoy** and **48% mom**. YTD, testing imports are down **18% yoy** to **$314 million** [8]. Market Insights - China accounted for **36%** of global wafer fabrication equipment (WFE) in 2024, highlighting its significance in the global semiconductor market [1][70]. - The **Netherlands** was a major supplier, with lithography machines from the Netherlands accounting for **86%** of all lithography imports in August 2025 [85]. - The average selling price (ASP) of lithography machines was **$11.5 million** in August 2025, above the previous 12-month average of **$11.1 million** [105]. Supplier Comments - **Applied Materials**: Anticipates lower revenues and earnings due to uncertainties in the China market, with a projected decrease in China’s contribution to total revenue [81]. - **ASML**: Expects China to account for over **25%** of total revenue, indicating stronger than previously expected demand [81]. - **Lam Research**: Projects WFE spending to be around **$105 billion**, with a notable increase in domestic China-related spending [81]. Conclusion - The semiconductor equipment market in China is experiencing mixed signals, with certain segments showing growth while others decline. The overall trend indicates a normalization in sales, with significant contributions from key suppliers and a focus on specific equipment categories. The data suggests potential investment opportunities in segments with positive growth trajectories, such as etching and spares, while caution is advised in areas experiencing declines.