China WFE imports are down 12% YTD YoY, but Bernstein expects a second-half recovery
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China WFE imports are down 12% YTD YoY, but Bernstein expects a second-half recovery
China WFE imports in May were USD 2.2 billion, down 20% MoM and 9% YoY, and the 24% YTD YoY decline in lithography equipment is the main drag; however, improving memory-related WFE imports could support a 2H rebound.
- China's WFE imports in May were USD 2.2 billion, below last year's monthly average of USD 3.2 billion; YTD 2026 imports reached USD 12.0 billion, down 12% YoY.
- May lithography imports rebounded to about USD 295 million to USD 297 million, but YTD they were still down 24% YoY, making them the main drag on overall import weakness.
- By region, the combined share of the U.S., Malaysia, and Singapore rose to 44% YTD 2026, versus 35% in 2025 and 33% in 2024.
- ASML's China system sales are modeled at about EUR 568 million in 2Q26, down 52% QoQ, with China accounting for about 9% of system sales.
- The regression results show LRCX China revenue down about 25% QoQ, AMAT up about 28%, KLAC up about 22%, Kokusai up about 69%, and Screen down about 64%.
Report interpretation
Overview
This report tracks monthly China Customs wafer fabrication equipment (WFE) import data and uses it to infer China revenue trends for major semiconductor equipment companies. In May, China's WFE imports remained weak at USD 2.2 billion for the month, down 20% MoM and 9% YoY; YTD 2026 imports were USD 12.0 billion, down 12% YoY. The weakness was mainly driven by insufficient lithography equipment imports, with lithography imports down 24% YoY YTD. However, the report believes China WFE imports could recover in the second half as memory-related WFE imports strengthen.
Core views
The report's core view is that short-term data are still weak, but not all equipment companies are equally negative. ASML is the most affected by low lithography imports, with the model forecasting about EUR 568 million of China system sales in 2Q26, down 52% QoQ, and China's share of system sales falling to 9%. LRCX also faces pressure, with China revenue expected to decline about 25% QoQ. By contrast, AMAT, KLAC, TEL, and Kokusai have steadier or improving China revenue forecasts, with Kokusai showing the largest sequential upside. By region, the combined share of imports from the U.S., Malaysia, and Singapore continues to rise, suggesting shipment origins may be shifting from the U.S. to Southeast Asian manufacturing bases. For domestic Chinese equipment makers, NAURA, AMEC, and Piotech continue to benefit from WFE localization and share gains.
Analysis framework
The report is based on China Customs WFE import data, broken down by equipment type and trade-partner region, and uses a one- to two-month regression window between monthly import data and quarterly China revenue for equipment companies. ASML uses China lithography import data; LRCX, KLAC, TEL, Kokusai, and Screen use semiconductor equipment import data relevant to their businesses; AMAT and Advantest use import data shifted by the corresponding month offset to match fiscal-quarter revenue recognition timing.
Methodology notes
Use monthly import value to observe China semiconductor equipment demand
China Customs data disclose WFE imports by equipment type and trade-partner region, which can be used to track China equipment demand, lithography strength, changes in import sources, and downstream capex pace.
Use one- or two-month import data to forecast quarterly China revenue
The report regresses relevant equipment imports against quarterly China revenue for equipment companies. The model R² is about 0.89 for ASML, 0.86 for LRCX, 0.70 for AMAT, 0.92 for KLAC, 0.79 for TEL, 0.78 for Kokusai, 0.59 for Screen, and 0.60 for Advantest.
Differentiate changes in demand, supply, and shipment origin
The report not only looks at total imports, but also analyzes changes in share by equipment types such as lithography, dry etch, deposition, process control, and cleaning, as well as source regions such as the U.S., the Netherlands, Japan, Singapore, and Malaysia.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- ASMLChina lithography imports are highly correlated with ASML China system revenue
- Strengths
- DRAM capacity expansions and higher EUV intensity remain long-term drivers; Bernstein maintains Outperform and a €1,700 target price.
- Weaknesses
- Lithography imports were weak in April and May, and the model forecasts 2Q26 China system sales down 52% QoQ, with China's share falling to 9%.
- Comparison
- ASML faces stronger China pressure than non-lithography equipment companies, because China's lithography imports are down 24% YTD.
- Risks
- DUV supply improvement coming in weaker than expected, export restrictions, monthly import volatility, and a decline in FY26 China revenue share.
