Xiangcai Securities released a research report stating that, going forward, with continuous policy support and measures such as "anti-involution" expected to drive a recovery in manufacturing profitability, the manufacturing sector's prosperity is anticipated to keep improving. This, in turn, is likely to boost overall demand for upstream machinery and equipment. Consequently, the firm maintains a "Buy" rating for the machinery industry. Key focus areas are suggested as follows:
First, the construction machinery sector. Equipment replacement cycles coupled with electrification are accelerating the recovery of domestic demand. High commodity prices are sustaining demand from mining countries overseas, while growing demand in emerging markets and companies' accelerated global expansion efforts are creating a synchronized uptick in both domestic and international demand. This environment is expected to drive a faster recovery in the performance of major original equipment manufacturers (OEMs) and core component suppliers.
Second, the semiconductor equipment sector. Amid the global wave of artificial intelligence and data center construction, prices for chips, including memory chips, continue to rise rapidly. This trend is expected to prompt semiconductor companies to accelerate capacity expansion. Furthermore, with the anticipated listing of a leading domestic memory manufacturer and the ongoing process of import substitution, demand within China's semiconductor equipment industry is projected to maintain sustained growth.
Key market observations from Xiangcai Securities are as follows:
**Market Review: Machinery Sector Outperforms, Semiconductor Equipment Leads** This week, the machinery industry rose 1.8%, outperforming the CSI 300 Index, which fell 0.3%. Top-performing sub-sectors were semiconductor equipment (up 15.8%), robotics (up 8.1%), and other automation equipment (up 6.5%). Lagging sub-sectors included energy equipment (down 4.1%), building equipment (down 2.8%), and printing & packaging machinery (down 2.4%).
Year-to-date as of May 15th, the CSI 300 Index has gained 5.0%, while the machinery industry has surged 18.7%. Leading gainers were laser equipment (up 109.9%), other automation equipment (up 65.0%), and semiconductor equipment (up 55.7%). Underperforming segments were printing & packaging machinery (down 4.9%), construction machinery OEMs (down 4.6%), and rail transit equipment (down 3.4%).
**Construction Machinery: April Sales Show Broad Gains, Aerial Platforms Shine** According to the Construction Machinery Association, sales growth rates for various machinery types in April 2026 were as follows: excavators (29.8%), loaders (32.4%), graders (21.2%), truck cranes (10.3%), crawler cranes (45.7%), mobile cranes (6.2%), tower cranes (-16.0%), forklifts (12.8%), road rollers (16.5%), pavers (-20.5%), aerial work platforms (43.9%), and aerial vehicles (29.4%).
For the January-April period, cumulative sales growth rates were: excavators (22.2%), loaders (27.3%), graders (14.5%), truck cranes (13.4%), crawler cranes (36.3%), mobile cranes (-4.9%), tower cranes (-18.0%), forklifts (16.7%), road rollers (15.9%), pavers (5.9%), aerial work platforms (12.8%), and aerial vehicles (5.1%).
Regionally, domestic sales for six types of machinery—excavators, loaders, truck cranes, crawler cranes, forklifts, and aerial vehicles—all grew during the January-April period. However, sales for six other types—graders, mobile cranes, tower cranes, road rollers, pavers, and aerial work platforms—declined year-on-year. Benefiting from positive sales growth in April alone, the year-to-date sales declines for mobile cranes, aerial work platforms, and road rollers all narrowed compared to the January-March figures.
On the export front, ten out of the twelve machinery types saw export volume growth during January-April, with the exceptions being mobile cranes and tower cranes.
Looking ahead, domestic demand for construction machinery is expected to continue its recovery, driven by ongoing replacement demand, the electrification trend, a diminishing negative impact from declining real estate demand, and new demand generated by projects like hydropower initiatives in the Yalong River basin and the Xinjiang-Tibet Railway. For exports, sustained high mineral prices are expected to fuel demand from mining regions like Australia and South America. Coupled with rapid demand growth in emerging markets such as Africa and Indonesia, and the continued overseas expansion of Chinese construction machinery companies, China's construction machinery exports are projected to maintain rapid growth.
**Semiconductor Equipment: Memory Chip Price Rally Continues, Upstream Equipment to Benefit** According to Wind data, as of May 15th, the spot average price for DDR3 (4Gb (512Mx8), 1600MHz) was $8.99, representing a 123.4% increase since the beginning of the year. The average price for 2026 has risen 267.8% compared to the 2025 average. As of May 4th, the spot average price for NAND Flash (32Gb 4Gx8 MLC) was $10.47, up 140.0% year-to-date, with the 2026 average price showing a 116.5% increase over 2025.
Driven by sustained growth in chip demand and prices, global semiconductor sales in March 2026 surged 79.2% year-on-year to $99.52 billion. China's semiconductor sales rose 74.8% year-on-year to $26.74 billion, with growth rates for both continuing an upward trend.
Benefiting from the sustained rise in chip prices, particularly for memory chips, global memory chip manufacturers and major foundries are experiencing rapid profit growth. Combined with persistent chip shortages, this is expected to trigger a new wave of large-scale capacity expansion by chipmakers. Additionally, with the imminent listing of a leading domestic memory manufacturer, ChangXin Memory Technologies (CXMT), and the ongoing increase in semiconductor localization rates in China, domestic semiconductor equipment manufacturers are likely to see an inflection point in orders, accelerating future earnings growth.
**Risk Factors** - Domestic policy implementation may fall short of expectations. - The effectiveness of "anti-involution" measures may be below expectations. - Domestic manufacturing demand may not meet expectations. - A sharp increase in raw material prices. - Renewed escalation of trade frictions. - Domestic and international construction machinery market demand may fall short of expectations. - Semiconductor industry capital expenditure may be lower than anticipated.
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