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Jiwei Consulting has released two consecutive reports: 2026 Semiconductor Metrology & Inspection Equipment Industry Research Report and 2026 Wet Electronic Chemicals Industry Research Report. The domestic localization rate of front-end metrology and inspection equipment in China stood at merely around 4.2% in 2025 (KLA holds approximately 49% of the global market share), while leading local vendors recorded revenue growth above 40%. Between 2022 and 2026, mainland China added 25 new 12-inch wafer fabs. By the end of 2026, monthly capacity will exceed 2.763 million wafers, representing a 165.1% increase from early 2022, opening the validation and adoption window for high-end materials.
Goldman Sachs: Changguang Precision Machinery, the leading supplier of ABF substrate equipment, has order backlogs extending to 2031. Some customers are voluntarily paying premiums to secure supply. The substrate shortage ratio will rise sequentially in H2 2026, 2027 and 2028, further confirming the rigid supply within the ABF industrial chain.
Pricing discipline takes shape for SiC: Domestic 8-inch SiC substrate quotations are roughly double those of 6-inch products, and overseas quotations carry a 20%–30% premium versus domestic prices. Driven by ramp-up of 8-inch epitaxy at Hantec together with AIDC demand, its revenue nearly doubled in the first half of the year.
Accelerated domestic substitution for equipment: South Korean media reports state that the proportion of domestic equipment installed at Chinese wafer fabs has risen to roughly one-third. KLA revised its 2026 WFE spending guidance upward to approximately USD 150 billion.
Optical communications: 1.6T optical module orders have fully occupied high-end mSAP production capacity. Dinglong Corporation has submitted multiple optical communication material products for sampling and qualification, and some are expected to secure orders within this year.
In-depth Analysis
Optical Communications / Optical Chips: During investor communications on September 19, a company disclosed that its Huizhou mSAP workshop capacity is currently dedicated to meeting production demand for 1.6T optical modules. It maintains robust order backlogs and healthy capacity utilization, and will continue capacity expansion in response to client requirements amid strong demand for mSAP capacity. On September 18, Dinglong Corporation stated multiple optical communication material products have been submitted for downstream customer sampling and qualification, with some expected to secure order breakthroughs within the year. The company is also developing high-end wafer photoresist and packaging photoresist. On September 19, Jiwei Net published an analysis examining how far large-scale mass production remains after the deployment of NPO ultra-node optical interconnects on Ascend 960, noting that the ramp-up of 3.2T/6.4T NPO hinges on standards, yield rates and optical engine supply.
Advanced Packaging & Testing：The latest Goldman Sachs research report points out that Changguang Precision Machinery, the leading ABF substrate equipment vendor, has order lead times extended to 2031. Customers are voluntarily offering price premiums to shorten waiting periods, and ABF substrates are facing tightening supply-demand balance with rising shortages year over year. On the materials side, on September 19, Sinocera Materials announced it has completed the layout of key materials for high-speed advanced CCL including spherical silica, spherical and angular titanium oxide. Some products are sold in small batches, while capacity expansion and customer qualification proceed for spherical silicon dioxide and aluminum nitride powder. Chujing New Materials disclosed its 50,000-ton high-precision copper alloy strip and foil project in Wuhu has commenced production ramp-up, delivering breakthroughs for PCB copper foil products. On the equipment side, a manufacturer stated on September 18 that its electroplating equipment portfolio supports PCB electroplating and IC substrate electroplating for high-end processes such as mSAP, compatible with PCBs for 800G–1.6T optical modules. A-share market enthusiasm spread across packaging & testing and material segments; Huatian Technology and Heyuan Gas hit daily limit on September 18. CITIC Securities proposed that diamond thermal dissipation has entered its first year of industrialization, recommending firms with early small-batch supply capabilities.
SiC / Power Semiconductors: Reports indicate that as the industry transitions from 6-inch to 8-inch SiC substrates, leading Chinese substrate manufacturers have drawn lessons from the 6-inch price war and adopted pricing discipline and customer screening strategies for 8-inch products. Current 8-inch substrate prices are approximately double those of 6-inch equivalents, and overseas quotations carry a 20%–30% premium over domestic prices. As a leading SiC epitaxy vendor, Hantec nearly doubled its first-half revenue driven by 8-inch capacity ramp-up. China Industrial Securities maintained an “Overweight” rating with a HKD 149 target price. Nexperia and Tata Electronics formed a strategic cooperation covering wafer fabrication, packaging & testing and technology development. Yole projects the power semiconductor market to register a CAGR of 7.1% from 2025 to 2031, exceeding USD 41.3 billion by 2031. Data center power supplies (including AI applications) serve as the core growth engine, with the share of SiC and GaN set to keep rising.
