Orient Securities: Emerging technology changes the characteristics of machine tool cycles, bringing increased resilience and opportunities for structural upgrades

The Zhitong Finance App learned that Orient Securities released research reports that the revenue of China's machine tool industry increased 7.1% year on year from January to July 2026. Among them, the metal cutting machine tool division increased 17.4% year on year, and the industry continues to thrive. Driven by emerging technologies such as AI and humanoid robots, the cyclical characteristics of the machine tool industry are changing. On the one hand, the industry's prosperity is expected to continue to increase, and on the other hand, leaders with high-end precision production capacity are expected to benefit structurally.

Orient Securities's main views are as follows:

The boom in the machine tool industry continues to rise, and demand in the technology industry changes the characteristics of the cycle

In the past, machine tool demand anchored capital expenses in traditional manufacturing industries such as automobiles and general molds, and the industry boom had strong cyclical characteristics, but the bank believes that the undertone of industry demand has changed recently. Driven by the technology industry, the boom in the machine tool industry no longer depends solely on stock equipment updates and traditional manufacturing restoration. The resilience of the industry has improved markedly, the characteristics of weakening cycles and strengthened growth are gradually showing, and fundamentals continue to improve. The bank saw a 7.1% year-on-year increase in revenue from China's machine tool industry from January to July 2026. Among them, the metal cutting machine tool division increased 17.4% year on year, and the industry continued to thrive.

The expansion of the emerging technology industry will continue to drive the growth of the machine tool industry

The bank believes that the core driving force behind this round of rapid growth in the machine tool industry comes from growing demand in emerging technology industries such as AI computing power construction and mass production of humanoid robots. Unlike the traditional manufacturing industry's phased inventory replenishment and equipment updates, capital expenses for AI liquid-cooled structural parts, humanoid robot joints, speed reducers, and precision shell parts will bring new demand for machine tools. The bank expects that as mass production of humanoid machines progresses and global AI computing infrastructure expands, demand for production capacity construction of downstream precision components will continue to be released, and orders for machine tools on emerging racetracks are expected to continue to increase.

Emerging technology industries put forward new processing requirements, bringing structural opportunities and benefiting leaders

AI and humanoid robot components differ from traditional manufacturing in terms of processing accuracy, equipment stability, material lightweighting, and complex curved surface processing capabilities. Traditional low- and mid-range general-purpose machine tools are more difficult to adapt to the processing requirements of emerging scenarios, and demand for high-end five-axis machines, precision grinders, and high-precision drilling and milling processing centers is expected to increase. The industry demand structure continues to shift to high-end precision, and the bank believes that the market share of leading companies that can match the processing requirements of emerging racetracks and have high-end precision production capacity is expected to increase.

Risk Alerts

Macroeconomic fluctuations have caused investment to fall short of expectations, demand for AI falls short of expectations, development of liquid cooling systems falls short of expectations, and rising raw material prices are dragging down corporate profits