Morgan Stanley: Global Semiconductor Equipment Demand Outlook
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Morgan Stanley projects robust growth for global semiconductor equipment demand in 2026, primarily driven by sustained investments in advanced process nodes. The firm estimates that worldwide semiconductor equipment capital expenditure will reach $120 billion, representing a 12% year-over-year increase. This expansion is largely fueled by logic chip investments, where equipment spending is forecasted to grow 15% due to sub-3nm node capacity expansions. Additionally, memory chip equipment spending is expected to rise 8%, supported by accelerated DRAM and NAND production.
Regional dynamics highlight China's ongoing localization strategy, with domestic equipment demand projected to surge 18%, outpacing the global average. Advanced packaging technologies are also experiencing exceptional momentum, anticipating 25% year-over-year growth. Overall equipment utilization rates remain notably high, averaging above 90%. This sustained demand is creating supply tightness, particularly in lithography systems where ASML maintains a robust order backlog. Etching and deposition equipment manufacturers continue to benefit from the increasing layer counts in 3D NAND architectures.
Consequently, Morgan Stanley maintains an 'Attractive' industry rating and has upgraded earnings forecasts for several leading equipment manufacturers. The firm assigns an 'Overweight' rating to Applied Materials (AMAT) with a target price of $200, and to Lam Research (LRCX) with a target of $650. ASML (ASML) retains a 'Hold' rating at a $950 target. Tokyo Electron also receives an 'Overweight' rating, targeting 40,000 yen. Growth may moderate to 5-8% in 2027, contingent upon macroeconomic conditions.