China Securities Co., Ltd.: The global prosperity cycle of semiconductor equipment continues to be confirmed, and the trend of simultaneous increase in quantity and price of PCB drill needles is clear.

China Securities Co., Ltd. released a research report stating that the semiconductor equipment component sector is in the background of a dual trend of independent and controllable trends: on the one hand, driven by AI, the downstream expansion production cycle is opening up, and mainland China requires self-reliance and controllability in the entire semiconductor equipment system, with the background of increasing domestic production rates at the equipment end, the overall market space for components is opening up; on the other hand, the overall domestic production rate of key components is relatively low, and the domestic substitution of high-end products is still in its early stages. It is recommended to focus on the progress of domestic substitutions in low domesticated categories and breakthroughs; and the rapid volume improvement driven by the smooth progress of domestication in smooth categories is worth attention for listed companies' performance improvement. China Securities Co., Ltd.'s main points are as follows: Event (1) Humanoid Siasun Robot & Automation: Figure03 enters BMW factory, focusing on the performance of humanoid Siasun Robot & Automation applications, expected to become a big year for humanoid Siasun Robot & Automation applications by 2026. (2) AIDC power generation equipment: clear trend of domestic equipment going overseas, entering volume and price increase. (3) Construction machinery: domestic and overseas demand continues to exceed expectations, firm positioning at a low level. (4) Semiconductor Equipment: Global semiconductor equipment entering a large cycle, focusing on price increases and overseas expansion. (5) Lithium battery equipment: from cycle to growth, lithium battery equipment opens the second growth curve. Humanoid Siasun Robot & Automation: Figure03 enters BMW factory, focusing on the performance of humanoid Siasun Robot & Automation applications The landing application of humanoid Siasun Robot & Automation is a focus of the market. Figure 03 enters the BMW factory, and leading manufacturers actively promote the application of humanoid Siasun Robot & Automation in industrial and other scenarios; with the increasing generalization level of Siasun Robot & Automation, its landing scenarios are expected to expand further, with 2026 expected to be a big year for humanoid Siasun Robot & Automation applications. Physical AI is the next wave of artificial intelligence, and Siasun Robot & Automation is one of the best physical carriers for AI, deserving attention. In addition, the mass production of Optimus is approaching, with clearer guidelines for mass production in the supply chain in the near term, with its volume pace gradually being verified, and the follow-up release and mass production of V3 products are still worth close attention. In addition, the IPO of domestic Siasun Robot & Automation company continues to progress, expected to bring about a reassessment of its valuation. It is expected that the sector will see continuous catalysts in the next quarter, and it is recommended to focus on high-quality segments. AIDC power generation equipment: Strongly optimistic about the development of domestic gas turbines overseas Morgan Stanley released a report predicting that global gas turbine orders will peak in 2026, and will decline from 2027 onward. Combined with the promotion of supplemental solutions such as SOFC and fuel cells, there may be oversupply after 2030. The bank believes that: (1) capacity expansion is not as easy as imagined, and the supply side may not grow as expected: Forecasts for the supply side cannot be simply extrapolated linearly, as industry expansion from planning to stable delivery capability takes time, and the delivery capability varies greatly among different manufacturers, different models, and different regions. Constraints on heavy-duty gas turbine delivery come from various aspects such as the turbine head, core high-temperature components, long-cycle forgings, supply chain support, complete integration, and on-site engineering. (2) Domestic gas turbines themselves are important supplements to fill gaps, equivalent to new routes such as SOFC + engines: Overseas discussions involve faster-delivery technology routes such as SOFC and engines. On the 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. Considering the worst case scenario, if global gas turbine orders decline, domestic gas turbine orders will not. The bank can only see the industry still maintaining a high level of prosperity, with high growth in domestic gas turbine orders, long delivery periods, and tight effective supply. Construction machinery: Domestic and overseas sales of excavators continue to exceed expectations, firmly positioning at a low level In May 2026, sales of various types of excavators totaled 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 foreign growth rates have accelerated, and the domestic excavator sales have shown a more obvious peak season shift since this year as compared to last year, as the Spring Festival was later this year, and domestic excavator sales have been recovering high year-on-year growth since March, and it is expected to continue to grow in the future. Exports continue to show strong performance, unaffected by international situations, tariff changes, interest rate reductions, etc., and China's construction machinery industry continues to maintain high growth momentum. The domestic market has improved, with leading enterprises starting to increase prices. Starting from May 1st, companies such as Sany, Xugong, Guangxi Liugong Machinery, and Shantui announced a about 5% price increase for excavators, with Sany and Xugong also increasing prices for crane products, reflecting the easing of industry price wars since the beginning of the year and a shift towards positive development. Semiconductor equipment: Global prosperity cycle continues to be confirmed, focusing on price increases and overseas expansion SEMI has raised its annual expectations, and SK Hynix plans to triple its capacity by 2034, confirming the continued global prosperity cycle of the semiconductor industry. SEMI released a report on June 11, raising its forecast for the global front-end semiconductor equipment market from the previous estimate of 16.5% to a substantial 23.5% increase, reaching $152.2 billion in 2026. Global semiconductor equipment shipments reached $36.55 billion in Q1, a year-on-year increase of 14%, setting a new record for a single quarter. After announcing the plan to double its production capacity in five years at the beginning of this month, SK Group Chairman Chey Tae-won further revealed in a recent interview that if all the planned construction projects progress as expected, SK Hynix's capacity will triple by 2034. The component sector is witnessing a rare historical trend of chain-wide price increases. The pricing power of the semiconductor industry is shifting structurally from chip end markets to equipment and components sectors. Component companies have small scales and high fixed costs, and price increases directly profits; at the same time, the expansion cycle of production lines is as long as 12-18 months, with the worst supply elasticity. The demand for domestic substitutions and price logic brought about by the extended lead times of overseas suppliers for components such as valves and pipelines, ceramics, radio frequency power supplies, and GAS BOX is being emphasized. Lithium battery equipment: From cycle to growth, lithium battery equipment opens the second growth curve The lithium battery equipment industry naturally has a strong capital expenditure cycle attribute. In the early stages of high market growth, equipment companies rely on downstream battery factories to achieve high growth through large-scale expansions. However, when downstream production capacity utilization rates decline and expansion slows down, equipment orders may exhibit more dramatic fluctuations than end-demand. This shows a typical "second derivative" feature, so equipment manufacturers have been promoting platformization and diversification transformations, actively seeking the second growth curve, which is beginning to show results. The significance of the second growth curve lies in two points: firstly, smoothing the fluctuations in the core business and improving the quality of income; secondly, raising the valuation center, revaluing the company from a "cyclical equipment provider" to a "platform-based high-end equipment provider." Currently, lithium battery equipment companies are mainly focusing on three core directions of the second growth curve: 1) general technology + automation solutions expanding into non-lithium battery areas, such as photovoltaics, 3C, smart logistics, automotive, semiconductors, etc.; 2) enabling products for overseas expansion with advanced technology, such as overseas battery factories expanding production, following domestic customers going overseas, localizing delivery and services, etc.; 3) new technology, new processes direction, solid-state batteries, sodium batteries, dry electrode coating, isostatic pressing, composite cathode, etc. Companies with proven platformization capabilities and leveraging new technology options in the lithium battery equipment industry are truly worth attention. The logic driving the current sector demand is clear, with high oil prices and resonating downstream prosperity, further emphasizing the attractiveness of portfolio allocation in the lithium battery equipment and solid-state battery sectors. Risk reminder: (1) Risks of fluctuations in domestic macroeconomics; (2) Risks of volatility in overseas markets; (3) Risks of downstream expansion falling short of expectations.