HuaChuang Securities: Domestic complete machines and core subsystems accelerate breakthroughs, and the domestic substitution of lithography machines welcomes a singularity moment

According to the Zhitong Finance APP, Huachuang Securities released a research report stating that photolithography machines are the most complex and highest value segment in semiconductor equipment, and they are also a critical area that needs to be conquered in the process of domestic production. In 2024, China has become the world's largest procurement market for photolithography machines, contributing 41% to ASML's revenue. In the future, driven by policies, demand, and validation, domestic photolithography machines are expected to enter a phase of accelerated commercialization. The domestic complete machines and core subsystems are making breakthroughs and entering a critical stage of transformation from validation to mass production. It is recommended to pay attention to local manufacturers with core capabilities, such as Mloptic (688502.SH) and HCVAC (301392.SZ). The main points of Huachuang Securities are as follows: Photolithography machines are the most complex and highest value segment in semiconductor equipment, and they are also a critical area that needs to be conquered in the process of domestic production. As the core process of wafer manufacturing, photolithography plays a key role in transferring circuit patterns, with the single machine value ranking first among semiconductor equipment. According to data from Guanyan Tianxia Data Center, in 2024, photolithography machines will hold the highest market share of approximately 24% in semiconductor equipment. The evolution of photolithography machines follows the Rayleigh criterion (CD=k·λ/NA), continuing Moore's Law to drive breakthroughs in process nodes through shortening the wavelength of the light source, increasing numerical aperture, and optimizing process factors. 1) From mercury lamps to DUV and then to EUV, the wavelength is gradually shortened; 2) Immersion technology breaks through the refractive index bottleneck, increasing NA to 1.35; 3) Process factor optimization, including off-axis illumination, OPC, phase-shift masks, and multiple exposure, expands the process window; 4) The exposure method evolves from contact exposure to step-and-scan projection, establishing the modern mainstream architecture. The three core subsystems of the light source system, optical system, and stage system respectively carry the three key functions of energy supply, image formation, and precise alignment. The light source system continuously shortens the wavelength to improve resolution, evolving from mercury lamps, KrF, and ArF to EUV laser plasma sources; the optical system, as the imaging core, primarily uses high-NA refractive lenses in the DUV era, while in the EUV era, it shifts to a multilayer mirror system to adapt to the limits of light source wavelengths, significantly changing the architecture; the stage system is responsible for high-speed movement and high-precision alignment of wafers, evolving to dual-stage and magnetic levitation structures in immersion and EUV equipment, supporting high throughput and nanometer-level precision. The three systems work together to improve photolithography accuracy, yield, and capacity release, collectively building a barrier for the complete machine. Lessons from others can be used to improve oneself; reviewing the fifty-year history of leadership changes in the photolithography machine industry. American manufacturers took the lead due to the advantages of being the birthplace of semiconductors, while Japanese companies relied on precision optics and policy support to reach the top during the DUV era; ASML achieved a leapfrog surpassing through three generational upgrades: in 2000, the TWINSCAN dual-stage improved capacity efficiency, in 2004, immersion ArF broke optical limits, and in 2007, its market share surpassed Nikon. Subsequently, relying on exclusive breakthroughs in EUV light sources and joint investments with customers, ASML achieved mass production delivery in 2017, establishing its core position in advanced processes. At the same time, the company acquired Cymer, HMI, and Berliner Glas and deeply bound with Zeiss, forming a closed-loop barrier covering light sources, optics, and detection. In the global landscape, in 2024, the market shares of ASML/Canon/Nikon are expected to be 61.2%/34.1%/4.7%, with Canon and Nikon focusing on mature models such as KrF and i-line ASML has a high monopoly in the ArFi immersion and EUV fields. In the future, as ASML's High-NA gradually enters mass production, the "one super" pattern in the high-end market is expected to be further solidified. Demand, policy, and external environment resonate, and domestic substitution welcomes a catch-up window In 2024, China has become the world's largest lithography machine procurement market, contributing 41% to ASML's revenue. Currently, high-end lithography machines in China rely on imports, and under the joint blockade risks from the US, Japan, and the Netherlands, the pace of domestic production is imperative. The policy side's "02 Special Project" systematic layout exposes core links such as optics, dual-stage platforms, and immersion systems, promoting rapid iteration of domestic technology. Shanghai Micro Electronics and Huazhuo Precision have already made breakthroughs in 90nm ArF models and dual-stage platforms. In the future, driven by policy, demand, and validation, domestic lithography machines are expected to enter a phase of accelerated commercialization. Risk Warning: The pace of technological validation may fall short of expectations, downstream expansion demand may be less than expected, risks of raw material cost fluctuations, and risks of changes in the competitive landscape