Jefferies Taps AMEC as Top China Semiconductor Pick After 382% Profit Surge

Jefferies has named Advanced Micro-Fabrication Equipment Inc. China (AMEC) its top pick among Chinese semiconductor equipment makers, reiterating a Buy rating following the company's stellar second-quarter 2026 financial results. The firm highlighted AMEC's surging profitability and strategic position to capitalize on China's domestic memory chip expansion.

Explosive Quarterly Growth

AMEC (688012.CH) reported exceptionally strong performance for the second quarter of 2026, significantly outperforming analyst expectations. The results underscore the company's accelerating growth trajectory.

• Revenue: Reached Rmb3,776 million, a 35% increase year-over-year.
• Net Profit: Surged an astounding 382% year-over-year to Rmb1,895 million.
• Gross Margin: Expanded to 39.6%, beating estimates by 0.8 percentage points, which Jefferies noted was likely due to a favorable product mix.

Domestic Demand and Tech Edge Drive Outlook

Jefferies' bullish outlook is rooted in AMEC's exposure to the rapidly growing domestic memory fabrication market. Industry checks cited by the firm suggest Chinese memory fabs are planning to expand capacity by more than 100,000 wafers per month in 2026, creating significant demand for process equipment like etchers.

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With 60-70% of its orders linked to the memory sector, AMEC is a primary beneficiary of this trend. The company's solid demand pipeline is further evidenced by its contract liabilities, which stood at approximately Rmb2.8 billion at the end of the quarter.

Technological progress is another key factor. AMEC's advanced 90:1 ultra-high-aspect-ratio etcher has successfully passed customer validation, with repeat orders expected in 2027. Management also indicated that over 20 new types of equipment are currently in development.

Upgraded Forecasts

Reflecting the stronger business outlook, Jefferies maintained its price target of Rmb490.00 for AMEC's stock. The firm also raised its average revenue and net profit forecasts for the 2026-2027 period by 10% and 31%, respectively, signaling high confidence in the company's continued performance.