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Jefferies: WFE Is China's Primary Target; Deal, if Inked, To Benefit Domestic GPU and IDC Sectors
2026-05-14 12:23:16
Although market expectations are rising for NVIDIA Corporation (NVDA.US) to sell more advanced AI chips to China, China's primary goal remains acquiring Wafer Fab Equipment (WFE) to expand 7-nm wafer foundry capacity and improve production yield, Jefferies said in its report.

The broker believed technology localization is China's long-term strategic objective, and in the near term WFE represents the biggest bottleneck to achieving localization. Therefore, for China, US WFE is far more attractive than US AI chips.

US President Donald Trump may, in negotiations, require China to purchase more US AI chips as a condition for obtaining advanced WFE, in order to ensure China does not easily reduce its reliance on US technology.

The broker believed such a move would benefit China's AI and IDC industries. In the most ideal scenario, China would be able to purchase both US AI chips and advanced WFE, which would be most favorable for the relevant sectors.
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AASTOCKS Financial News
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