Citi Comments on US Semiconductors and China Restrictions: 'fundamental investor concern remains an uninspiring flat to up 2026 WFE setup'
Citi Comments on US Semiconductors and China Restrictions: 'fundamental investor concern remains an uninspiring flat to up 2026 WFE setup'.
The analyst comments "Bloomberg reported today that Biden government China export controls could be more lenient, with fewer Huawei suppliers impacted, omission of leading DRAM maker CXMT, and HBM memory restrictions. Our base case $105B WFE or +5% in 2025 assumes no CXMT ban (only Swaysure) and ~$1B WFE cut from HBM sales into China assuming China ~15% of HBM demand and HBM low teens of WFE. We expect the group to rally near-term post fears of wider China restrictions. That said, we believe the fundamental investor concern remains an uninspiring flat to up 2026 WFE setup (China flat to down again assuming ~20-25% China normalized equipment sales & uncertainty around international HBM DRAM spend). We remain defensive on the group or Phase 3 and await: a) DDR4 and NAND memory prices to hit cash costs; b) group estimate revisions to bottom (still 20% above trough), and/or c) -10% 2025 WFE bear case."