Economic Observer reporter Zheng Chenye

From October 14th to 16th, the 2026 Bay Area Semiconductor Industry Ecological Expo (hereinafter referred to as "Bay Chip Expo") will be held in Shenzhen.

In Hall 1 of Shenzhen Convention and Exhibition Center, the booth of Shenzhen Xinkailai Technology Co., Ltd. (hereinafter referred to as "Xinkailai") is still the most crowded place in the venue. Visitors hold their phones and gather around the glass display cabinet to take photos, hoping to see if this local company in Shenzhen, which caused a sensation last year, will come up with new "surprises" this year.

In fact, this year's booth of Xinkailai's headquarters did not display new products. Instead, 16 models of etching, film and quantity testing equipment, such as "Mount Wuyi", "Changbai Mountain" and "Yuelu Mountain", were displayed on site, but only two new testing equipment were brought in the product manual.

However, at the same time, Shenzhen Wanliyan Technology Co., Ltd. (hereinafter referred to as "Wanliyan") and Qiyunfang Technology Co., Ltd. (hereinafter referred to as "Qiyunfang"), subsidiaries of Xinkailai, which debuted as a "surprise" last year, not only continue to launch new products this year, but the products that were first launched last year have also been widely implemented on the client side.

The staff of the Wanliyan booth told the Economic Observer that driven by the testing demand for artificial intelligence (AI) chips, high bandwidth memory (HBM), and 800G, 1.6T high-speed optical modules, the company's 90GHz ultra high speed real-time oscilloscope, which was first launched last year, has entered the research and development testing lines of several leading domestic enterprises. Currently, downstream order demand is quite strong.

The on-site staff of Qiyun Fang at the adjacent booth also introduced to reporters that the two schematic diagrams and printed circuit board (PCB) design software released last year have been implemented by more than 100 enterprise customers, and the number of engineers using the software has increased from 20000 last year to 50000.

The progress of Xinkailai's parent and subsidiary companies from product debut to delivery to customers is quite representative among exhibitors. The reporter visited and saw that from front-end equipment manufacturers such as Zhongwei Company (688012. SH), Tuojing Technology (688072. SH), and Micro Nano (688147. SH), to testing and cross-border manufacturers such as Huahai Qingke (688120. SH) and Jingzhida (688627. SH), they are all launching new products around AI needs, and multiple exhibitors have mentioned sufficient orders on hand.

However, there is still a gap between the intensive release of new products on the R&D side and the large-scale procurement of downstream customers. Several industry insiders interviewed told reporters that semiconductor equipment and industrial software are directly related to downstream production line yield and chip development efficiency. After a new product is launched, it often needs to go through a long process of client verification, process debugging, and supply chain ramp up.

So, how is the demand for AI computing power changing the technological direction of upstream devices and software? What challenges do local manufacturers face in the process of moving towards mass delivery?

Upstream equipment intensive iteration

The reason why wafer manufacturing equipment, testing instruments, and electronic design automation (EDA) software, which are at the top of the industry chain, are undergoing iteration is due to the driving force of AI computing power investment on chip manufacturing and testing demand.

The report released by the International Semiconductor Industry Association in July this year predicts that global semiconductor manufacturing equipment sales will reach 165.9 billion US dollars in 2026, driven by investments in advanced logic, storage, and advanced packaging, with a year-on-year growth of 23.2%; According to data from the Ministry of Industry and Information Technology, the national production of integrated circuits reached 386 billion yuan from January to August this year, a year-on-year increase of 22.3%.

In addition to the expansion of production capacity, the change in the internal manufacturing structure of chips is the direct reason for driving the replacement of upstream equipment.

On October 14, Mao Junfa, an academician of the CAS Member, mentioned in his opening speech at the Bay Core Exhibition that as Moore's Law nears its limit, the focus of competition in the post Moore era is shifting from planar transistor miniaturization to three-dimensional interconnection and system level integration.

On the same day, Cong Hai, Senior Vice President of Zhongwei Company, also analyzed at the Wanxin Exhibition Wafer Manufacturing Summit that AI servers, 3D flash memory, HBM, and advanced packaging are pushing chip manufacturing into the 3D era, and the core competitiveness of equipment companies is shifting from single point processes to full stack platforms.

