Goldman Sachs Empyrean Technology (301269.SZ): China AI Tour: Full-Flow Digital Design and Foundry EDA Expansion; Rising Spending from Memory and Logic Foundry Customers

Goldman Sachs met Empyrean Technology's management in Beijing on September 10, 2026, covering EDA product expansion, localization and customer spending. Second-quarter 2026 revenue rose 16% year-on-year, accelerating from 10% in the first quarter, with large-customer orders recovering this year toward 2024 levels and first-half results helped by higher spending from local memory and logic foundry customers. The roadmap targets full EDA tool-category coverage by end-2026 (adding Place and Route, TCAD, DFT) and a full-flow offering including digital design and foundry EDA by end-2027, supported by over 1,500 R&D staff and acquisitions. Digital design EDA growth is muted this year after strong 2025 orders from local GPU/CPU companies, as individual orders typically run about three years, though management remains constructive on the market's potential and localization demand. Goldman views share gains from product expansion and rising EDA localization positively but keeps Neutral, with a 12-month target of RMB125, implying 44.5% upside versus the September 11 close of RMB86.52, using a discounted P/E that applies 45x to 2029E EPS (global peers' historical average forward P/E) discounted back at an 11.5% cost of equity to 2026E. Forecasts: revenue of RMB1,979 million (2026E) and RMB2,765 million (2027E), EPS of RMB0.64 and RMB1.30. Key risks: customer additions and spending per account, competition, and talent pool and cost swings.