Just before the Spring Festival, Jensen Huang began his scheduled trip to China as planned. From Shanghai's soup dumplings to Yunnan cuisine in Beijing and then to beef hot pot in Shenzhen, Huang engaged in a culinary tour while also praising Chinese open-source large models like DeepSeek to employees. He ultimately made headlines with the "approval for importing the first 400,000 H200 chips," kicking off his next journey.
It's important to note that a full year has passed since DeepSeek's last groundbreaking release. Over the past year, with SOTA models refreshing every 35 days, the magic of large models seems to have lost its widespread spotlight. The magic of scaling law and the FOMO-driven frenzy haven't disappeared; they've simply shifted from model parameters to hardware and capital markets. Following the relentless surge of NVIDIA GPUs and memory, at the beginning of 2026, the domestic semiconductor sector—which has been oscillating wildly between genius and madness—announced its return with an epic rally. Not only are TSMC and Samsung reaping massive profits, but domestic wafer fabs like SMIC and Huahong have also seen their equipment utilization rates unexpectedly return to 100% for the first time in a long while, operating at full capacity and generating substantial earnings.
Capital expenditure has risen accordingly, and semiconductor equipment and materials companies are naturally the first to benefit from this红利. Where there is high prosperity, investors fear being left behind. As of January 26, the CSI Semiconductor Materials and Equipment Index has risen by 23% since the start of the year. The E Fund Semiconductor Equipment ETF (159558), which tracks this index, has recorded a gain of over 80% in the past year.
Amid the狂欢, questions arise: Is this major semiconductor recovery driven by cyclical forces or a fundamental reshaping of its underlying logic? Has the golden era for semiconductor equipment truly arrived? And how should we interpret its current surge? Embracing High景气度 To understand the logic behind this semiconductor equipment rally, we must first examine the unprecedented industry supercycle that began in 2021. In 2021, due to the pandemic and port shutdowns in Southeast Asia—which accounts for 27% of the global semiconductor packaging and testing market—a massive global chip shortage began, catching everyone off guard. The first to be affected were automotive power chips, whose packaging and testing stages are concentrated in Southeast Asia.
To maintain normal production, automakers with disrupted schedules started stockpiling consumer-grade MCUs. As the panic buying spread downstream, the consumer electronics sector—which accounts for the bulk of semiconductor consumption—hadn't even recovered from the MCU shortage before procurement teams began hoarding CPUs and passive components. Subsequently, the恐慌 from consumer electronics蔓延 to home appliances, industrial applications, and even the most upstream semiconductor equipment manufacturing, impacting wafer fab capacity expansion.
Thus, a high-景气度闭环 was formed: the greater the shortage, the more frantic the hoarding; the more frantic the hoarding, the greater the shortage. At its peak, a single Texas Instruments automotive-grade chip was sold at a hundred times its original price. What started as localized production bottlenecks ultimately evolved into a global crisis affecting all categories and industries.
The层层叠加的恐慌催生了疯狂的产能扩张. Around 2022,产能焦虑, combined with supply chain security risks stemming from geopolitical tensions, triggered a "Great Leap Forward" in global semiconductor capacity building—from mainland China to Taiwan, and from the US to South Korea. IC Insights data shows that after a 35% surge in semiconductor capital expenditure in 2021, it grew by another 15% in 2022. TSMC and Samsung announced expansion plans worth tens of billions of dollars, while mainland Chinese manufacturers also accelerated their catch-up in mature process technologies.
While the supply side was疯狂扩产, the demand side had already entered a prolonged consumer electronics recession. Gartner data indicates that the global semiconductor market declined by 11% year-on-year to $533 billion in 2023, with the memory market shrinking by nearly 40%. DRAM and NAND sales plummeted by 38.5% and 37.5%, respectively.
