Goldman Sachs Sees Bright Future for China’s Semiconductor Equipment Sector: AMEC and NAURA Remain Buy Ratings, Valuations Still Attractive

Overview

This report focuses on China’s semiconductor production equipment industry and two local leaders, AMEC and NAURA. Goldman Sachs believes that China’s semiconductor capital expenditure will remain high, projected at around US$43-46bn from 2025-2030E, and the market share of domestic suppliers in China’s WFE market will continue to rise. By analyzing the interplay among capital expenditure, domestic supply ratio, company profitability and valuation multiples, the report concludes that AMEC and NAURA still offer attractive risk-reward profiles under different scenarios.

Core views

Key views include: First, demand for China’s semiconductor equipment remains supported by domestic capacity building, demand from storage and AI-related applications, advanced node expansion, and supply chain security concerns; Second, the market share of domestic equipment makers in China’s WFE market is expected to increase from 32% in 2026E to 40% in the baseline scenario for 2028E; Third, AMEC and NAURA still have positive stock price upside potential under bear-case scenarios, indicating that current valuations do not fully reflect medium-term growth; Fourth, product line expansion for AMEC and platform coverage for NAURA enhance both companies’ ability to navigate industry cycles.

Analysis framework

The report uses scenario sensitivity analysis, mapping China’s semiconductor capital expenditure growth onto WFE revenues for Chinese suppliers, and further mapping these revenues onto AMEC and NAURA’s revenues, EPS and current valuations. The baseline scenario follows Goldman Sachs’ latest forecast, while the bull-case scenario assumes stronger demand for AI equipment, AI data centers, storage supply-demand gaps, industrial recovery and advanced node expansion; the bear-case scenario reflects weaker consumer demand and intensified overseas equipment supply constraints.

Methodology notes

• Scenario AnalysisCapital Expenditure and Domestic Supply Ratio Sensitivity Analysis

  Linking China’s semiconductor capital expenditure, domestic supply ratio, company EPS and valuation multiples to assess upside or downside stock price movements under different scenarios.

  The report sets up bear, baseline and bull-case scenarios, assuming changes in China’s semiconductor capital expenditure growth rates, domestic supplier market shares and company profitability from 2026-2028E, and uses target P/E multiples to calculate implied stock prices for AMEC and NAURA.

• Valuation MethodologyP/E Target Multiple Method

  Using target P/E multiples and forward EPS to derive target prices.

  AMEC’s 12-month target price of Rmb471 is based on a 2029E P/E of 43.8x discounted back to 2026E at an 11% equity cost; NAURA’s 12-month target price of Rmb638 is based on a 2027E P/E of 36.5x.

• Factor FrameworkGS Factor Profile

  Assessing stocks’ relative position against the market and industry peers using growth, financial returns, valuation multiples and composite scores.

  The report discloses that Goldman Sachs’ factor framework uses metrics such as sales, EBITDA, EPS growth, ROE, ROCE, CROCI, as well as P/E, P/B, EV/EBITDA to calculate percentile rankings.

Asset mapping & comparison

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

• AMEC

  Core Beneficiary

  Strengths

  A key supplier of etching and MOCVD equipment, expanding into a more comprehensive product portfolio including etching, deposition, metrology and CMP; planning to acquire 64.69% stake in CMP supplier Hangzhou Sizonetech; the report sees its exposure to storage customers and product line expansion helping it outperform the industry.

  Weaknesses

  More sensitive to capital expenditure trends at major Chinese wafer fabs, supply capabilities for advanced nodes and changes in trade restrictions.

  Comparison

  Compared to NAURA, AMEC has a more prominent position in etching and MOCVD, and the report uses a higher target P/E multiple for AMEC.

  Risks

  Trade restrictions extending to mature nodes, supply disruptions for advanced nodes, weaker-than-expected capital expenditure at major Chinese wafer fabs.

• NAURA

  Core Beneficiary

  Strengths

  A leading domestic SPE platform player, covering tools for thermal processing, deposition, silicon etching, cleaning and expanding into ion implantation; the report sees its strong market position and comprehensive product capabilities benefiting from the expansion of mature domestic nodes.

  Weaknesses

  Higher short-term R&D spending, growth still dependent on customer expansion progress and operational efficiency improvements after revenue scale-up.

  Comparison

  Compared to AMEC, NAURA has a more integrated product platform and a more diversified end-market, but the target P/E multiple used in the report is lower than AMEC’s.