- LRCXRelevant semiconductor equipment imports have a strong two-month correlation with LRCX China revenue
- Strengths
- Benefiting from GAA, advanced packaging, HBM, and NAND upgrade inflection points; Bernstein maintains Outperform.
- Weaknesses
- The model forecasts China revenue down about 25% QoQ in Jun-Q, with China revenue share falling from about 34% to about 23%.
- Comparison
- The short-term China revenue trend is weaker than AMAT and KLAC.
- Risks
- Cyclical decline in China business, slower-than-expected memory recovery, and a mismatch between equipment imports and revenue recognition.
- AMATA one-month import correlation is used to forecast AMAT China revenue
- Strengths
- The model forecasts China revenue up about 28% QoQ in Jul-Q, with China revenue share about 30%; the company has strong exposure to key equipment inflection points.
- Weaknesses
- R² is about 0.70, indicating only moderate predictive power; management did not provide Jul-Q China revenue guidance.
- Comparison
- Short-term China revenue outlook is stronger than LRCX.
- Risks
- China business could be flat or only slightly higher, industry capex volatility, and regression model error.
- KLACA two-month import correlation is used to forecast KLAC China revenue
- Strengths
- R² is about 0.92, indicating strong predictive power; the model forecasts China revenue up about 22% QoQ in Jun-Q, with China share about 28%.
- Weaknesses
- Management did not explicitly provide guidance on this quarter's China exposure.
- Comparison
- The short-term outlook is stronger than LRCX, and the company is viewed as having structural growth drivers and lower China substitution risk.
- Risks
- China WFE growth lagging global WFE, process control demand volatility, and dependence on import data.
- Tokyo ElectronChina import data are used to infer TEL China SPE revenue
- Strengths
- The model forecasts China revenue up about 5% QoQ, with China SPE revenue accounting for about 28%; yen depreciation is viewed as improving pricing competitiveness and margin expansion.
- Weaknesses
- R² is about 0.79, and the report says predictive power is limited.
- Comparison
- The short-term trend is modestly better than Screen, but less leveraged than Kokusai.
- Risks
- Japanese equipment export restrictions, competition in sub-markets such as cleaning and deposition, and FX volatility.
- KokusaiTwo-month import data are used to infer China revenue
- Strengths
- The model forecasts China revenue up 69% QoQ, with China revenue share rebounding to about 40%; Batch ALD is supported by advanced-node and NAND capex recovery.
- Weaknesses
- Highly sensitive to China demand and NAND recovery.
- Comparison
- Among the Japanese equipment companies covered in the report, Kokusai has the strongest short-term China revenue leverage.
- Risks
- NAND capex recovery falling short, changes in advanced-node adoption pace, and regression model forecast error.
- ScreenTwo-month import data are used to infer China revenue related to cleaning equipment
- Strengths
- Potential upside from panel-level packaging is worth watching.
- Weaknesses
- The model forecasts China revenue down 64% QoQ, with China revenue share falling from 46% to 20%; cleaning intensity has not improved materially and competition is fierce.
- Comparison
- The short-term outlook is significantly weaker than TEL and Kokusai, with a Market-Perform rating.
- Risks
- Declining China demand, pressure from global and Chinese competitors, and insufficient improvement in cleaning equipment intensity.
- AdvantestOne-month import data are used to track China test equipment revenue trends
- Strengths
- Benefits from higher HBM and Nvidia AI GPU test intensity; strong share advantages in HBM testing and AI GPU testing.
- Weaknesses
- The model shows China revenue share falling to about 15%, with short-term China revenue declining QoQ.
- Comparison
- China revenue is under short-term pressure, but the structural drivers from AI and HBM are stronger.
- Risks
- HBM4 migration timing, volatility in AI GPU demand, and the test equipment order cycle.
- NAURAA beneficiary of China WFE localization
- Strengths
- Its product mix covers deposition, dry etch, thermal processing, and cleaning, with customers across logic, DRAM, and NAND; Bernstein gives it Outperform and a CNY 680 target price.
- Weaknesses
- Valuation is relatively high, and it is highly tied to the domestic China capex cycle.
- Comparison
- Compared with overseas equipment makers, NAURA benefits more directly from localization share gains.
- Risks
- Pace of localization, product validation cycles, and customer capex volatility.
- AMECA beneficiary of China WFE localization
- Strengths
- Focused on dry etch and expanding into ALD, LPCVD, and EPI; viewed as a domestic WFE company with relatively strong technical capability and global recognition; Bernstein gives it Outperform and a CNY 500 target price.
