Hua Chuang Securities: OEM industry continues to grow; pay attention to changes in downstream prosperity.

Hua Chuang Securities released a research report stating that benefiting from the recovery of the OEM automation market and the concentrated release of capital expenditure in high-prosperity downstream sectors such as lithium batteries, semiconductors, PCB, and industrial Siasun Robot&Automation, the automation industry will usher in an upward demand cycle in 2026. Domestic manufacturers continue to tackle the high-end market, leveraging advantages in cost, delivery, and service to accelerate import substitution, continuously improve product matrices, and maintain ample performance elasticity. The main views of Hua Chuang Securities are as follows: The overall domestic automation market is expected to rise to 359.3 billion yuan in 2026 MIR Ruigongye predicts that China's overall automation market size will continue to expand from 2023 to 2028, with a market size of 343.1 billion yuan in 2025. In 2026, driven by the high prosperity of the OEM segment, the overall domestic automation market is expected to rise to 359.3 billion yuan, a year-on-year increase of 4.71%, and is expected to achieve slight positive growth. In the medium to long term, the growth rates of both major segments will gradually decline in 2027-2028. Affected by the carbon peak target before 2030, some projects are expected to halt in 2028, putting pressure on automation order demand. The automation industry shows significant structural differentiation In the second quarter of 2026, the OEM track maintained high prosperity, with downstream sectors such as electronics and semiconductors, lithium batteries, and industrial Siasun Robot&Automation continuing double-digit growth. Among them, the PCB segment had the strongest elasticity, with a growth rate of 55.6%, and strong bidding demand for high-speed placement and AOI inspection equipment; the integrated circuit segment grew by 8.8%, with demand concentrated in high-end industrial control, vacuum automation, and clean robots, which have higher technical barriers. Domestic and overseas energy storage and power battery capacity continued to land, and orders for lithium battery-specific automation equipment manufacturers were full; in the photovoltaic field, demand for component equipment updates and production line automation technological transformation expanded simultaneously. In contrast, the prosperity of the project-based traditional industrial track weakened slightly, with capital expenditure slowing in areas such as ferrous metallurgy, mining, oil and gas, and petrochemicals, insufficient commencement of new projects, and delayed equipment procurement plans; the power sector showed internal structural differentiation, with thermal power investment performing steadily and nuclear power overseas export projects continuing to increase. In Q2 2026, the domestic OEM automation market grew by 8% year-on-year By industry growth rate, the battery segment performed most impressively, with a year-on-year growth rate of 35%; the year-on-year growth rates of industrial Siasun Robot&Automation and semiconductors both rose to 20%+, electronic manufacturing recovered to 13%, and the machine tool industry's growth rate repaired to 9%, becoming the core engine driving OEM automation growth. In the electronics and semiconductor fields, large-scale new construction of AI servers, computing hardware, high-frequency PCBs, and wafer production lines, along with micron-level positioning and high-cycle flexible production requirements, has generated substantial demand for customized automation equipment. Order growth for automation equipment across the entire industrial chain exceeded 30%, and domestic industrial control and machine vision manufacturers fully benefited from the dividends of import substitution. In the lithium battery track, the expansion of domestic and overseas energy storage and power battery capacity continued to land, orders for lithium battery-specific automation equipment manufacturers were full, and combined with the release of demand for photovoltaic component equipment updates and production line automation technological transformation, this continued to support demand for automation equipment. In contrast, industries such as printing and pharmaceuticals faced pressure in prosperity, and demand in some traditional downstream industries weakened. In Q2 2026, the project-based automation market declined by 4% year-on-year overall The power industry became the only high-growth segment, with a year-on-year growth rate of 16%; the landing of high-energy-consumption new infrastructure such as data centers and AI computing centers boosted electricity demand, and against the backdrop of energy security, new thermal power projects in Southwest China commenced in a concentrated manner, while flexibility retrofits for peak shaving of existing thermal power units continued to advance, expanding automation demand related to thermal power and nuclear power simultaneously. Other traditional downstream sectors generally weakened: chemicals (-10%), municipal and public facilities (-8%), petrochemicals (-8%), metallurgy (-7%), and automobiles (-7%) declined year-on-year; although mining and papermaking maintained positive growth, their growth rates fell sharply to 1%. In the petrochemical industry, domestic demand was relatively weak and export momentum was limited. Although the OEPC model brought a small number of incremental projects, some overseas projects in the Middle East stalled due to geopolitical factors, making it difficult for the overall market to reverse the downward trend. Risk warnings: macroeconomic fluctuation risk, downstream demand falling short of expectations, and intensified market competition.