Jefferies Names AMEC Top China Semiconductor Equipment Pick

Jefferies has named Advanced Micro-Fabrication Equipment Inc China (AMEC) as its top pick in China’s semiconductor equipment sector, pointing to strong second-quarter earnings, technological progress and rising demand from the country’s expanding memory chip industry.

The investment bank maintained a Buy rating on AMEC (688012.CH) and set a price target of RMB490, reflecting confidence in the semiconductor equipment maker’s growth prospects.

AMEC reported second-quarter 2026 revenue of RMB3.78 billion, representing a 35% increase from a year earlier and a 30% rise from the previous quarter. Gross margin reached 39.6%, about 0.8 percentage points above analyst expectations, potentially supported by a favorable product mix.

Net profit climbed 382% year over year to RMB1.90 billion, substantially exceeding market forecasts and strengthening Jefferies’ positive outlook on the Chinese chip equipment company.

AMEC is also expanding its semiconductor manufacturing technology portfolio. Its 90:1 ultra-high-aspect-ratio etcher has successfully completed customer validation, with repeat orders expected by 2027. Management said more than 20 types of equipment are currently under simultaneous development, with development cycles of two years or less.

The company already provides more than 50 equipment types covering over 30% of front-end semiconductor process equipment. Over the next five years, AMEC aims to address more than 60% of the high-end front-end equipment market and over 70% of the advanced packaging equipment segment.

China’s accelerating memory chip capacity expansion could provide another major growth driver. Industry checks indicate Chinese memory fabs could add more than 100,000 wafers per month of capacity in 2026, supporting demand for semiconductor manufacturing equipment, particularly etching systems.

AMEC is well positioned to capitalize on that investment cycle, with memory-related products accounting for roughly 60% to 70% of its orders. Contract liabilities remained elevated at approximately RMB2.8 billion at the end of the second quarter, signaling healthy forward demand.

Following the results, Jefferies raised its average 2026-2027 revenue forecasts by 10% and net profit estimates by 31%, citing an increasingly favorable business outlook for AMEC.