2026-01-22 02:44Summary of the Conference Call on Global Semiconductor Capital Equipment Industry Overview - The focus is on the Wafer Fabrication Equipment (WFE) market, particularly imports to China. - In 2025, total WFE imports to China reached $39.2 billion, representing a 3% year-over-year (YoY) increase, despite a 13% YoY decline in December imports due to a high base effect from December 2024 [2][26][37]. Key Insights - December 2025 saw WFE imports of $4.5 billion, marking the highest monthly figure for the year, with a MoM increase of 84% [2][3][26]. - Lithography imports hit a record high in December at $2.3 billion, primarily driven by demand from Shanghai and Beijing [3][27][35]. - The overall demand for WFE in China remains robust, particularly for AI chip and memory production, indicating a continued push for local production capabilities [3][68]. Company-Specific Insights ASML - ASML's China sales are projected to reach EUR 3.14 billion in Q4 2025, reflecting a 35% QoQ and 64% YoY increase, driven by high lithography imports [4][68][70]. - China is expected to account for 42% of ASML's total system sales in Q4 2025, significantly higher than previous guidance [68][79]. Lam Research (LRCX) - December revenues for LRCX are expected to decline by 42% QoQ, with China exposure estimated at 25% of total revenues [6][90]. - The company anticipates that its China revenue exposure will fall below 30% in 2026 [6][90]. Applied Materials (AMAT) - AMAT's January quarter revenues are projected to increase by 4% QoQ, with China exposure remaining around 30% [7][87]. Other Companies - Tokyo Electron (TEL) and Kokusai are also expected to see growth, with TEL benefiting from competitive pricing and Kokusai from increased adoption of batch ALD technology [17][20]. - Screen and Advantest are projected to experience declines in China revenue, with Screen's expected to drop 43% YoY [11][12]. Import Trends - The US, Singapore, and Malaysia combined accounted for 35% of WFE imports to China in 2025, while Japan's share decreased to 23% [43][50]. - The share of lithography imports from the Netherlands has increased significantly since 2023, indicating a shift in sourcing strategies among global vendors [43][65]. Investment Implications - NAURA, AMEC, and Piotech are highlighted as outperformers in the domestic WFE market, benefiting from local demand and technological advancements [14][15][16]. - ASML, LRCX, and AMAT are also rated as outperformers, with strong growth prospects driven by ongoing demand in the semiconductor sector [19][20][21]. Conclusion - The WFE market in China is showing signs of resilience and growth, particularly in lithography, despite some expected declines in revenue for certain companies. The ongoing investments in local production capabilities for advanced technologies like AI chips and memory are likely to sustain demand in the coming years.