China WFE imports are down 13% YTD YoY, with supply constraints in lithography equipment as the main drag
AI summary card
China WFE imports are down 13% YTD YoY, with supply constraints in lithography equipment as the main drag
Bernstein tracks semiconductor equipment demand using China customs WFE import data, and believes April imports fell 12% MoM and 13% YTD YoY, but the weakness is concentrated in lithography equipment, while non-lithography imports still show resilience.
- China WFE imports in April were about $2.7 billion, down 12% month over month and 3% year over year, below the prior year's monthly average of about $3.2 billion.
- China WFE imports were about $10.0 billion year to date, down 13% year over year; lithography equipment was down 27% year to date and was the main drag.
- April lithography equipment imports were only about $142 million, down 60% year over year; lithography imports from the Netherlands were €87 million, down 87% month over month and 65% year over year, the lowest since July 2022.
- The report argues that weaker imports do not equal a slowdown in China's WFE demand, because non-lithography equipment continues to grow and imports from Singapore and Malaysia remain strong.
- ASML's China system sales regression model points to a sharp short-term drop in China revenue, but if DUV supply improves, actual performance could come in above guidance.
Report interpretation
Overview
This report is Bernstein's monthly tracker of China wafer fabrication equipment (WFE) imports, with core data sourced from China customs. April China WFE imports were $2.7 billion, down 12% month over month and 3% year over year; year-to-date imports were about $10 billion, down 13% year over year. The report emphasizes that current weakness is mainly dragged down by lithography import constraints rather than a broad-based softening in China's semiconductor capital expenditure demand. Excluding lithography, some equipment categories and imports from Singapore and Malaysia still showed growth.
Core views
The report's core views are threefold. First, the April and year-to-date China WFE import data are weak, but lithography is the main drag, while aggregate non-lithography imports remain resilient. Second, China's demand is still supported by capacity expansion investment, and the domestic WFE substitution trend continues to benefit local equipment makers such as NAURA, AMEC, and Piotech. Third, ASML's China revenue faces clear near-term pressure, and the regression model suggests China's share of system sales could fall to a low level; however, if DUV supply improves, there is still upside potential.
Analysis framework
The report uses monthly China customs import data, breaks China WFE imports down by equipment type and trading partner region, and runs regression analysis linking import values for certain equipment categories to the China revenue of companies such as ASML, LRCX, AMAT, KLAC, TEL, Kokusai, Screen, and Advantest to assess quarterly revenue direction and China exposure.
Methodology notes
Use monthly import amounts to observe changes in China's wafer fabrication equipment demand and supply.
The report filters customs codes related to semiconductor equipment and totals import amounts by categories such as lithography, deposition, dry etch, process control, cleaning/material removal, ion implantation, and other equipment.
Use import data to estimate changes in equipment companies' China revenue.
The report builds correlation models between each company's quarterly China revenue and the corresponding equipment import data; the ASML lithography import model has an R2 of about 0.79, LRCX about 0.83, KLAC about 0.84, TEL about 0.53, Kokusai about 0.65, Screen about 0.54, and Advantest about 0.60.
Identify supply chain shifts and regional share changes by source country.
The report compares shares from the United States, Singapore, Malaysia, Japan, the Netherlands, and other sources, and points out that the direct import share from the United States is declining, while the combined share of the United States, Singapore, and Malaysia is rising, which may reflect some supply being shipped to China from manufacturing bases in Southeast Asia.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- ASML HOLDING NVChina lithography equipment imports are highly correlated with the company's China system revenue
- Strengths
- Long-term support comes from DRAM capacity expansion and rising EUV intensity; the report maintains Outperform and a €1,700 target price.
- Weaknesses
- Lithography imports from the Netherlands fell sharply in April, and the model shows China revenue may weaken significantly in the near term.
- Comparison
- FY26 China revenue is guided at about 20% of total revenue, below FY25's 33%; the model estimates Q2 China system sales could be only 7% of the total.
- Risks
- DUV supply constraints, export controls, monthly import volatility, and China revenue deterioration.
- NAURAA beneficiary of domestic substitution in China's WFE market
- Strengths
- Its product portfolio covers deposition, dry etch, thermal processing, and cleaning, with a relatively diversified customer base.
- Weaknesses
- It still needs to keep proving capability in advanced-process equipment and the pace of share gains.
- Comparison
- As a leading domestic WFE player, the report believes it benefits from local substitution and accelerating share gains in China.
- Risks
- Technology iteration, customer qualification cycles, and intensifying competition.
- AMECA beneficiary in China's dry etch and deposition equipment segments
- Strengths
- The company is mainly focused on CCP and ICP dry etch, and has expanded into deposition equipment such as ALD, LPCVD, and EPI, with strong technical recognition.
- Weaknesses
- Its business is still concentrated in several key equipment categories.
- Comparison
- The report says it is often viewed as one of the best and most globally recognized domestic WFE companies from a technology standpoint.
- Risks
- Execution in product expansion, international competition, and customer capital expenditure timing.
- PiotechA beneficiary in China's deposition equipment and advanced packaging equipment segments
- Strengths
- It focuses on PECVD, HDPCVD, SACVD, and ALD, and is expanding into W2W and C2W hybrid bonding equipment.
- Weaknesses
- As a growth-stage manufacturer, it still needs to expand scale and customer coverage.
- Comparison
- The report believes it has a strong record of product innovation and can benefit from domestic substitution.
- Risks
- New product validation, volatility in advanced packaging demand, and intensifying competition.
- LRCXChina import data are used to forecast the company's China revenue
- Strengths
- It benefits from key trends such as GAA, advanced packaging, HBM, and NAND upgrades.
