China's Chip Equipment Makers See Broad Revenue Growth, but Profit Margins Under Widespread Pressure
Nashnova编辑部
Nine of China's ten major semiconductor equipment makers grew revenue 13.9%–49.1% in the first half, but gross margins largely failed to keep pace — and some headline profit surges collapse once one-off items are stripped out. Revenue is scaling; profit quality is not.
Revenue up, so why aren't profits keeping up?
Naura Technology (北方华创), China's largest chip-equipment maker, posted first-half revenue of RMB 20.16 billion, up 24.90% year-on-year — but net profit rose just 5.05%. This means → almost none of the extra revenue reached shareholders.
Gross margin fell from 42.17% to 40.07%, driven by rising component-iteration costs, new-product qualification spending, and volume discounts for large buyers.
R&D expenses climbed 28.87% to RMB 2.68 billion. In plain terms = Naura is spending today's margin to buy tomorrow's technology. Short-term profitability takes the hit by design.
Net profit up 300%, up 1,324% — can you trust those numbers?
AMEC (中微公司) reported net profit up 300.22% to RMB 2.83 billion, but strip out non-recurring items and basic EPS rose only 97.70%. Weighted ROE dropped from the reported 11.56% to 4.59%.
In plain terms = a significant share of profit came from one-time gains — investment returns, subsidies — not from the core business.
Piotech (拓荆科技) posted a 1,324.1% net-profit surge to RMB 1.34 billion, yet after stripping non-recurring items the figure was just RMB 367 million. The roughly RMB 960 million gap came mainly from fair-value gains on trading financial assets — short-term investments the company holds. This means → the headline figure and actual operating strength differ by nearly RMB 1 billion.
Piotech's core business did improve — gross margin rose about 9 percentage points to 41.00% — but that is a far cry from 1,324%. Investors need to do their own decomposition.
What about the companies not flattered by accounting?
Huaxing Tech posted revenue growth of 35.6%; ACM Research Shanghai grew 13.9% — solid, with no help from one-off items.
Kingsemi (芯源微), a metrology and inspection equipment maker, grew revenue 34.01% but saw its net loss widen from RMB 18 million to RMB 127 million. This means → new-tool qualification costs are still consuming profits; growth has not yet reached the money-making stage.
Kaisheng Tech (凯盛科技), Naura's coater/developer subsidiary, earned just RMB 8.08 million in net profit, down 49.4%.
Under Entity List restrictions, how far has domestic substitution gone?
In December 2024 the U.S. Commerce Department placed Naura, ACM Research Shanghai, Piotech, Kingsemi, Huaxing Tech, and Kaisheng Tech on the Entity List with a presumption of denial.
Demand-side policy is biting: Reuters reported in December 2025 that China required chipmakers to source at least half their equipment domestically. Naura's cumulative shipments of etch, PVD — physical vapor deposition — and vertical furnace tools each exceeded 1,000 units.
Yole Group's June 2026 report put China's equipment localization rate at 23.2% in 2025, up from 8% in 2021, and forecast 39% by 2030. This reflects an accelerating trend — but "mostly domestic" is still a long way off.
Progress is uneven: etch, deposition, and CMP — chemical-mechanical planarization — are substituting fast; lithography remains a "long-term challenge," and advanced metrology tools are similarly unresolved.
Everyone is building a "platform" — what does that mean for margins?
Naura is integrating Kaisheng Tech and Guotai Vacuum. The cost shows up directly: selling expenses rose 63.46%, administrative expenses 29.65%.
AMEC is expanding from etch into CMP and metrology, now offering 54 high-end tool types with more than 8,800 process chambers running across over 220 production lines.
In plain terms = "platform" means shifting from single-tool supplier to one-stop solution provider. Short-term, it pushes up costs and compresses margins; only over time can it strengthen pricing power.
The market is big enough — but can profits follow?
SEMI forecasts the global semiconductor equipment market will hit a record US $165.9 billion in 2026. China is expected to remain the world's largest equipment buyer through at least 2027.
Goldman Sachs maintained a Buy rating on AMEC on August 25 with a target of RMB 577, based on discounted 2030 valuation multiples, citing trade restrictions, export controls, and customer capex shortfalls as key risks. Capital Securities (Hong Kong) analyst Zhu Jixiang rated the stock Outperform with a target of RMB 450.
Naura listed competition — not export controls — as its top risk: homogenization in mature-node tools, persistent pricing pressure, and a warning that margins may come under periodic strain as advanced-node projects ramp. This means → the demand tailwind is already in place, but converting market share into sustainable profit remains the central test for China's equipment makers.
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