- Weaknesses
- High business concentration, and new product categories require continued validation.
- Comparison
- Among domestic equipment companies, it has relatively strong technical recognition, but narrower product breadth than NAURA.
- Risks
- Etch competition, slower-than-expected ramp of new deposition products, and customer qualification progress.
- PiotechA beneficiary of China WFE localization and advanced packaging equipment
- Strengths
- Focused on PECVD, HDPCVD, SACVD, and ALD, and expanding into W2W and C2W hybrid bonding equipment; Bernstein gives it Outperform and a CNY 580 target price.
- Weaknesses
- Strong growth potential, but valuation and earnings delivery expectations are high.
- Comparison
- Compared with NAURA and AMEC, Piotech is more exposed to deposition and advanced packaging expansion opportunities.
- Risks
- Execution of product innovation, advanced packaging demand timing, and intensified domestic equipment competition.
Key data
- China WFE imports in MayUSD 2.2 billionDown 20% MoM and 9% YoY, below last year's monthly average of USD 3.2 billion.
- China WFE imports YTD 2026USD 12.0 billion, down 12% YoYOverall still weaker than expected.
- Lithography equipment imports YTDUSD 2.14 billion, down 24% YoYThe report sees this as the main drag on YTD import weakness.
- May lithography importsapproximately USD 295 million to USD 297 million; or EUR 236 millionA clear rebound from April's historic low; in euro terms, up about 170% to 171% MoM and about 2% YoY.
- Import share of the U.S. + Malaysia + Singapore44% YTD 2026Above 35% in 2025 and 33% in 2024, reflecting a shift in shipment origin along the supply chain.
- ASML 2Q26 China system sales forecastEUR 568 millionDown 52% QoQ and 62% YoY; China accounts for about 9% of system sales.
- LRCX China revenue forecastapproximately USD 1.504 billion in 2QCY26Down 24.7% QoQ; China revenue accounts for about 22.6%.
- AMAT China revenue forecastapproximately USD 2.688 billion in 2QCY26Up 28.8% QoQ; China revenue accounts for about 29.9%.
- KLAC China revenue forecastapproximately USD 1.012 billion in 2QCY26Up 22.0% QoQ; China revenue accounts for about 28.1%.
- Kokusai China revenue forecastapproximately JPY 29.0 billion in 1QFY27EUp 69% QoQ; China revenue accounts for about 40%.
- Screen China revenue forecastapproximately JPY 25.0 billion in 1QFY27EDown 64% QoQ; China revenue accounts for about 20%.
- Advantest China revenue forecastapproximately JPY 53.0 billion in 1QFY27EThe table shows a 7% QoQ decline; China revenue accounts for about 15%.
Impact & implications
For investors, the implication is that short-term China WFE import data still point to weak demand timing, especially as low lithography equipment supply and imports are putting clear pressure on ASML China revenue; however, equipment types and companies are diverging materially, with AMAT, KLAC, and Kokusai showing stronger sequential improvement in the model. If memory-related WFE imports recover in 2H, demand expectations across the global equipment chain could improve; meanwhile, leading domestic Chinese equipment vendors continue to benefit from localization and share gains.
Risks
- Monthly import data are volatile and may not fully reflect quarterly revenue recognition.
- There is a time lag between import data and company revenue, and the regression model may be distorted by changes in shipment timing, inventory, and acceptance cycles.
- Lithography equipment supply, DUV capacity, and export controls could affect ASML and the pace of China WFE imports.
- China WFE demand recovery depends on memory capex and domestic wafer fab expansion; if the recovery falls short, the expected 2H improvement may not materialize.
- Policy changes in the U.S., Europe, Japan, or China could alter equipment import sources and supply-chain routes.
- An acceleration in domestic substitution could compress the China market share of overseas equipment makers.
What to watch
- Whether China WFE imports in June and 3Q26 recover from the May low.
- Whether lithography imports continue to improve, especially lithography imports from the Netherlands and DUV supply conditions.
- Whether memory-related WFE imports strengthen materially in 2H26.
- Whether ASML's FY26 China revenue share approaches management's 20% guidance, or rises further if DUV supply improves.
- Whether the China revenue shares disclosed by LRCX, AMAT, and KLAC in the next earnings season validate the model forecasts.
- Whether the continued rise in the combined import share of the U.S., Malaysia, and Singapore indicates a long-term shift in shipment origin.
- Whether order trends and share gains for domestic Chinese equipment makers such as NAURA, AMEC, and Piotech continue.