China Chip Equipment Stocks Face Earnings Test After Sharp Rally
0xBroomberg
Chinese semiconductor-equipment stocks have surged 70–100%+ this year, but first-half earnings season is approaching — investors now need hard numbers to prove whether valuations have run ahead of fundamentals.
How big is this rally?
NAURA (北方华创) is up over 70% year-to-date. AMEC (中微公司), Piotech (拓荆科技), and HWATSING (华海清科) have each more than doubled.
Crystal Growth & Energy Equipment (晶盛机电), Hangzhou Changchuan (长川科技), Accelitech, TanKeBlue, and Wuhan Jingce have all been swept up in the same wave.
This means → the market has already priced in a verdict: China's chip-equipment makers are long-term winners. The question is whether earnings can back that up.
Are earnings keeping pace?
Across 14 major equipment firms tracked by Soochow Securities, combined 2025 revenue hit RMB 90 billion, up 35% year-on-year.
In Q1 2026, combined revenue rose to RMB 21.78 billion, up 32% YoY; combined net profit jumped 61%.
In plain terms = profit is growing nearly twice as fast as revenue — these companies are not just selling more, they are earning more per unit sold.
What is the market betting on?
Three drivers stacked together: memory-chip capacity expansion driving equipment orders, advanced packaging — assembling multiple chips with new processes instead of traditional methods — opening fresh demand, and Beijing's self-sufficiency push keeping policy tailwinds strong.
Investors are betting all three will funnel orders to a widening set of domestic suppliers, sustaining both revenue growth and margin improvement.
This reflects a shift: the "domestic substitution" trade has moved from concept to a phase where real order delivery is expected.
Where is the risk?
Share prices have run well ahead of reported earnings — in effect, the good news has already been spent.
First-half earnings are the critical checkpoint: investors need evidence of firm orders, revenue growth, and sustainable margins.
This means → if results come in merely "decent" rather than "beat expectations," current valuations may not hold — and the pullback pressure could be significant.
Content is for reference only, not financial advice.