The so-called 'three-dimensional era' refers to the internal structure of chips no longer relying solely on miniaturization on a plane, but instead being stacked vertically in multiple layers. For example, the stacking layers of three-dimensional flash memory are developing towards 300 to 500 layers or more, while advanced logic chips are evolving towards nodes of 7 nanometers or less.

During the interview, the reporter learned that in the pre wafer manufacturing process, chips are stacked vertically, which requires etching equipment to process deeper and finer vertical micropores on the silicon wafer; On the other hand, as the size of nanoscale interconnects shrinks, the resistance of traditional conductive materials increases. Thin film deposition equipment manufacturers need to cooperate with downstream introduction of new materials such as molybdenum and ruthenium, as well as new filling processes.

Around these new process requirements, domestic front-end equipment manufacturers are accelerating their upgrades. Taking Zhongwei Company as an example, the company exhibited an extremely high aspect ratio etching machine that supports 70:1 to 90:1 ultra deep holes at the exhibition, and also launched a 12 inch atomic layer deposition (ALD) metal molybdenum equipment that grows thin films layer by layer with a single atomic thickness.

Cong Hai stated in his speech that Zhongwei Company has shortened the research and development cycle of new equipment from the past 3 to 5 years to within 2 years, and plans to invest nearly 13 billion yuan in the development of 102 new devices in the next 3 to 5 years, covering more than 60% of the high-end semiconductor equipment market in the next five years.

Micro conductive Nano and Tuojing Technology, which participated in the exhibition at the same time, also respectively launched the metal ruthenium ALD process and the flowable amorphous carbon thin film technology for filling complex three-dimensional structures.

While upgrading the performance of individual machines, front-end equipment manufacturers are also expanding horizontally to adjacent processes.

For example, as of the end of June this year, Zhongwei Company, which has over 8800 reaction stations in mass production on more than 220 production lines at home and abroad, is expanding its thin film and quantity detection product lines beyond etching; On October 14th, Micro conductive Nano also released a physical vapor deposition (PVD) equipment for sputtering materials onto wafers in vacuum, filling in the three mainstream thin film technology routes of ALD, chemical vapor deposition (CVD), and PVD.

Multiple industry insiders interviewed by reporters analyzed that the etching and multi-layer film deposition processes inside 3D chips are interrelated. If machines for different processes belong to different manufacturers, downstream customers need to coordinate parameters with different manufacturers when debugging yield, which takes a longer period of time; After a device manufacturer completes multiple technical routes, they can provide customers with cross process combination solutions, shortening the time for collaborative verification.

In addition to the front-end wafer manufacturing, the use of Chiplets (small chips with different functions packaged together) and advanced packaging such as 3D stacking in AI chips is also changing the role of back-end testing equipment.

On October 14th, Yu Bo, Senior Director of Marketing at Jingzhida, analyzed at the exhibition forum that with the rapid iteration of advanced packaging and the continuous improvement of chip integration and computing power density, testing and inspection are shifting from traditional post packaging checks to key links connecting the entire process of research and development, engineering verification, and mass production.

The forward movement of the testing phase directly drove the related equipment orders. Jingzhida has launched a full range of storage testing machines, self-developed computing chip testing machines, and probe cards connecting testing machines with wafers to the market for the first time at this exhibition. According to the announcement data, the company achieved a revenue of 804 million yuan in the first half of this year, a year-on-year increase of 81.17%. In January and September of this year, it also signed two semiconductor testing equipment contracts totaling 2.887 billion yuan (including tax), which is twice its annual revenue last year.

In the process of high-speed interconnection and system design, the upgrade of AI hardware is also driving the replacement of measuring instruments and EDA software.

From the solution demonstrated by Wanliyan on site, as the single channel signal rate of the server increases to 224G, its 90GHz oscilloscope can shorten the optimization time of the 224G signal from two weeks to 10 minutes through the built-in AI algorithm; The 65GHz optical sampling oscilloscope released in April this year reduced the four channel testing time of a single channel 200G optical signal to one-third of the traditional solution.

EDA software used for designing chips and PCBs is also evolving towards collaborative platforms. On October 14th, Su Liqing, CEO of Qiyunfang, unveiled the EDA system level electronic design toolchain at the exhibition.