Memory & Compute Chips: Samsung Electronics and SK Hynix plan to scale DRAM below 10nm around 2028 with divergent technical routes. Samsung will introduce Vertical Channel Transistors (VCT) starting from the 0a node, while SK Hynix develops Vertical Gate (VG) designs. On the computing front, Qualcomm’s next-generation mobile platform centers on a brand-new Hexagon NPU, with shared memory capacity increased by 50% to ease bandwidth and power consumption pressure. Meta plans to deploy its self-developed AI inference chip Arke (MTIA 450) in H1 2027 and launch Astrid (MTIA 500) by end-2027.
Equipment & Materials: In metrology and inspection, SEMI data shows global semiconductor equipment sales reached USD 135.1 billion in 2025, up 15% YoY. China’s inspection and metrology equipment market stood at approximately USD 4.45 billion in 2025, accounting for 23% of the global USD 19.09 billion market, with a 19.46% CAGR from 2020 to 2025. China’s electron-beam metrology & inspection market grew from USD 426 million in 2021 to USD 1.025 billion in 2025 (CAGR 24.52%) and is projected to hit USD 1.618 billion by 2032. By competitive landscape, KLA holds roughly 49% global market share, and the top five vendors together capture 78.8%. The domestic localization rate for China’s front-end metrology and inspection equipment remains merely 4.2%. Leading local players posted strong revenue growth: KMC (+48.75% YoY, metrology equipment +72.71%), and Jingsheng Electromechanical’s semiconductor business (+71.60%), vastly outperforming Onto (+1.8%), Camtek (+16%) and Nova (+31%). Electron-beam inspection and advanced packaging inspection represent the two main tracks for high-end breakthroughs.
For wet electronic chemicals, China’s market reached RMB 22.36 billion in 2024, including RMB 7.93 billion for IC-grade products (+9.99% YoY). A 12-inch wafer consumes 239.82 tonnes of wet chemicals per 10,000 wafers, around 4.6 times the consumption for 8-inch wafers. The localization rate for IC-grade wet chemicals rose from 23% in 2020 to 44% in 2023; the rate for 12-inch high-purity reagents climbed from 15% in 2018 to 45% in 2024, hitting 65% for mature nodes. In 2025, domestic vendors captured over 30% market share of mid-to-high-end electronic chemicals for the first time. Huayi Group invested RMB 1.842 billion in Jianghua Micro and partnered with SMIC and Huahong Group to build a supply chain platform.
Wafer Fabrication: Reportedly, the yield rate of Intel’s Panther Lake compute chips built on the 18A process reached approximately 80% in Q2 2026, with defect density D0 estimated at 0.1–0.2 (market estimate, not official). CEO Lip-Bu Tan stated that global advanced foundry capacity cannot rely on a single supplier for 95% of supply, and admitted CPU supply remains tight, currently meeting only roughly half of customer demand.
Policy & Macro Environment: Beijing’s Bureau of Economy and Information Technology and Development and Reform Commission issued the Action Plan for Accelerating the Development of Token Economy in Beijing (2026–2028). The plan promotes model-chip adaptation and tuning, and supports R&D on inference-dedicated chips, model lightweighting and edge deployment technologies. Overseas, Japan’s export controls on strategic metals continue to reinforce the thesis of supply chain self-reliance and controllability. TrendForce estimates the global data center power demand capacity will reach 161 GW in 2026, rising about 31% annually. AI servers account for 33.4% of the total, making energy and thermal dissipation hard constraints for computing power expansion.
Daily Investment Tips
1. Prioritize order delivery in segments featuring ultra-low localization rates and rigid supply. Front-end metrology & inspection equipment (domestic localization rate at ~4.2%), ABF substrates and associated equipment (lead times stretched to 2031), and high-grade wet electronic chemicals carry strong conviction.
2. On the risk side, any relaxation of pricing discipline for 8-inch SiC could trigger a repeat of the 6-inch price-cut cycle. Meanwhile, price hikes of upstream materials (CCL, electronic fabric, photoresists, wet chemicals) propagating downstream may squeeze gross margins in packaging & testing and PCB segments. Track the execution of price increase notices and cost pass-through capability.
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