The consequences of overcapacity became particularly evident in 2023: global second-tier foundries saw utilization rates drop to as low as 50%, and even TSMC's advanced 5/4nm process utilization fell below 75% during the same period. If the heavy rainfall from the previous cycle isn't properly drained, it will lead to a new flood. The memory industry, having partied too hard, was forced to swallow the bitter pill of concentrated expansion—worrying about overcapacity while slashing capital expenditure precipitously. In 2023, total global semiconductor capital expenditure reached $169 billion, down 7% year-on-year, with memory—which saw a 21% decline—being the hardest hit.
It typically takes 2-3 years from planning and construction of memory chip wafer fabs to actual mass production. When the memory industry began cutting capital expenditure in 2023, AI was still a rather unreliable narrative. Who could have predicted that by late 2024, the large model revolution would become increasingly real, and a new round of chip shortages would arrive once again? Before memory modules were speculated to reach prices equivalent to a Shanghai刚需房, the industry narrative had already undergone four major shifts: The first wave was the explosion in training-side GPUs, with NVIDIA reaping enormous profits; the second wave saw the rise of inference-side ASIC chips, with Broadcom benefiting significantly from customization; the third wave involved memory chip volume expansion, with Micron Technology and Samsung seeing业绩反弹; the fourth wave featured CPU price hikes, signaling a comprehensive industry recovery.
Among these, AI's impact on memory has been particularly暴力. Micron data shows that the DRAM capacity of an AI server is 8 times that of a regular server, while NAND capacity is 3 times greater. A single AI server requires up to 2TB of storage. The storage pooling technology announced by Jensen Huang at CES 2026 further added fuel to the fire, with each GPU corresponding to 16TB of NAND capacity—a three to fourfold increase from previous levels.
However, after two consecutive years of declining capacity construction, supply has completely failed to keep up with exploding demand. Thus, another epic surge arrived, with敏锐的韩国人 taking the lead. On January 25, Korea's Electronic Times reported that Samsung Electronics planned to raise NAND flash memory prices by over 100% in the first quarter of 2026—a doubling that far exceeded market expectations of 30%-50%. Soon, SK Hynix and Western Digital quickly followed suit. From DRAM to NAND, and from original manufacturer quotes to终端分销, the supercycle of "buying on rising prices, not falling ones" for memory chips abruptly accelerated.
How to address insufficient capacity, surging demand, and层层挤压 product specifications? There's only one answer: expand production once again. And the foundation of this expansion lies precisely in semiconductor equipment and materials. The Unavoidable Pick-and-Shovel Sellers Supply-demand mismatch is the core driver of semiconductor equipment growth, but it's certainly not the only logic. In the current market, whether you're an AI believer, a supporter of domestic substitution, or a performance-realization advocate, you can find resonance within the semiconductor equipment sector.
The cycle constitutes the first layer of logic. The so-called cycle means that a 10% shortage at the终端 translates to a 20% capacity expansion in manufacturing, which then leads to a 30% increase in equipment shipments. When the shortage propagates from the final link of the industrial chain back to the initial equipment stage, and the equipment then feeds back into capacity, the market completes a full cycle of shortage-driven price hikes followed by产能过剩. This amplification effect creates the strongly cyclical nature of the equipment industry, making it the optimal sector for gauging the industry's pulse.
The data already provides proof. A Morgan Stanley research report on January 20 significantly raised expectations, increasing the 2026 growth forecast for the global semiconductor capital equipment (WFE) market from 11% to 16%, reaching a scale of $136 billion. The 2027 growth forecast was raised from 13% to 19%, with the market size climbing to $161 billion.
Breaking it down: For general wafer foundries, advanced process CapEx is expected to grow by 26% in 2026, with potential shortages in 3nm capacity. TSMC's EUV equipment orders have seen a 40%-50% year-on-year increase over two years. In the memory sector: just for high-end DRAM, Samsung's P4 fab and the Micron-Powerchip P5 fab are accelerating capacity release, with an industry bit growth rate of 25% expected for 2026-2027.
For domestic equipment, growth often follows a typical S-curve: a long, slow导入期 (0-10%) requiring rigorous verification testing; an加速期 (10%-40%) featuring high业绩爆发 driven by policy and cost-effectiveness; and a成熟期 (40%-80%) where market stabilization and competition with overseas giants cause growth to slow again. In 2025, the domestic substitution rate for semiconductor equipment in China rose from 25% in 2024 to 35%, positioning it at a critical juncture within the加速期.
