Global Semiconductor Equipment: $200bn WFE in Sight
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Bernstein has significantly revised upward its 2026 to 2028 global wafer fabrication equipment (WFE) forecasts, driven by expanding memory capacity, particularly in DRAM, and stronger-than-expected demand from China. The 2026 WFE forecast is raised to US$148 billion, representing 21.4% year-over-year growth. Looking forward, 2027 WFE is projected at US$175 billion, growing 18.2%, while 2028 is expected to reach US$198 billion, marking 13% growth. Bernstein believes the US$200 billion WFE milestone is rapidly approaching.
China's WFE estimates for 2026 through 2028 were upgraded by US$2.3 billion, US$6.7 billion, and US$16.1 billion respectively, fueled by aggressive capacity expansions from YMTC and CXMT. Outside of China, global WFE growth is primarily pulled by DRAM, with 2027 DRAM WFE raised by US$3.4 billion to reflect 25% year-over-year growth. Additionally, the wafer-level packaging market is anticipated to expand from US$6 billion in 2025 to US$11 billion by 2028.
Bernstein maintains Outperform ratings on Applied Materials, Lam Research, and KLA, with raised target prices for LRCX to US$340 and KLAC to US$1,975. ASML remains the top pick in Europe. Among Chinese semiconductor equipment manufacturers, AMEC, NAURA, and Piotech are highly favored, reflecting strong domestic substitution trends and accelerating order growth. The firm expresses greater confidence that the current equipment spending upcycle may persist for multiple years.