Su Liqing introduced that in response to the complex PCB design requirements of high-speed computing equipment, this toolchain integrates schematic design, PCB layout, and manufacturability review into one platform, supporting multi role online parallel collaborative design. It can shorten the electronic design cycle by 20% and increase the success rate of hardware development by 30%.

Mass production delivery is not easy

AI computing power and domestic substitution have opened up demand space for upstream manufacturers, and the new products at each booth are also densely packed.

However, during the interview, the reporter found that developing a new product with standard parameters is only the first step. Local manufacturers still face many challenges in making new equipment, instruments, and software the main tools for downstream production lines and R&D lines.

In the field of wafer manufacturing equipment, although local manufacturers are rapidly increasing production in mature processes, they are still in the initial stage in some high-end categories.

According to a research report released by Bernstein in May this year, the overall market share of local manufacturers in the domestic wafer equipment market is 21% by 2025, with high etching (31%) and thin film deposition (27%), while volume detection is only about 10%, and ion implantation and lithography are lower.

In order to avoid homogeneous competition in mature categories, some top manufacturers have begun to extend to low localization rate links, but the technical and validation barriers in these blank links are also higher.

For example, taking the cross-border release of the first mid beam ion implantation machine by Huahai Qingke as an example, the staff at the Huahai Qingke booth told reporters that the model is still in the verification stage and is expected to achieve on-site application on the client side within this year. Ion implantation machine is a key equipment for changing the conductivity of silicon wafers, which integrates high voltage, high current, and strong magnetic field control internally.

Even if the equipment enters the downstream production line, a long verification cycle is required from single trial to bulk procurement. Several industry insiders interviewed told reporters that semiconductor manufacturing production lines have a large investment scale and are extremely sensitive to yield. After new equipment enters the production line, it needs to be repeatedly debugged and matched with upstream and downstream processes. The client verification cycle alone usually takes several months to more than six months.

At the same time, as domestic equipment procurement shifts from early single unit trials to batch imports, downstream customers' assessment requirements for suppliers are also increasing.

During the interview, the reporter learned that early customers mainly focused on whether single point technical indicators could replace imports when importing domestic equipment or components; In the bulk procurement stage, customers are more concerned about the stability of equipment's continuous operation throughout the year, consistency in multi batch delivery, and long-term component supply guarantee.

On the supply chain side, the supply capacity of upstream core components also constrains the pace of equipment mass production.

For example, Huahai Qingke introduced at the exhibition that the localization rate of its mid beam ion implantation machine has reached 95.6%, and it plans to achieve full localization by 2027.

An industry insider admitted to reporters that the further domestic equipment moves towards the last few percentage points of key components, the longer the time required for verification and replacement. In the field of high-end electronic measuring instruments in China, where over 80% of products rely on imports, breaking through from a single product to large-scale production of multiple categories also requires long-term investment.

During the interview, the reporter also learned that ultra-high frequency measuring instruments involve multiple aspects such as customized chips, high-frequency devices, and underlying algorithms. From the first device being finalized to achieving stable mass production in multiple batches, continuous ramp up of upstream core device yield and long-term engineering verification are required.

Looking at the lowest level of computing chip design, the most difficult breakthrough in the domestic chain is still chip level full process EDA.

At present, local enterprises such as Qiyunfang have achieved rapid commercialization, mainly focusing on board level and system level design software for schematics, PCBs, and advanced packaging substrates. However, the full process EDA toolchain for chip internal design still needs continuous research and development.

On October 15th, Huang Yu, Chief Scientist of Huawei Semiconductor EDA, stated in a speech at the Wanxin Exhibition Forum that in the exploration of improving chip performance through collaborative optimization at the four levels of devices, links, chips, and systems, the biggest challenge currently faced is the full process EDA tools, while process, engineering, and system design challenges also exist.

In short, from this year's Wanxin Exhibition, it can be seen that for local semiconductor upstream enterprises, the incremental demand brought by AI computing power has gradually landed on orders.

However, after the industry has gone through the early stage of product breakthrough, compared to the "surprise" brought by a new product release, the next step requires more patience, perhaps the long verification process from the launch of a single new product to achieving large-scale production.

(Author Zheng Chenye)