China WFE: Stronger for Longer

We see China WFE TAM growing 23% each year in 2027/28, with sustained memory investment and accelerating localization supporting continued share gains for domestic WFE vendors. We forecast China WFE spending of US$45.6bn/US$55.8bn/US$68.6bn in 2026/27/28, implying 9%/23%/23% YoY growth, with China at 28%/25%/27% of global WFE. Growth is increasingly memory-led, as domestic DRAM and NAND manufacturers add capacity and localize key process steps. The bipartisan MATCH Act presents an underappreciated near-term execution risk but could accelerate localization of domestic etch, deposition and cleaning tools. We remain OW on Naura, AMEC and ACMR, lowering our price targets to Rmb788, Rmb428 and US$115 respectively given heavier R&D expenses and the previous share split.