25 January 2026 | 5:54PM HKT Equity Research AMEC (688012.SS): Etching tools shipments ramp up for advanced nodes; 4Q Rev +21% YoY, NI midpoint +31% YoY; Buy AMEC pre-announced 4Q Rev of Rmb4.3bn (+21% YoY), which is 10%/ 3% lower than our estimates and Bloomberg consensus. 4Q GM improved to 39.7% (vs. 2Q25/ 3Q25 at 38.5%/ 37.9%). With the continuous spending on R&D for new product development, 4Q25 net income came in at Rmb869m~Rmb969m (+24%~+38% YoY). In 2025, the company's etching equipment sales were Rm ...

Core Viewpoint - The semiconductor industry is experiencing growth driven by the AI boom, with Applied Materials (AMAT) and Lam Research (LRCX) being key players in this sector, each with distinct strengths and challenges in their investment profiles [2][17]. Group 1: Applied Materials (AMAT) - AMAT is a major manufacturer of semiconductor fabrication equipment, focusing on deposition, etching, and inspection, which are critical for chip manufacturing [3]. - The company is leveraging AI-driven semiconductor technology, which is expected to create long-term growth prospects [3]. - In fiscal 2024, AMAT's revenues from advanced semiconductor nodes surpassed $2.5 billion, with expectations to double this figure in fiscal 2025 due to increased customer adoption of GAA and backside power delivery solutions [5]. - In the first quarter of fiscal 2025, AMAT reported a 7% increase in revenues and a 12% increase in non-GAAP EPS [5]. - However, AMAT faces challenges, including U.S. government export restrictions on semiconductor equipment sales to China, which are projected to reduce fiscal 2025 revenues by $400 million [6]. - The company also noted a slowdown in the IoT, Communications, Automotive, Power, and Sensors (ICAPS) segment, which could impact overall performance [7]. - The Zacks Consensus Estimate for fiscal 2025 indicates single-digit growth in revenues and EPS, with year-over-year growth of 6% and 8.21%, respectively [8]. Group 2: Lam Research (LRCX) - LRCX is recognized for its etch and deposition technology, essential for HBM and advanced packaging technologies that support AI workloads [9]. - In 2024, LRCX's shipments for gate-all-around nodes and advanced packaging exceeded $1 billion, with expectations to triple to over $3 billion by 2025 [11]. - The company reported revenues of $4.72 billion in the third quarter of fiscal 2025, reflecting a 24.5% year-over-year increase, and EPS of $1.04, a 33.3% increase [12]. - The Zacks Consensus Estimate for fiscal 2025 suggests strong growth, with year-over-year increases in revenues and EPS of 21.8% and 32.8%, respectively [13]. Group 3: Stock Performance and Valuation - Year to date, AMAT and LRCX shares have declined by 25.5% and 19.2%, respectively [13]. - AMAT and LRCX are trading at forward 12-month price to sales multiples of 4.24X and 5.14X, both below the semiconductor industry's average of 6.92X [14]. - LRCX is viewed as having a stronger growth profile due to its advanced technology for AI chip manufacturing, while AMAT's growth outlook is more uncertain [17].