This report highlights key investment opportunities across several industrial and technology sectors. The analysis covers humanoid robotics, power generation equipment, construction machinery, semiconductor equipment, and lithium battery equipment.
Humanoid Robotics: Factory Applications in Focus
The practical application of humanoid robots is a key market focus. The entry of the Figure 03 model into a BMW factory signifies leading manufacturers actively promoting their use in industrial settings. As the generalization capabilities of robots improve, their applicable scenarios are expected to expand further. The year 2026 is anticipated to be a significant year for vertical applications of humanoid robots. Physical artificial intelligence represents the next wave of AI, with robots being one of its best physical embodiments, warranting attention. Additionally, the mass production of Optimus is drawing closer, with recent supply chain guidance on production volumes becoming clearer, validating its scaling pace. Upcoming releases of the V3 product and progress on mass production remain areas to watch closely. Furthermore, domestic robotics companies are advancing their IPO processes, which could lead to a revaluation of the entities. The sector is expected to see continuous catalysts over the next quarter, suggesting a focus on high-quality segments.
Power Generation Equipment: Strong Outlook for Domestic Turbine Exports
We maintain a firm positive view on the export of domestically produced gas turbines. A recent report from Morgan Stanley forecasts global gas turbine orders to peak in 2026, with a decline starting in 2027, potentially leading to oversupply after 2030 when combined with the advancement of supplementary solutions like SOFC and fuel cells. However, we believe that: (1) Capacity expansion is not as straightforward as imagined, and supply may not grow as projected. Predicting supply cannot be based on simple linear extrapolation. The industry's expansion from planning to stable delivery capability takes time, and deliverable capacity varies significantly across different manufacturers, models, and regions. Constraints for heavy-duty gas turbine delivery stem from multiple factors including the engine core, high-temperature components, long-lead forgings, supply chain support, system integration, and on-site engineering. (2) Domestic gas turbines themselves represent a crucial gap-filling solution, equivalent to new routes like SOFC plus engines. While overseas discussions focus on faster-delivery technological routes like SOFC and engines, some are still in early stages with considerable uncertainty. Domestic gas turbines, with their relatively shorter delivery times, serve as an important supplement. Even in the worst-case scenario of declining global orders, orders for domestic turbines would not fall. The industry continues to exhibit high prosperity, with domestic turbine orders still growing strongly, delivery cycles remaining long, and effective supply staying tight.
Construction Machinery: May Data Exceeds Expectations, Positioning at Low Levels Advised
Sales of various excavators in May 2026 reached 24,794 units, a year-on-year increase of 36.2%. Domestic sales accounted for 11,628 units, up 38.6%, while exports reached 13,166 units, up 34.2%. Both domestic and international growth rates accelerated. This year, domestic excavator sales have shown a clear shift of peak season to later months, partly due to a later Spring Festival compared to last year. Domestic excavators have maintained a high year-on-year growth rate since March, with continued growth expected. Exports have maintained strong performance, unaffected by international situations, tariff changes, or interest rate cuts, sustaining the high-growth momentum of Chinese construction machinery. The domestic competitive landscape is improving, with leading companies initiating price increases. Starting May 1st, companies including Sany, XCMG, LiuGong, and Shantui announced price hikes for excavators of approximately 5%. Sany and XCMG also raised prices for crane products, indicating a moderation in the industry's price war that began earlier in the year and a shift towards healthier development.
Semiconductor Equipment: Global Upturn Confirmed, Focus on Price Hikes and Exports
The global semiconductor equipment boom is being continuously confirmed, with a focus on price increases and international expansion. SEMI's upward revision of its annual forecast and SK Hynix's plan to triple capacity by 2034 solidify the ongoing global semiconductor upcycle. On June 11, SEMI released a report significantly raising its 2026 growth forecast for the global front-end semiconductor equipment market from a previous 16.5% to 23.5%, reaching $152.2 billion. First-quarter global semiconductor equipment billings reached $36.55 billion, a year-on-year increase of 14%, setting a new historical quarterly high.
Following the announcement of SK Hynix's five-year plan to double capacity earlier this month, Chairman Choi Tae-won recently indicated in an interview that if all construction plans proceed as expected, SK Hynix's capacity by 2034 could be three times its current level. The components segment represents the most elastic direction in this market cycle. The global semiconductor equipment supply chain is experiencing a historically rare, comprehensive wave of price increases across the entire chain. Pricing power within the semiconductor industry is structurally shifting from chip end-users towards the equipment and components segments. Component companies are generally smaller with high fixed cost ratios, meaning price increases directly translate into profits. Simultaneously, production line expansion cycles are long, typically 12-18 months, resulting in the poorest supply elasticity. Attention should be paid to the demand for import substitution and the pricing logic driven by extended delivery times from overseas suppliers of items like valves and piping, ceramic components, RF power sources, and gas boxes.
Lithium Battery Equipment: Transitioning from Cycle to Growth, Opening a Second Growth Curve
The lithium battery equipment industry inherently possesses strong capital expenditure cyclicality. During the early market boom, equipment companies relied on massive capacity expansions by downstream battery manufacturers for high growth. However, when downstream capacity utilization falls and expansion slows, equipment orders tend to fluctuate more sharply than end-demand, exhibiting a typical "second derivative" characteristic. Consequently, equipment manufacturers have been actively promoting platformization and diversification strategies to secure a second growth curve, with initial results now visible. The significance of this second curve lies in two aspects: first, smoothing out the volatility of the main business and improving revenue quality; second, raising the valuation benchmark, re-rating companies from "cyclical equipment suppliers" to "platform-type high-end equipment manufacturers." Currently, the second growth curve for lithium equipment companies mainly falls into three core directions: ① Extending general technology and automation solutions to non-lithium fields such as photovoltaics, 3C electronics, smart logistics, automotive, and semiconductors. ② Leveraging advanced technology for product exports, capitalizing on overseas battery plant expansions, following domestic clients abroad, and offering localized delivery and services. ③ Focusing on new technologies and processes like solid-state batteries, sodium-ion batteries, dry electrode processes, isostatic pressing, and composite current collectors. Among lithium equipment companies, those that have demonstrated technological platform capabilities while retaining optionality in new technologies are truly noteworthy. The sector's current demand drivers are clear, with high oil prices and robust downstream prosperity creating positive synergy. We continue to see value in allocating to the lithium battery equipment and solid-state battery sectors.
Key Investment Risks
(1) Risk of Domestic Macroeconomic Fluctuations: The machinery sector is a typical midstream capital goods industry, closely linked to macroeconomic cycles. Significant shifts in domestic macroeconomic policies could impact overall demand for machinery.
(2) Risk of Overseas Market Volatility: The international expansion of Chinese companies will not be without challenges. Future endeavors are likely to encounter various frictions, and it requires prudent judgment to determine whether these are temporary setbacks or the formation of new trends.
(3) Risk of Lower-Than-Expected Downstream Expansion: If downstream industries expand capacity less than expected, corresponding equipment demand will decline, adversely affecting orders and performance for companies within the sector.