This is without even mentioning the持续加码的政策红利. The National Integrated Circuit Industry Investment Fund Phase II plans to invest 80 billion yuan into the equipment segment over the next three years. Compared to Phase I's focus on design and manufacturing, Phase II places greater emphasis on investments in semiconductor equipment and materials. High-end lithography machines, metrology and inspection equipment, and advanced packaging equipment are all key areas of focus.
Demand explosion coupled with policy support has led to a major业绩爆发. Since 2025, leading equipment companies have been flush with orders, reporting collectively strong financial results. Looking at the top three holdings of the E Fund Semiconductor Equipment ETF (159558), the high景气度 of semiconductor equipment is also evident in their financial reports. Taking the top three holdings as examples, their Q1-Q3 2025 results already demonstrate robust growth.
In the first three quarters of 2025, NAURA Technology Group reported revenue of 27.3 billion yuan, with electronic process equipment orders accounting for approximately 95%. Etching leader Advanced Micro-Fabrication Equipment Inc. China (AMEC) achieved revenue of 8.063 billion yuan, with etching equipment comprising about 76% of revenue. Its net profit attributable to shareholders reached 1.211 billion yuan, a year-on-year increase of 32.66%, and its order book extends into the third quarter of 2026. Piotech Inc., which holds the leading domestic market share in PECVD/ALD equipment, reported revenue of 4.22 billion yuan and net profit attributable to shareholders of 557 million yuan. Revenue grew 85.27% year-on-year, while net profit surged 105.14%.
Epilogue There are a hundred ways to invest in the technology industry, but all hundred inevitably involve the most上游的 semiconductor equipment and materials. The problem is, semiconductor equipment research cannot be summarized by a few broad terms like lithography, etching, and thin-film deposition. Take the most familiar lithography machine: beyond the major分类 of EUV and DUV, DUV itself can be split into dry lithography and immersion lithography技术路线. Going further, dry and wet methods correspond to different process technologies, which in turn are suited for different chip products and终端环节.
This tree-like structure, where major categories branch into subcategories and subcategories further bifurcate, dictates that semiconductor equipment research is characterized by high barriers to entry and无限细分. Coupled with industry cycles, policy influences, and customer relationship lock-ins, selecting individual stocks in semiconductor equipment and materials poses a challenge for the average person comparable to hand-soldering a CPU.
Therefore, for ordinary investors, rather than纠结 over specific技术路线, it's better to embrace the major trend and opt for index-based investing. Using ETFs to cover a basket of leading companies allows for precise capture of industry红利. Since the start of the year, returns for semiconductor equipment ETFs have all exceeded 20%, but performance varies due to differences in the underlying indices they track. The market is currently divided into three main camps, ranging from broad to narrow: the全产业链派 (equipment + materials + design + manufacturing), the全市场设备材料派, and the科创板设备材料派.
At the index level, the representative for the全市场 is the CSI Semiconductor Materials and Equipment Index (931743.CSI). Originally launched in 2012 as the CSI 800 Semiconductor Index, it was revised and renamed in May 2023. Its core investment focus is the two upstream sectors of semiconductor materials and equipment, with its sample universe covering all A-shares. By selecting 40 leading companies in semiconductor equipment and materials as constituent stocks, the index achieves an extremely high industry concentration, with equipment + materials accounting for 86.5% of its weight.
Among the products tracking this index, the E Fund Semiconductor Equipment ETF (159558) has a moderate size, effectively addressing the practical pain point for ordinary investors who want to capture the industry's beta but struggle with researching个股 alpha. Furthermore, according to the fund's semi-annual report, institutional investors comprise over 80% of its holder base, with internal holdings alone接近 70%, maintaining a leading position among similar products.
On the track of technology investment, the complexity of the industry, the depth of the technology, and the intensity of change are such that even for the most professional investment institution practitioners, choosing the right trend is often the more critical task.
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