- Weaknesses
- April data point to a roughly 28% sequential decline in June-quarter China revenue, with China exposure of about 22%.
- Comparison
- The direction is consistent with management's statement about a sequential decline in China exposure in the June quarter.
- Risks
- Declining China exposure, equipment order cycles, and export restrictions.
- AMATImport regression is used to validate already disclosed quarterly results
- Strengths
- It has strong exposure to key technology inflection points and still looks attractive on valuation relative to peers.
- Weaknesses
- The April data are no longer useful for forecasting the already disclosed quarter.
- Comparison
- The model shows China revenue was roughly flat, with China exposure of about 26.5%, close to the actual 26.4%.
- Risks
- Cyclical volatility, China demand, and peer competition.
- KLACProcess control-related imports have a strong correlation with China revenue
- Strengths
- It has structural growth drivers, a solid competitive position, low China substitution risk, and strong capital allocation discipline.
- Weaknesses
- Management did not provide guidance for this quarter's China revenue exposure.
- Comparison
- The model points to a 17% sequential increase in June-quarter China revenue, with China exposure of about 27%.
- Risks
- China WFE growth lagging global WFE growth, valuation premium, and customer capital expenditure volatility.
- Tokyo ElectronChina import data are used to estimate the company's SPE China revenue
- Strengths
- As the world's fourth-largest SPE supplier, it covers multiple product segments, and a weaker yen supports pricing competitiveness and margins.
- Weaknesses
- Its one-month regression has an R2 of about 0.53, limiting predictive power.
- Comparison
- The model points to about 14% sequential China revenue growth, with China contributing about 32%, above the previous quarter's 27%.
- Risks
- Limited model explanatory power, competition, and volatility in China demand.
- KokusaiChina import data point to a strong quarterly rebound
- Strengths
- Batch ALD adoption is increasing at advanced nodes, especially GAA, and NAND capex recovery also provides support.
- Weaknesses
- China revenue is highly volatile.
- Comparison
- The model points to 48% year-over-year China revenue growth and 101% sequential growth, with China contributing about 51%.
- Risks
- Weaker-than-expected NAND recovery, volatile equipment demand, and model error.
- ScreenChina import data point to a clear decline
- Strengths
- Panel-level packaging may offer potential upside.
- Weaknesses
- Cleaning intensity has not improved and market competition is intense.
- Comparison
- The model points to 50% year-over-year China revenue decline and 73% sequential decline, with China contributing about 12%, down from 46% in the prior quarter.
- Risks
- Competition in cleaning equipment, weakening demand, and large volatility in China revenue.
- AdvantestTest equipment China revenue is partially correlated with import data
- Strengths
- It benefits from rising HBM and Blackwell testing intensity and is an important supplier of HBM test machines and Nvidia AI GPU testing.
- Weaknesses
- The model points to a 7% sequential decline in China revenue, with lower China exposure.
- Comparison
- Implied China contribution is in the 12% to 15% range, below the prior quarter.
- Risks
- Timing of AI test demand, customer concentration, and quarterly volatility.
Key data
- April total China WFE imports$2.7 billionDown 12% month over month and 3% year over year.
- China WFE imports year to date in 2026About $10.0 billionDown 13% year over year.
- April lithography equipment importsAbout $142 millionDown 60% year over year, accounting for about 5% of total April imports.
- Lithography equipment imports year to date in 2026$1.85 billionDown 27% year over year, the main drag on year-to-date import weakness.
- April lithography imports from the Netherlands€87 millionDown 87% month over month and 65% year over year, the lowest since July 2022.
- ASML China system sales estimate€0.44 billionThe regression model points to a 64% month-over-month decline and 71% year-over-year decline, with China accounting for about 7% of Q2 system sales.
- ASML management guidanceFY26 China revenue to be about 20% of total revenueFY25 was 33%.
- Import share from the United States + Singapore + Malaysia44% year to date in 202635% in 2025 and 33% in 2024.
- Japan import share18% year to date in 202623% in 2025 and 26% in 2024.
- Netherlands import share19% year to date in 2026About 25% in both 2025 and 2024.
Impact & implications
For investors, the data short-term pressure expectations for ASML China revenue and suggest that LRCX China revenue may decline sequentially. However, non-lithography equipment demand, domestic substitution, and China exposure for some Japanese equipment makers may still provide structural opportunities. The report remains positive on domestic equipment leaders and some global equipment companies, while reminding readers that monthly import data are volatile and that a weak single month should not be extrapolated into a broad decline in China's WFE demand.
Risks
- Monthly import data are highly volatile, and a single month may not reflect a trend.
- Lithography imports are affected by supply constraints and export controls, which may distort the assessment of true demand.
- If China's WFE demand is weaker than expected, it will affect the China revenue and valuations of global equipment companies.
- Regression model explanatory power differs across companies, and TEL, Screen, and Advantest have relatively limited predictive power.
- Domestic substitution is a long-term trend, but product validation, technology upgrades, and customer capital expenditure timing remain uncertain.
What to watch
- Whether China lithography equipment imports recover from the low level in the coming months, especially DUV-related imports from the Netherlands.
- ASML's DUV supply capacity improvement and whether FY26 China revenue exceeds the 20% guidance.
- Whether non-lithography equipment imports continue to grow, especially deposition, process control, and cleaning/material removal equipment.
- Changes in import shares from the United States, Singapore, Malaysia, Japan, and the Netherlands to judge supply chain shifts.
- The gap between LRCX, KLAC, TEL, Kokusai, Screen, and Advantest's future China revenue disclosures and the model forecasts.
- Orders and share gains for Chinese domestic equipment makers such as NAURA, AMEC, and Piotech in domestic substitution.