【E-Maliang】Fuchang Precision: Platform-Based Dragon Head Riding the Domestic Substitution Wave, Capacity Release Imminent Expected to Drive Incremental Growth

(Source: Guotou Securities Research)

【Electronics - Ma Liang】Fuchuang Precision: Leading Platform Player Riding the Wave of Domestic Substitution, Capacity Release Imminent with Potential for Growth

Release Date: March 18, 2026

■ Leading semiconductor component manufacturer with a platform-based layout, building strong competitiveness. Fuchuang Precision is a leading domestic enterprise in semiconductor precision components. Through a platform approach, it has established core competitive advantages. The company’s products cover mechanical and electromechanical components, gas transmission systems, and other key categories. Its clients include mainstream domestic and international equipment manufacturers such as North Huachuang, SMIC, and Tokyo Electron. Additionally, the company has expanded its footprint through acquisitions, such as indirectly holding shares in Compart to strengthen its position in gas transmission systems. The company has experienced strong revenue growth, mainly benefiting from market demand and domestic substitution. However, in the first three quarters of 2025, proactive capacity building and talent investment led to significant increases in depreciation and labor costs, putting pressure on net profit and causing a slight decline in gross margin. As future capacity is released and scale effects emerge, the company’s profitability is expected to gradually recover.

■ Downstream demand drives growth in the component industry, with domestic substitution expected to accelerate. Driven by AI demand, global wafer capacity is expanding rapidly, especially in advanced process nodes, directly boosting demand for upstream semiconductor equipment. Precision components, as core parts of semiconductor equipment, account for over 90% of costs, and their market size continues to grow. Mainland China has become an important global semiconductor equipment market, providing vast growth opportunities for local component suppliers. Semiconductor equipment components are diverse and have high technical barriers, making them critical links in the supply chain. Currently, the domestic substitution rate for many high-end process components, such as valves and pressure gauges, remains below 1%, severely restricting the independent security and long-term development of China’s semiconductor industry. In this context, ensuring supply chain security and gaining technological dominance are urgent priorities. Domestic substitution of components is inevitable and likely to accelerate, creating opportunities for leading domestic companies.

■ Deepening market expansion and capacity release are expected to boost profitability. Fuchuang Precision continues to strengthen its market position and domestic leadership in semiconductor components through platform expansion, R&D, and acquisitions. In core product lines, the company has reached international competitive levels in mechanical components, capable of mass production for 7nm process equipment. It has also entered the international supply chain for gas, liquid, and vacuum systems. Through ongoing technological R&D, the company has made breakthroughs in high-performance coatings and high-precision valve assemblies. It has acquired Yisheng and indirectly holds shares in Compart, further enriching its product portfolio and expanding into non-metallic components and gas transmission systems. Capacity building is progressing steadily. The Shenyang factory is operating at full capacity, while Nantong, Beijing, and Singapore factories are in ramp-up stages, supporting future revenue growth. As the peak period of fixed asset investment passes and depreciation stabilizes, capacity release and scale effects are expected to gradually materialize, leading to marginal improvements in profitability.

■ Risk warning: Downstream demand falls short of expectations; R&D progress delays; capacity ramp-up progresses slower than expected; intensified market competition; profit forecasts and assumptions do not meet expectations.