CITIC Securities: Increased interest in domestic computing power boosts the semiconductor equipment sector.

CITIC Securities Research Report pointed out that the increase in the heat of domestic computing power drove the semiconductor equipment sector. In the context of the overall slowdown in industry expansion, we believe that the increase in penetration rate driven by localization will still be an important source of growth for the equipment sector. We judge that the future localization rate of equipment will achieve rapid growth, with top machine equipment companies expected to achieve a 20-30% increase in orders by 2025, and the localization process of components, especially bottleneck components, is expected to accelerate, with the overall sector fundamentals looking good. In terms of prosperity, it is expected that front-end CAPEX will continue to grow before 2025, with advanced processes maintaining strong performance and mature processes recovering; the back-end packaging is expected to see a mild recovery, and there may be positive progress in 2.5D/3D advanced packaging in the second half of the year. In terms of domestic substitution, the demand for domestic substitution from top customers remains strong, with customers not on the list also accelerating the introduction of domestic products, and it is expected that the slope of the subsequent increase in localization rate will be steeper. Equipment manufacturers are also rapidly promoting the localization of their supply chains.