China's May SPE imports fell 12% YoY, but demand in Shanghai and Beijing remained strong

Overview

This report tracks monthly import data for China's semiconductor production equipment (SPE). China's SPE imports in May were US$1.865 billion, down 12% YoY and 21% MoM; cumulative imports in 5M26 were US$10.737 billion, down 12% YoY. The regional divergence is striking: demand in Shanghai and Beijing remained strong, driven by advanced logic and memory projects at SMIC, Hua Hong/Hua Li, CXMT and others, while Guangdong, Anhui and Hubei were clearly weaker.

Core views

UBS believes that although total imports are under near-term pressure, SPE and lithography imports in Shanghai and Beijing remain strong, which is a positive signal for domestic WFE equipment makers in China. The core logic is that lithography imports usually lead fab equipment spending; Shanghai and Beijing are key semiconductor manufacturing hubs in China; and advanced logic and DRAM domestic substitution is expanding opportunities for local equipment vendors. Therefore, UBS keeps a constructive view on Chinese WFE manufacturers and rates NAURA and AMEC Buy.

Analysis framework

The report mainly uses China customs import data, broken down by equipment type, export country and Chinese province/city of import, compares month-over-month, year-to-date and YoY/MoM changes, and infers demand sources based on the regions where major fabs are located. Lithography equipment is also tracked separately by import value, unit count and average unit price from the Netherlands to gauge the potential pace of fab capex.

Methodology notes

• Industry data trackingMonthly SPE import tracking

  Assess the semiconductor equipment demand environment using China's SPE import value, YoY change, MoM change and regional structure.

  The report breaks SPE imports into lithography, non-lithography, etching and deposition categories, and analyzes them by provinces and cities such as Shanghai, Beijing and Guangdong, as well as by export sources such as Japan, the Netherlands and Singapore.

• Leading indicatorLithography imports as a leading indicator of WFE demand

  Lithography equipment usually enters before other fab equipment, so it can serve as a leading signal for subsequent WFE demand.

  UBS believes strong lithography imports in Shanghai and Beijing may foreshadow later equipment demand for local advanced logic and memory projects.

• Estimation methodAssumption that lithography accounts for a share of WFE TAM

  Assume lithography accounts for about 20% of the total addressable WFE market, and infer supportable WFE demand from the past 12 months of lithography imports.

  Based on this assumption, UBS estimates that China's lithography imports over the past 12 months could support US$49.6 billion in total WFE demand, slightly above its 2026E China WFE forecast of US$47.5 billion.

• Valuation methodPE multiple

  Use price-to-earnings multiples to value NAURA and AMEC.

  The report says UBS uses PE multiples to value NAURA and AMEC, but the excerpt does not provide specific target prices.

Asset mapping & comparison

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

• ASML HOLDING NV

  Lithography equipment supply-chain and China import data reference

  Strengths

  China's lithography imports remain an important leading indicator of WFE demand; lithography imports from the Netherlands into Shanghai and Beijing have increased 92% and 65% YoY YTD, respectively.

  Weaknesses

  China's lithography imports were down 24% YoY in 5M26, reflecting digestion pressure after the earlier surge in imports.

  Comparison

  Compared with total SPE imports, which were down 12% YoY in 5M26, lithography imports fell more sharply; however, May lithography imports rebounded from US$142 million to US$297 million.

  Risks

  China's lithography demand recovery could fall short of expectations, export restrictions or geopolitical constraints could intensify, and fab capex could be cut.

• NAURA

  Chinese domestic WFE equipment maker, rated Buy by UBS

  Strengths

  Benefits from China's advanced logic and DRAM domestic substitution trends, as well as the progress of fab projects in Shanghai and Beijing.

  Weaknesses

  Faces volatility in Chinese WFE demand and rising competition in etching, deposition and cleaning businesses.

  Comparison

  The report places NAURA alongside AMEC as a Chinese WFE name UBS likes and values them using PE multiples.

  Risks

  Escalating geopolitical restrictions, weaker-than-expected Chinese WFE demand, and market share losses due to competition.

• AMEC

  Chinese domestic WFE equipment maker, rated Buy by UBS

  Strengths

  May benefit from Chinese fab expansion, equipment localization and etching-related demand.

  Weaknesses

  Etching imports fell 33% YoY in May, indicating near-term pressure on related equipment demand.

  Comparison

  Together with NAURA, AMEC is one of the Chinese WFE names UBS maintains at Buy.

  Risks

  Escalating geopolitical restrictions, weaker-than-expected Chinese WFE demand, market share losses in etching, longer-than-expected new product development cycles, and turnover of core management and R&D talent.

Key data

• China's May SPE importsUS$1.865 billion, -12% YoY, -21% MoMTotal import demand declined in the short term.
• China's 5M26 SPE importsUS$10.737 billion, -12% YoYYear-to-date cumulative imports remain below the prior-year level.
• Shanghai May SPE importsUS$898 million, +33% YoY, 48% of totalShanghai was the largest importing province/city in May.
• Beijing May SPE importsUS$410 million, +263% YoY, 22% of totalDemand in Beijing increased significantly.
• Guangdong 5M26 SPE importsUS$936 million, -79% YoYDown sharply from US$4.516 billion in 5M25, making it the largest drag on the overall decline.
• China SPE imports excluding Guangdong+27% YoY in 5M26Shows that the overall decline was mainly dragged down by Guangdong.
• May lithography importsUS$297 million, -2% YoY, +109% MoMRebounded from US$142 million in April, but the absolute level is still relatively low.
• 5M26 lithography importsUS$2.142 billion, -24% YoYMay reflect digestion after the large lithography imports from September to December 2025.
• May non-lithography equipment importsUS$1.568 billion, -14% YoYOverall non-lithography equipment demand weakened.
• May deposition equipment importsUS$708 million, +12% YoYCVD accounted for US$545 million, up 31% YoY.
• May etching equipment importsUS$382 million, -33% YoYEtching equipment performed weaker than deposition equipment.
• Related to ASML China revenue guidanceThe midpoint of China's revenue share in 2026 is about 20%UBS expects ASML CY2026 total system revenue to grow 25% to €30.5 billion, implying China's lithography imports may rebound in 2H26.

Impact & implications

For investors, the report distinguishes between the decline in total imports and the improvement in regional structure. Strong demand in Shanghai and Beijing means advanced logic and memory projects are still moving forward, which may benefit domestic WFE equipment makers; better performance in deposition equipment than in etching equipment also suggests divergence across equipment categories. For ASML-related observation, UBS believes that the earlier surge in lithography imports is being digested, but management guidance on China's revenue share supports a potential rebound in the second half of the year.

Risks

• Macro conditions and end demand are weaker than expected.
• Geopolitical tensions escalate and restrictions broaden further.
• The semiconductor upcycle is shorter than expected.
• Chinese fabs suspend projects or cut capex more than expected.
• R&D progress is slower than expected.
• Intensifying competition causes market share losses for domestic equipment makers.

What to watch

• Whether China's lithography imports rebound in 2H26 as UBS expects.
• Whether strong SPE imports in Shanghai and Beijing can continue, and whether they translate into domestic WFE orders.
• Whether import demand in Guangdong, Anhui and Hubei recovers.
• Whether the growth gap between deposition equipment and etching equipment imports continues to widen.
• Whether ASML's China revenue share and system revenue growth meet management guidance.
• The impact of geopolitical developments and export controls on lithography and advanced equipment imports.