CITIC Securities: The domestic semiconductor industry will continue to experience high prosperity. Recommended to focus on leading platform companies in semiconductor equipment.

CITIC Securities’ research report states that SEMICON CHINA 2026 demonstrates three major trends in China’s semiconductor industry: moving from breakthroughs at individual points to the rise of the entire industry chain; transitioning from mature process nodes to advanced process nodes; and expanding from the domestic market to the global market. With gradual breakthroughs across all links of domestically produced semiconductor equipment, components, and materials, advanced process products are being mass-produced, overseas dependence continues to decline, and domestic companies have become the core driving force of industry growth. It is also expected that in the future, China’s leading wafer fabs will continue to expand capacity; the construction of advanced process lines will accelerate, providing significant market space for domestic equipment and materials, further promoting domestic substitution. Over the long term, driven by demand such as AI computing power, advanced storage, and new energy, China’s semiconductor industry will remain in a high-growth state; domestic substitution is the most certain mainline. With local companies leveraging technological breakthroughs, cost advantages, and service capabilities, they are expected to occupy a more important position in the global semiconductor landscape and seize long-term growth opportunities. It is recommended to focus on leading platform-type semiconductor equipment companies.

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Semiconductors | SEMICON CHINA 2026: Local forces rise strongly, domestic substitution accelerates across the board

SEMICON CHINA 2026, held in Shanghai from March 25–27, 2026, attracted over 1,500 exhibitors and 180,000 professional visitors, with domestic manufacturers accounting for about 80%. In this exhibition, the share of overseas exhibitors continues to decline, while domestic exhibitors fully take the lead, with domestic substitution blooming across the entire industry chain. Additionally, leading domestic equipment manufacturers are densely launching new products, and competition in some segmented tracks is intensifying. Overall, China’s semiconductor industry is showing a strong momentum of advancing from “usable” to “high-end.” Going forward, as domestic advanced wafer fabs continue to accelerate capacity expansion, upstream industries such as equipment, components, and materials are expected to achieve rapid growth.

▍The proportion of overseas exhibitors and the exhibition efforts at SEMICON 2026 have significantly shrunk; domestic companies have taken center stage, accounting for about 80%, highlighting the rise of the local industry.

According to an analysis of the SEMICON CHINA 2026 exhibitor directory, domestic exhibitors account for about 80%, focusing on core segments such as semiconductor equipment, materials, components, manufacturing, and packaging and testing. Overseas exhibitors are still present, but their exhibition efforts and booth sizes have decreased compared to previous years, with the number of U.S.-based companies declining annually, and the scale of Japanese and South Korean companies also decreasing. Moreover, the core forums, new product launches, and technical exchanges are mainly led by domestic companies. Local firms have begun proactively defining technological roadmaps and directions such as domestic advanced processes and advanced packaging. As the maturity, sophistication, and stability of domestically produced semiconductor equipment and materials continue to improve, the industry landscape is accelerating its shift from “overseas-led” to a “balanced domestic and international, with local rise” pattern.

▍Domestic companies are comprehensively deploying in advanced process and advanced packaging, achieving a leap from “usable” to “high-quality” solutions.

1. Core equipment: breakthroughs have been achieved in etching, thin-film deposition, ion implantation, CMP, and advanced packaging equipment, with some technologies accelerating to catch up with international standards, filling gaps in domestic advanced process equipment.

2. Key components: electrostatic chucks (ESC), RF power supplies, vacuum pumps, EFEM, and precision motion components—key “bottleneck” areas—are seeing multiple domestic companies achieve technological breakthroughs and small-batch validation.

3. Semiconductor materials: 12-inch large silicon wafers, high-end photoresists, precursors, specialty gases, and targets—meeting the needs of advanced logic, memory, and packaging—are moving from auxiliary to core materials, gradually breaking overseas monopolies in high-end materials.

4. Advanced packaging: equipment and materials related to hybrid bonding, TSV, Chiplet, and HBM are being launched in concentrated releases, supporting AI compute chip packaging needs and helping domestic advanced packaging industries align with international standards.

▍Leading domestic equipment manufacturers are launching numerous new products, fully demonstrating their technical strength.

At this exhibition, top companies concentrated on releasing advanced process new products. The dense rollout of these innovations demonstrates China’s entire industry chain deployment capability, and domestic semiconductor equipment substitution is expected to continue accelerating.

▍Core segment players are rapidly expanding, with competition in some subdivided tracks intensifying, shifting from “a few breakthroughs” to “many strong contenders.”

As domestic substitution accelerates, high-value segments such as thin-film deposition, electrostatic chucks (ESC), pumps, power supplies, and EFEM see a surge in local competitors, shifting from “a few breakthroughs” to “many strong rivals,” continuously optimizing industry competition.

Among these, thin-film deposition equipment: domestic manufacturers are deploying PECVD, ALD, and PVD technologies comprehensively, with competition extending from mature to advanced process nodes, and technological iteration accelerating.

Electrostatic chucks (ESC): domestic firms are in R&D and validation phases, breaking the Japanese Shin-Etsu and U.S. Entegris’ overseas monopolies. High-end ESC domestic substitution is entering an accelerated phase, gradually reducing reliance on imported parts.

Vacuum pumps and power supplies: the number of domestic dry pumps, molecular pumps, and RF power supply companies is rapidly increasing. Product performance is approaching overseas levels, with batch applications gradually being implemented on domestic production lines.

EFEM and automation: domestic companies have made breakthroughs in wafer transfer and cleanroom automation, with products covering 12-inch lines, directly competing with overseas vendors. Their cost and service advantages are increasingly evident, further enhancing domestic semiconductor manufacturing automation.

We believe that intensified competition among domestic firms will drive rapid technological iteration and continuous cost reductions, accelerating domestic substitution. However, this also risks homogenization and price wars, testing companies’ technological barriers and customer loyalty, and compelling firms to increase R&D investment and improve core competitiveness.

Risk factors:

Risks include a weak global macroeconomic environment; geopolitical changes and increased trade frictions; downstream demand shortfalls; AI innovation underperformance; domestic substitution delays; domestic wafer fab capacity expansion shortfalls; advanced process technology development delays; intensified downstream competition; raw material price increases due to inflation; escalation of sanctions; and large exchange rate fluctuations.

Investment strategy:

SEMICON CHINA 2026 highlights three major trends: the industry’s shift from point breakthroughs to full-chain rise; from mature to advanced process nodes; and from domestic to global markets. As domestically produced equipment, components, and materials achieve breakthroughs and advanced process products are mass-produced, reliance on imports declines, with local companies becoming the core growth drivers. It is also expected that leading wafer fabs will continue capacity expansion, with advanced process line construction accelerating, creating vast market opportunities for domestic equipment and materials and further promoting domestic substitution. In the long term, driven by AI computing, advanced storage, and new energy demands, China’s semiconductor industry will remain highly prosperous; domestic substitution remains the most certain mainline. With technological breakthroughs, cost advantages, and service capabilities, local companies are poised to occupy more significant positions in the global semiconductor landscape and seize long-term growth opportunities. It is recommended to focus on leading platform-type semiconductor equipment companies.

(Source: Jiemian News)