CICC: Advanced manufacturing leads structural recovery, domestic substitution and overseas expansion

The Zhitong Finance App learned that CICC released a research report saying that the total recovery of the industrial control industry is weak, but structural opportunities are outstanding. Since 2026, manufacturing profits have rebounded, but overall production expansion has been cautious. In this context, the 1H26 automation market size was +1.5% year-on-year. The recovery was mainly driven by capital expenditure and equipment updates in the advanced manufacturing industry, driving accelerated sales growth in products related to high-end equipment such as servos and CNC. Local leaders are using emerging industries to expand production and increase their share, and deepening overseas expansion opens up room for growth.

CICC's main views are as follows:

View by industry

The OEM market contributed the main increase, with machine tools/batteries/electronics/industrial robots being the main growth exposure. The growth rate differentiation of OEM and project-based markets increased, and the 1H26 scale was +7.7%/-2.1% year-on-year. Driven by advanced manufacturing, equipment updates, and the industry's own opportunities, 1H26 downstream machine tools/batteries/electronics/industrial robots were +8%/35%/14%/24%, contributing a total increase of 94%; the share of chemicals in the project-based market was 26% /-7% YoY as the main drag, and the electricity +12% YoY ratio was not offset.

View by product

Servo/CNC benefits from multi-axis and high-end machine tool upgrades leading the growth rate, and localization alternatives accelerate. 1H26 servo/CNC sales +21%/24%, 2q26 domestic share +3.7/4.9ppt to 64%/46% year over year; small/medium to large PLC sales revenue +15%/12%, supported by system-level automation expansion support such as electronic discrete manufacturing and batteries, domestic production share +3.0/1.3ppt to 38%/18%; HMI and low voltage inverters due to downstream dispersion, sales growth was only +10%/5% compared to traditional manufacturing dilution, domestic production share +2.5/0.5 to 64%/64%% The bank believes that among high-end equipment, products with high stand-alone value and strong technical barriers have large growth exposure and strong domestic replacement opportunities.

risk

Downstream demand fell short of expectations; raw material price increases were not sufficiently transmitted; competition intensified.