China's WFE Market Is Expected to Exceed USD 100 Billion in 2028, with Local Equipment Vendors Re-accelerating Growth

Overview

The report further raises the medium- to long-term forecast for China's wafer fabrication equipment market. Although import performance is relatively weak in 2026, domestic logic and memory manufacturers are accelerating cleanroom and wafer capacity construction, and related equipment demand is expected to be converted into orders and revenue in a concentrated manner roughly one year later. Meanwhile, export restrictions, improved performance of local equipment, and an approximately 20% price advantage are jointly driving domestic substitution. Bernstein therefore believes that revenue growth for local WFE vendors will accelerate continuously in 2027 and 2028.

Core views

First, China's WFE demand has not slowed overall because overseas suppliers' China revenue has flattened; domestic equipment revenue growth is offsetting the import slowdown. Second, AI computing demand, higher wafer consumption brought by LogicFolding, and the supporting relationship between advanced logic and mature-node processes will jointly expand logic equipment demand. Third, capacity expansion and improved financing capabilities at CXMT, YMTC, and JHICC will make memory the fastest-growing segment. Fourth, domestic equipment continues to gain share in mature-node logic, DRAM, advanced logic, and NAND, with the self-sufficiency rate expected to rise to 52% by 2028. Fifth, NAURA, AMEC, and Piotech will benefit simultaneously from industry expansion and share gains, with NAURA named the top pick due to its broadest product portfolio and higher exposure to advanced logic orders.

Analysis framework

The report combines channel checks, cleanroom construction cycles, fab expansion plans, customs import data, and order and revenue guidance from major domestic and overseas equipment vendors to forecast demand separately for advanced logic, mature-node logic, DRAM, and NAND; on the supply side, it aggregates data from the top five global suppliers and China's major listed WFE vendors to conduct a bottom-up calculation, and updates company valuations using 2028E EPS and P/E multiples.

Methodology notes

• Market Size ForecastSegmented Supply-Demand Forecast

  Split WFE demand by end market

  Separately estimates the capacity expansion scale of advanced logic, mature-node logic, DRAM, and NAND, and combines equipment procurement schedules to aggregate the size of China's WFE market.

• Industry Chain ResearchSupplier Bottom-up Analysis

  Aggregate revenue of domestic and overseas suppliers

  Estimates imported equipment, local equipment, and the self-sufficiency rate based on historical revenue, orders, and management guidance from major global suppliers and China's major listed WFE vendors.

• Leading Indicator AnalysisCleanroom Cycle and Order Transmission

  Transmission from capacity construction to equipment revenue

  The report assumes that the cleanroom construction cycle for Chinese fabs is about one year, and that local equipment vendors also typically take close to one year from order receipt to revenue recognition; based on this, it judges that construction and orders in 2026-2027 will be reflected as revenue in 2027-2028.

• Valuation methodsForward P/E Valuation

  Pricing based on 2028E EPS

  The target prices for NAURA, AMEC, and Piotech correspond to approximately 32x, 39x, and 36x 2028E P/E, respectively.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NAURA（002371.CH）

  A core beneficiary of China's WFE expansion and domestic substitution; the report's top pick.

  Strengths

  Broadest product portfolio, covering PVD, CVD, dry etching, thermal processing, and cleaning, while serving logic, DRAM, and NAND customers; advanced logic order exposure is close to 40%.

  Weaknesses

  The report expects 2Q26 results may fall short of expectations, and the target valuation depends on high growth being realized in 2028.

  Comparison

  Compared with AMEC and Piotech, it has a more diversified business coverage and customer structure, and higher exposure to advanced logic capacity expansion.

  Risks

  Quarterly results falling short of expectations, delays in capacity construction, slower order conversion, domestic equipment validation falling short of expectations, and a pullback from high valuation.

• AMEC（688012.CH）

  A major beneficiary of localization in etching and deposition equipment.

  Strengths

  Has strong technical capabilities in CCP and ICP dry etching and is rapidly expanding deposition products such as ALD, LPCVD, and EPI, with relatively high global recognition.

  Weaknesses

  Product structure is relatively concentrated, and the target price corresponds to approximately 39x 2028E P/E, the highest among the three local names.

  Comparison

  It has a prominent technology profile, but less product breadth than NAURA; its 2028 EPS upward revision is the largest among the three companies.

  Risks

  New product ramp-up falling short of expectations, extended customer validation cycles, intensified competition, changes in export controls, and valuation compression.

• Piotech（688072.CH）

  A beneficiary of demand growth in thin-film deposition and advanced packaging equipment.

  Strengths

  Focuses on PECVD, HDPCVD, SACVD, and ALD, and is expanding into wafer-to-wafer and chip-to-wafer hybrid bonding equipment, with a strong track record of product innovation.

  Weaknesses

  Scale and product coverage are below NAURA, and the growth forecast depends heavily on new equipment introduction and rapid capacity expansion.

  Comparison

  More distinctive in deposition and advanced packaging, but less diversified than NAURA.

  Risks

  Delayed commercialization of new products, customer concentration, capacity expansion execution falling short of expectations, earnings forecasts missing expectations, and high-valuation volatility.

