China Securities Co., Ltd.: Semiconductor equipment global economic cycle continues to be confirmed, paying attention to price increases and overseas expansion.

China Securities Co., Ltd. released a research report stating that after SK Hynix announced its plan to double its production capacity in the beginning of this month, SK Group Chairman Choi Tae-yong recently revealed in an interview that if all construction plans progress as expected, Hynix's production capacity will be triple the current level by 2034. The component sector is the direction with the greatest elasticity in this round of market trends. Global semiconductor equipment components are experiencing a rare historical trend of increased prices throughout the entire supply chain. The pricing power of the semiconductor industry chain is shifting structurally from chips to equipment and components. Component companies have small scales and high fixed costs, so price increases directly profits; at the same time, the expansion cycle of production lines is long, ranging from 12 to 18 months, with the worst supply elasticity. Attention should be given to the demand for domestic alternatives and the pricing logic brought about by extended delivery times from overseas suppliers of valve pipe fittings, ceramic parts, radio frequency power sources, GAS BOX, and others. Humanoid Siasun Robot & Automation: Figure03 enters the BMW factory to observe the application performance of humanoid Siasun Robot & Automation. The practical application of humanoid Siasun Robot & Automation is the focus of the market. Figure 03 enters the BMW factory, with manufacturers actively promoting the application of humanoid Siasun Robot & Automation in industrial scenarios. With the increasing generalization level of Siasun Robot & Automation, it is expected that its application scenarios will further expand, and it is likely to become a peak year for humanoid Siasun Robot & Automation applications in 2026. Physical AI is the next wave of artificial intelligence, and Siasun Robot & Automation is one of the best physical carriers of AI and deserves attention. In addition, the mass production of Optimus is gradually approaching, and the guidelines for mass production scale of the supply chain are gradually becoming clear. Its production rhythm is gradually being validated, and the subsequent release and mass production of V3 products are still worth close attention. In addition, the IPO of domestic Siasun Robot & Automation company is continuing to advance, which may lead to a revaluation of its intrinsic value. It is expected that the sector will continue to be catalyzed in the next quarter, and it is recommended to focus on quality segments. AIDC power generation equipment: Strongly optimistic about the expansion of domestic gas turbines overseas. Morgan Stanley released a report predicting that global gas turbine orders will peak in 2026 and decline from 2027 onwards, coupled with the promotion of supplementary solutions such as SOFC and fuel cells, there may be oversupply after 2030. China Securities Co., Ltd. Securities believes that (1) increasing production is not as easy as imagined, and the supply side may not necessarily grow as expected: Predicting the supply side is not as simple as linear extrapolation. The industry's production expansion from planning to stable delivery capability formation takes time, and the differences in delivery capability among different manufacturers, machine types, and regions are significant. The delivery constraints of heavy gas turbines come from multiple aspects such as heads, high-temperature core components, long-cycle forgings, supply chain matching, complete integration, and on-site engineering. (2) Domestic gas turbines themselves are important supplementary routes to fill gaps, equivalent to new routes such as SOFC + engines: Overseas discussions on faster technology routes such as SOFC and engines. On one hand, some routes are still in the early stages of introduction and there are still many uncertainties. On the other hand, domestic gas turbines themselves are important supplements with short delivery times. In the worst case scenario, if global gas turbine orders decline, domestic gas turbine orders will not decline. We can only see that the industry remains highly prosperous, domestic gas turbine orders continue to grow at a high rate, delivery periods remain long, and effective supply remains tight. Construction machinery: Domestic and foreign excavator sales continue to exceed expectations in May, solid positioning at low levels. In May 2026, sales of various types of excavators reached 24,794 units, a year-on-year increase of 36.2%. Among them, domestic sales were 11,628 units, a year-on-year increase of 38.6%; exports were 13,166 units, a year-on-year increase of 34.2%. Both domestic and international growth rates have accelerated, and domestic excavator sales have shown a more obvious peak season after the Chinese New Year, as the Chinese New Year was later this year compared to last year. Domestic excavator sales have been recovering with high year-on-year growth since March, and it is expected to continue to grow in the future. Exports maintain a strong performance and are not affected by international situations, tariff changes, interest rate cuts, etc. The high-growth trend of China's construction machinery industry continues. The domestic market landscape is improving, with leading companies starting to raise prices. Starting from May 1st, companies such as Sany, XCMG, Guangxi Liugong Machinery, and Shantui announced a 5% price increase for excavators, and Sany and XCMG also raised prices for crane products, reflecting a slowdown in industry price wars since the beginning of the year and a shift towards positive development. Semiconductor equipment: Global market cycle continues to confirm, focusing on price increases and overseas expansion. SEMI raised its annual forecast and SK Hynix announced a threefold increase in production capacity by 2034, confirming the continued prosperity of the global semiconductor market cycle. SEMI released a report on June 11th, revising its forecast for the global front-end semiconductor equipment market size growth rate in 2026 from the previous 16.5% to a significant 23.5%, reaching $152.2 billion. Global semiconductor equipment shipments in Q1 reached $36.55 billion, a year-on-year increase of 14%, setting a new record for single-quarter shipments in history. After SK Hynix announced its plan to double its production capacity in the beginning of this month, SK Group Chairman Choi Tae-yong recently revealed in an interview that if all construction plans progress as expected, Hynix's production capacity will be triple the current level by 2034. The component sector is the direction with the greatest elasticity in this round of market trends. Global semiconductor equipment components are experiencing a rare historical trend of increased prices throughout the entire supply chain. The pricing power of the semiconductor industry chain is shifting structurally from chips to equipment and components. Component companies have small scales and high fixed costs, so price increases directly profits; at the same time, the expansion cycle of production lines is long, ranging from 12 to 18 months, with the worst supply elasticity. Attention should be given to the demand for domestic alternatives and the pricing logic brought about by extended delivery times from overseas suppliers of valve pipe fittings, ceramic parts, radio frequency power sources, GAS BOX, and others. Lithium battery equipment: From cyclical to growth, lithium battery equipment enters the second growth curve. The lithium battery equipment industry naturally has a strong cyclical capital expenditure attribute. In the early stages of the market's high growth, equipment companies rely on downstream battery factories for large-scale expansion to achieve high growth. However, when downstream production capacity utilization declines and expansion slows down, equipment orders will experience more severe fluctuations than end-demand, exhibiting typical "second derivative" characteristics. Therefore, equipment manufacturers have been promoting platformization and diversification transformation to actively seek a second growth curve, which is now beginning to show results. The significance of the second growth curve lies in two points: smoothing the fluctuations in the main business and improving the quality of income; raising the valuation center, revaluing the company from a "cyclical equipment manufacturer" to a "platform-oriented high-end equipment manufacturer". Currently, lithium battery equipment companies are mainly focusing on three core directions for the second growth curve: 1) General technology + automation solutions expanding to non-lithium battery sectors such as photovoltaics, 3C, intelligent logistics, automotive, and semiconductor; 2) Enabling advanced technology products for overseas markets, expanding production capacities of overseas battery factories, following domestic customers overseas, and providing localized delivery and services; 3) New technology and new process directions, solid-state batteries, sodium batteries, dry electrode methods, isostatic pressing, composite current collectors, etc. Companies in the lithium battery equipment sector that have proven technological platformization capabilities while retaining options for new technologies are truly worthy of attention. The current sector's demand-driven logic is clear, with high oil prices resonating with downstream prosperity, and continued optimism for the allocation value of the lithium battery equipment and solid-state battery sectors.