  Risks

  Further U.S. restrictions on Chinese semiconductor companies, slower-than-expected expansion of mature node customers, lower-than-current forecasts for revenue growth and profitability.

• China’s Semiconductor Production Equipment Industry

  Upstream Cycle and Domestic Substitution Trend

  Strengths

  Domestic manufacturing capacity building, demand from AI and storage, advanced node expansion, and supply chain security concerns supporting WFE demand and rising domestic supply ratios.

  Weaknesses

  The industry highly depends on wafer fab capital expenditure cycles and is significantly affected by overseas equipment supply and policy restrictions.

  Comparison

  Local equipment makers benefit from domestic substitution and supply chain security demands compared to overseas suppliers, but technical depth and advanced process capabilities remain critical competitive factors.

  Risks

  Weaker consumer electronics demand, tightening overseas equipment restrictions, declining capital expenditure, slower-than-expected advanced node expansion.

Key data

• China’s Semiconductor Capital Expenditure ForecastApproximately US$43-46bn from 2025-2030EThe report expects China’s semiconductor capital expenditure to remain high.
• Baseline Capital Expenditure Growth Rates for 2026-2028E5% / 1% / 1%Corresponds to Goldman Sachs’ baseline forecast.
• Bull-Case Capital Expenditure Growth Rates for 2026-2028E5% / 9% / 9%If AI, storage, industrial demand and advanced node expansion are stronger than the baseline.
• Bear-Case Capital Expenditure Growth Rates for 2026-2028E5% / 0% / 0%If demand weakens and overseas equipment supply constraints intensify.
• Market Share of Domestic Manufacturers in China’s WFE MarketBaseline scenario: 32% / 36% / 40% for 2026-2028EIn the bear case: 32% / 35% / 39%; in the bull case: 32% / 37% / 41%.
• 2027E AMEC EPSBear case: Rmb8.32; Baseline: Rmb9.09; Bull case: Rmb11.30Corresponds to year-on-year growth of approximately 29%, 40% and 74% respectively.
• 2027E NAURA EPSBear case: Rmb15.46; Baseline: Rmb17.48; Bull case: Rmb23.32Corresponds to year-on-year growth of approximately 46%, 66% and 121% respectively.
• Valuation MultiplesAMEC: 51.8x P/E; NAURA: 36.5x P/EThe report says these multiples align with the implied multiples for the companies’ target prices.
• Target PricesAMEC: Rmb471; NAURA: Rmb638Both are 12-month target prices.

Impact & implications

The report has a generally positive investment implication: If China’s semiconductor capital expenditure in 2027/2028 exceeds market expectations and the domestic equipment supply ratio continues to rise, AMEC and NAURA’s earnings elasticity could outperform current valuations. AMEC is more focused on product line expansion and exposure to advanced process/storage customers, while NAURA benefits more from its platform coverage and mature domestic node expansion. For the industry, supply chain security, cost savings and domestic substitution could continue driving the market share of local equipment makers.

Risks

• Further tightening of U.S. or other overseas export restrictions could impact the pace of expansion and equipment demand for Chinese semiconductor companies.
• If trade restrictions extend to mature-node wafer fabs, it could weaken product demand for AMEC and NAURA.
• Weaker-than-expected capital expenditure at major Chinese wafer fabs or IDMs could lead to lower-than-forecasted revenues and profits for local SPE manufacturers.
• Slower-than-expected consumer demand or recovery in AI or storage demand could drag down capital expenditure growth rates in 2027/2028.
• If AMEC’s supply capabilities for advanced-node equipment are disrupted, it could bring additional downside risks.
• Slower-than-expected expansion of NAURA’s mature-node customers could result in lower-than-current estimates for revenue growth and profitability.

What to watch

• Whether capital expenditure growth rates for China’s semiconductors from 2026-2028 exceed the baseline forecast.
• Whether the market share of domestic suppliers in China’s WFE market can continue rising from 32% in 2026E to around 40% in 2028E.
• The actual pull from AI equipment, AI data centers, storage supply-demand gaps and industrial demand recovery on equipment orders.
• Progress on AMEC’s new ICP etcher, high-selectivity etchers, Micro LED MOCVD and CMP merger & acquisition integration.
• R&D progress on NAURA’s advanced-node customer tools, expansion of thermal processing/deposition/etching/cleaning/ion implantation product lines and improvement in operational efficiency.
• Changes in U.S. export restrictions and supply chain security policies.
• Whether AMEC and NAURA adjust their subsequent target prices, EPS forecasts and P/E multiples.