Jefferies has singled out Advanced Micro-Fabrication Equipment Inc China (AMEC) (688012.CH) as its leading pick within China’s semiconductor equipment sector following the company’s second quarter 2026 financial disclosure.
The firm maintained a Buy rating on AMEC and assigned a price objective of Rmb490.00.
AMEC posted second quarter 2026 revenue of Rmb3,776 million, an increase of 35% year-over-year and 30% sequentially. Gross margin widened to 39.6%, coming in 0.8 percentage points above analyst expectations, a gap Jefferies attributed to a favorable product mix. Net profit rose sharply, climbing 382% year-over-year to Rmb1,895 million, a result that materially outpaced consensus forecasts.
Operationally, AMEC reported progress on advanced tools. Its 90:1 ultra-high-aspect-ratio etcher cleared customer validation and the company expects repeat orders by 2027. Management disclosed simultaneous development of more than 20 equipment types, with development cycles of two years or less. At present, AMEC offers in excess of 50 equipment types and reports coverage of more than 30% of front-end semiconductor process equipment.
Looking ahead, the company has stated targets to capture over 60% of the high-end front-end tools market and more than 70% of the advanced packaging market within a five-year horizon.
Jefferies highlighted the potential upside from planned Chinese memory fabrication capacity increases. Industry checks cited in the analysis indicate more than 100,000 wafers per month of additional capacity from China memory fabs in 2026, a development likely to stimulate demand for process equipment, with particular emphasis on etchers. AMEC’s current order book exhibits a 60-70% memory exposure, positioning the company as a principal beneficiary should that demand materialize.
Contract liabilities remained elevated at approximately Rmb2.8 billion at the end of the second quarter 2026, which Jefferies interprets as evidence of solid forward demand. In response to these trends and AMEC’s reported performance, Jefferies raised its average 2026-2027 revenue forecast by 10% and its net profit forecast by 31%.
Context and implications
Jefferies’ call reflects a combination of strong recent earnings, demonstrated technological advancement in etching tools, and industry data suggesting meaningful Chinese memory fab capacity additions in 2026. Those factors underpin the broker’s upgraded company forecasts and support the Buy recommendation and Rmb490.00 price target.
While Jefferies’ commentary emphasizes upside from memory-focused demand, the company’s concentration of orders toward memory-related tools also highlights the linkage between AMEC’s near-term results and the trajectory of China’s memory fabrication activity.