• Overseas WFE Suppliers

  Benefiting from growth in the overall size of the China market, but facing continued share-loss pressure among local customers.

  Strengths

  Still retain technological advantages in yield, equipment uptime, and leading-edge processes, and the absolute amount of China's imported equipment is expected to remain high.

  Weaknesses

  Local Chinese customers' willingness to purchase is declining, while the approximately 20% price advantage and performance improvements of domestic equipment are accelerating substitution.

  Comparison

  China revenue is expected to achieve only a single-digit CAGR from 2025 to 2028, significantly below that of China's local equipment vendors.

  Risks

  Tightening export restrictions, customers reducing reliance on overseas suppliers, fading inventory pre-purchases, and a continued decline in the proportion of revenue from China.

Key data

• China WFE Market Size2026E USD 57bn; 2027E USD 73bn; 2028E USD 101bn2025-2028 CAGR of approximately 26%; 2027 and 2028 forecasts were raised by approximately USD 6.3bn and USD 24.0bn, respectively, versus previous estimates.
• Revenue of Local WFE Vendors2026E USD 16bn; 2027E USD 27bn; 2028E USD 52bnCorresponds to year-on-year growth of approximately 41%, 68%, and 93%, showing continued acceleration in revenue growth.
• Equipment Self-sufficiency Rate2025 23%; 2026E 28%; 2027E 37%; 2028E 52%Domestic substitution is gradually expanding from advanced logic and NAND to DRAM and mature-node logic.
• Memory WFE Demand2026E USD 14bn; 2027E USD 26bn; 2028E USD 42bnCorresponds to year-on-year growth of approximately 88%, 81%, and 62%, mainly driven by capacity expansion at CXMT, YMTC, and JHICC.
• Advanced Logic WFE Demand2027E USD 26bn; 2028E USD 33bnCorresponds to year-on-year growth of approximately 13% and 30%; LogicFolding and domestic AI training demand are viewed as the main drivers.
• Mature-node Logic WFE Demand2027E USD 21bn; 2028E USD 25bnCorresponds to year-on-year growth of approximately 10% and 22%, driven by supporting demand for advanced logic, spillover from memory wafer foundry demand, and shrinking eight-inch supply.
• NAURA Target Price and Earnings RevisionsTarget price CNY 1,380, previously CNY 6802026E, 2027E, and 2028E EPS raised by 5%, 23%, and 89%, respectively; the target price corresponds to approximately 32x 2028E P/E.
• AMEC Target Price and Earnings RevisionsTarget price CNY 660, previously CNY 3362026E, 2027E, and 2028E EPS raised by 64%, 59%, and 121%, respectively; the target price corresponds to approximately 39x 2028E P/E.
• Piotech Target Price and Earnings RevisionsTarget price CNY 1,200, previously CNY 5802026E, 2027E, and 2028E EPS raised by 3%, 28%, and 90%, respectively; the target price corresponds to approximately 36x 2028E P/E.

Impact & implications

For investors, the main contradiction in industry growth is shifting from sole reliance on imports to joint drivers from local capacity expansion and equipment localization. Flat overseas equipment imports in 2026 do not indicate that China's WFE demand has peaked; rather, they suggest that local vendors' revenue and market share may rise faster. If capacity expansion and orders in 2027-2028 materialize as expected, earnings growth for domestic equipment leaders could be significantly higher than that of global peers; however, share prices have already risen substantially, and valuation, order delivery, and quarterly earnings volatility will determine near-term returns.

Risks

• Fab capacity expansion, cleanroom construction, or equipment installation progress falls short of expectations, causing 2027-2028 demand to be delayed.
• Demand for artificial intelligence, advanced logic, DRAM, or NAND falls short of forecasts, preventing the WFE market size and earnings upgrades from being realized.
• Local equipment may still lag global leaders in yield, uptime, and key process performance.
• Changes in export controls, import licenses, or supply-chain policies may disrupt equipment procurement and fab construction plans.
• Import and channel data may be affected by advance stocking and timing differences between shipment and revenue recognition, reducing forecast accuracy.
• NAURA, AMEC, and Piotech have already risen significantly year-to-date, and high valuations may amplify drawdowns from quarterly results or orders falling short of expectations.
• NAURA's recent results may fall short of expectations, creating short-term share-price volatility.

What to watch

• Teardown of Huawei Kirin 2026 mobile application processor, as well as wafer consumption and mass-production evidence for the first LogicFolding chip.
• Deployment progress of Huawei Atlas 950 superPoD and cluster demand for up to 8192 chips.
• YMTC's IPO prospectus, financing scale, and capital expenditure plan.
• New fab construction, equipment procurement, and capacity ramp-up progress at CXMT and JHICC.
• Order growth of local WFE vendors from 2026 to 2027, and whether conversion from orders to revenue is consistent with the roughly one-year cycle assumption.
• China monthly WFE import data, China revenue share of major overseas equipment vendors, and purchasing trends among local customers.
• NAURA's 2Q26 results and valuation opportunities after a potential pullback.
• Customer validation, performance catch-up, and annual share gains of domestic equipment in mature-node logic and DRAM.