Bernstein: Japanese and European Semiconductor Equipment Suppliers Contemplating Price Increases, Sector May See a New Catalyst

BlockBeats News, June 15th - Wall Street investment bank Bernstein stated in a recent report that semiconductor equipment companies are beginning to show signs of price hikes, and related stocks are expected to regain investor attention.

Over the past few months, the market has been more focused on commodity-type tech stocks as price hike expectations have emerged in areas such as storage, analog chips, wafers, and packaging substrates. In contrast, equipment stocks, although benefiting from a long-term production expansion cycle, have lacked a clear price catalyst. However, Bernstein believes that the price hikes in the tech commodity sector will eventually translate into capital expenditure expansion, and equipment manufacturers themselves also have room to raise prices.

Japanese equipment manufacturers are at the center of this change. The report points out that companies such as Tokyo Electron and Screen primarily price their products in yen, and over the past three years, the yen has significantly depreciated against the dollar, providing a basis for them to readjust prices. More importantly, manufacturers' attitudes are changing. Previously, equipment companies were cautious about price hikes, but now they have begun to reflect expedited delivery, material costs, labor costs, and the additional value brought by new models in their prices.

Tokyo Electron hopes to boost its gross profit margin to over 50% through more aggressive pricing and bring its operating profit margin closer to 35%. Screen is also implementing a two-stage price hike: first, discussing inflation-related price adjustments with customers, and then seeking a higher selling price around new products and additional features. Bernstein believes that Kokusai may also follow this trend.

This price hike logic is particularly beneficial for Japanese front-end equipment companies. In contrast, companies like DISCO, Lasertec, and Advantest have already experienced significant profit margin expansion, and their pricing currencies are more mixed, so the incremental impact of further price hikes may be more moderate.

European equipment leaders are also benefiting from product upgrades. The report mentions that ASML's new generation EUV equipment may lead to a significant price increase, and advanced packaging equipment manufacturer Besi will also benefit from product structure improvements. In the current tight supply environment, high-end equipment manufacturers can not only raise prices for new products but may also charge a premium for faster delivery.

Overall, Bernstein's assessment is that the investment logic for semiconductor equipment stocks is shifting from merely relying on customer production expansion to extending to price and profit margin improvements. With price hikes in areas such as storage and wafers driving a new round of capital expenditure, equipment vendors may also begin to reap the benefits of this cycle. For the market, companies like Tokyo Electron, Screen, Kokusai, and ASML will be key targets to watch to see if this round of price changes materializes.