Northeast: AI drives the upturn cycle of CAPEX in architectural decoration, and clean rooms benefit greatly.

Northeast released a research report stating that clean room projects that provide basic support for advanced manufacturing have a high concentration in the high-end market. Against the backdrop of sustained high investment in the global semiconductor industry, the domestic industry has a wide space for domestic substitution. AI is driving high demand for chips such as GPUs and HBM, combined with accelerated domestic substitution, the domestic and foreign industry capital expenditures are expected to enter a new growth cycle, with a focus on the front end of the industry chain in the clean room industry. Key points from Northeast are as follows: Clean rooms are basic engineering for advanced manufacturing, with a high concentration in the high-end market. Clean rooms are divided into industrial and biological categories, and the domestic clean room market is expected to reach 286.8 billion yuan by 2024, with over half used for electronics. The unit cost per square meter is increasing year by year, reaching 6,600 yuan per square meter by 2024. At the same time, the high-end market in the clean room industry has a high concentration, with the top listed companies expected to account for 27% of revenue by 2024. The global semiconductor investment is in a high boom, with a large space for domestic substitution in the domestic industry. According to WSTS, global semiconductor sales continue to grow, expected to reach 975.5 billion US dollars by 2026, an increase of 26% year-on-year; TSMC forecasts that the market size will surpass one trillion US dollars by 2030. Logic chips and memory chips are the main contributors to growth, with sales expected to increase by 7% and 16% respectively by 2026. Leading TSMC is expected to increase its capital expenditure to 52-56 billion US dollars by 2026, a year-on-year increase of 27%-37%, with a focus on advanced processes and packaging. At the same time, the trend towards semiconductor localization in China is strong, with the domestic IC self-sufficiency rate reaching only 18.3% by 2022. The HBM market is expanding, with leading manufacturers accelerating production expansion. HBM has become the mainstream choice for high-end AI chips, with rapid product iteration and market expansion in the past two years. Goldman Sachs predicts that the market will reach 30 billion US dollars by 2026, with a compound annual growth rate of around 100% from 2023 to 2026. The HBM industry is highly concentrated, mainly dominated by the three storage giants SK Hynix, Samsung, and Micron, with market shares of 54%, 39%, and 7% respectively in 2024. Considering the accelerated expansion of production lines by the top three international manufacturers and domestic storage leaders in HBM, the demand for construction of production lines is expected to remain strong. It is expected that global semiconductor capital expenditure will exceed 200 billion US dollars by 2026, corresponding to a clean room market size of 217.2 billion yuan. Clean rooms are the core infrastructure for semiconductor manufacturing, accounting for about 10% to 21% of capital expenditure. It is forecasted that the global semiconductor capital expenditure will reach 207.2 billion US dollars by 2026, an increase of 11% year-on-year. Assuming China accounts for 35% and clean rooms account for 15% of the total, the global/Chinese semiconductor clean room industry size is expected to reach 217.3/76 billion yuan by 2026. AI edge drives display panel demand, leading players actively expand production of high-generation products. The market share of mainland China's display panels in the global market is increasing year by year (52% in 2025H1), with downstream applications concentrated in smartphones (73% by 2024), including 16% for AI smartphones, which is expected to rise to 54% by 2028. AI at the edge is expected to drive the demand for display panels. Meanwhile, domestic panel leaders such as BOE are actively expanding into the high-generation OLED field, further driving demand for clean rooms. Medical clean room demand is rigid, with long-term stable growth. Clean-type operating rooms are more suitable for high-standard medical sterile requirements compared to traditional operating rooms. The scale of domestic hospitals and medical services continues to expand, with the number of hospitals in China increasing from 24,709 in 2013 to 38,355 in 2023, driving the continuous expansion of medical clean rooms. The scale of medical clean rooms in China has increased from 6.78 billion yuan in 2013 to 23.5 billion yuan in 2024, and is expected to exceed 30 billion yuan by 2028. Investment recommendations: Related beneficiaries include L&K Engineering, Acter Technology Integration Group, Wuhan Huakang Century Clean Technology, Both Engineering Technology, MayAir Technology (Note: Acter Technology Integration Group, Both Engineering Technology, MayAir Technology not covered). Risk factors: Capital expenditures falling below expectations; increased industry competition; domestic substitution falling below expectations.