A state-backed Shanghai company, Shanghai Aishengna Electronic Technology Group, began mass-producing China's first homegrown immersion deep-ultraviolet (DUV) lithography machines — roughly five units this year destined for chipmakers SMIC, Hua Hong and memory producer CXMT, with about 20 more planned for 2027, though reporting says overlay precision and build quality trail Western equipment. Within days, a US House committee criticised American toolmakers' sales to China and recommended further export curbs, and CXMT closed its 27 July Shanghai debut 466% above its offer price after raising $8.6bn — the largest mainland semiconductor offering on record, and a reminder that memory supply may grow faster than demand.

The scale check matters. ASML shipped 131 immersion DUV systems in 2025 alone, and China is guided to about 20% of its 2026 net sales, down from 33% in 2025. The domestic threat is real in direction and small in size.

The drawdown is broad, and it is not a stall

Fifteen of the sixteen makers of wafer-fab and test equipment tracked here are down from a 30 June peak — Ichor Holdings, which builds gas-delivery subsystems, worst at -41.6%, ASML mildest at -9.6%, with a median near -30%. Nine of them, including Applied Materials, Lam, Teradyne and ASML, lost their uptrend classification between 8 July and 6 August, their shorter-term averages rolling under after months above. Aehr Test Systems is the lone member above its June high; its outlier gain is the entire reason the group's average month reads flat rather than roughly -11%.

One housekeeping item: KLA's screen-reported losses of 78-89% are a data artifact, not a de-rating. KLA executed a ten-for-one forward stock split effective 11 June 2026 and raised its dividend 21%; the price history was never back-adjusted. Split-corrected, KLA is up 120% over twelve months and 10.7% over three.

Every large toolmaker is accelerating into the fall

ASML, which sells lithography, metrology and inspection systems and is the world's only source of extreme-ultraviolet (EUV) machines, grew second-quarter revenue 21.3% to €9.33bn — accelerating from +13.2%, +4.9% and +0.7% in the three prior quarters — at a 54.0% gross margin, with operating income up 29.7% on that 21.3% and full-year guidance raised to €43-45bn. System sales split 51% logic, 49% memory; EUV capacity for 2027 is being lifted about 30% to roughly 85 tools, which management says are nearly fully ordered.

Lam Research, which makes the deposition, etch and wafer-clean tools that build transistor structures, grew fiscal fourth-quarter revenue 30.0% to $6.72bn, its fourth consecutive acceleration, with operating income up 44.4% and full-year gross margin at 50.5% against 48.7%. KLA, whose inspection and metrology systems find defects on wafers, grew fiscal fourth-quarter revenue 15.2% at a 61.4% gross margin. Applied Materials, the largest supplier of materials-engineering tools, inflected from two declining quarters to +11.4% and has guided fiscal third quarter to about $8.95bn, roughly 23% growth; it reports after the close on 13 August.

Teradyne, which makes automated test equipment for chips, is the extreme: second-quarter revenue doubled to $1.329bn, operating income rose 382%, memory test hit a record $212m on high-bandwidth memory (HBM) and DRAM demand, and memory book-to-bill ran above 2x. Management also flagged the honest risks — compute orders were front-loaded into the first half, and test's share of chip capex, up from 4% in 2023 to 8%, may revert toward 6-7%.

Verdict A, business momentum: CONTRADICTS the move. The tape fell hardest on the names whose growth is compounding fastest.

Valuation says earnings are climbing, not falling

Every large name's forward multiple sits materially below trailing: Lam 53.8x trailing to 33.2x forward, on consensus FY27 revenue growth of 49.0%; KLA 54.4x to 36.6x on 33.9%; Teradyne 51.8x to 41.2x; Applied 49.2x to 42.8x; ASML 57.3x to 47.2x. Applied closed at $525.61 against a $635.41 average analyst target. The industry forecast agrees: SEMI projects 300mm fab equipment spending up 18% to $133bn in 2026 and 14% more to $151bn in 2027. Bank of America called the July drop a buying opportunity. Verdict B for the large front-end names: INCONCLUSIVE, tilted toward dislocation — the multiples embed the earnings, so the question is delivery, not arithmetic.

Aehr inverts both verdicts. The 138-employee maker of wafer-level burn-in systems saw fiscal 2026 revenue fall 15.2% to $50.0m with gross margin down to 35.3%; only the final quarter inflected, revenue +40.2% and back to profit, on record bookings of $60.7m, backlog above $100m and fiscal 2027 guidance of $130-150m. Its shares jumped about 30% after the July report. Aehr's own release calls HBM a potential roadmap application, not current revenue. At a $3.82bn market value, that is 75x trailing sales, 30x forward sales and 186x forward earnings. CONTRADICTS.

The setup

Where it stands — Chip-tool makers gave back roughly a quarter since 30 June on China and export-control headlines while their reported growth accelerated. Would confirm — Applied Materials printing fiscal Q3 revenue near its $8.95bn guide, about 23% growth, on 13 August. Would invalidate — Order or backlog commentary showing memory tool bookings slipping, or Teradyne's memory book-to-bill falling below 1x. Watch next — Applied Materials reports after the close on 13 August 2026; ASML's next quarterly bookings follow in October. Valuation — Lam 53.8x trailing, 33.2x forward; ASML 57.3x and 47.2x; Aehr 30x forward sales, 186x forward earnings.