Goldman Sachs has expressed the view that the confluence of increasing customer capital expenditures and a rising rate of domestic substitution is leading to a substantial improvement in the long-term visibility for China's semiconductor equipment industry.

The future growth of the sector is seen as being driven by the expansion of capacity for memory and advanced logic production within China. In light of this improved long-term outlook, Goldman Sachs has adopted a constructive stance towards China's semiconductor equipment and materials segments. The firm has reset its valuation framework for the sector, covering four specific companies: Naura Technology Group Co.,Ltd. (002371.SZ), Advanced Micro-Fabrication Equipment Inc. China (688012.SH), Shengmei Shanghai (688082.SH), and Anji Technology. All four have been maintained with a Buy rating. Furthermore, Goldman Sachs has uniformly shifted its valuation methodology from a near-term price-to-earnings (P/E) ratio to a 2030 discounted P/E model. This change is intended to better capture the long-term growth opportunities these companies present.

The investment bank emphasized that the capacity expansion within China's semiconductor equipment sector is not merely reliant on policy subsidies. Instead, it is characterized as a structural growth trend propelled by two main drivers: memory and advanced logic. On the memory front, this is represented by companies like Yangtze Memory Technologies Co., Ltd. and Changxin Memory Technologies Inc. The advanced logic segment is represented by leading foundries such as SMIC and Hua Hong Semiconductor. The sustained increase in capital expenditures from these key customers is directly stimulating demand for upstream equipment. Goldman Sachs reiterates that the combination of rising customer capital outlays and an accelerating domestic substitution rate is significantly enhancing the long-term predictability of the Chinese semiconductor equipment industry.