Bernstein: China Semis Tour 1H26 – Strong Demand, Rising Localization
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Bernstein conducted a China semiconductor research tour across Beijing and Shanghai in early March 2026, engaging with over 20 industry companies. The findings indicate that semiconductor demand remains stronger than expected, excluding smartphones, with most firms steadily gaining market share through technological breakthroughs and localization trends.
In semiconductor equipment, front-end capacity expansion continues robustly, and test equipment localization is accelerating. DRAM orders for Shanghai fabs are expected imminently, while additional Beijing and Hefei facilities are slated for 2027 to 2028. Advanced logic orders remain pending but could present the largest upside surprise. AI chip demand persists robustly, though capacity constraints remain the primary bottleneck. With Nvidia chips restricted, cloud service providers are gradually shifting to domestic suppliers, driving massive inference demand.
Within power discrete devices, Chinese foundry and integrated device manufacturer capacities are tightening, paving the way for price hikes. MOS pricing has already increased, with IGBTs expected to follow. For analog chips, new product launches are propelling market share gains, and pricing has stabilized, positioning the sector for a potential recovery this year. Bernstein assigns Outperform ratings to several key players, including NAURA, AMEC, SMIC, Cambricon, and Hygon, citing the dual tailwinds of demand recovery and accelerating domestic substitution. Export control risks remain, but customer de-risking makes localization largely irreversible.