VAT GROUP: Vacuum Valves Powering Every AI Chip Factory

VAT holds 70% of the vacuum valve market for etch and deposition tools, the equipment that builds AI chips at 2nm and below. Competitors lack the engineering depth to replicate VAT's precision, giving the company pricing power as chip complexity increases and fabs demand more valves per tool.

VAT operates over 1.5 million valves globally, creating a recurring service business that delivered 43.2% EBITDA margins in H1 2025. Q3 2025 service orders jumped 33% year-over-year as fab utilization rates improved above 90%, driving demand for spare parts, retrofits, and maintenance that turns past sales into compounding cash flow.

Semiconductor equipment sales reached $125.5 billion in 2025 and are forecast to hit $138.1 billion in 2026, driven by AI chip demand and leading-edge logic and memory capacity expansions. VAT captures this wave disproportionately because every advanced fab requires vacuum valves, and the company's nine-month 2025 sales surged 24% year-over-year to CHF 815 million.

• Memory Makers Ramp HBM Capacity: DRAM equipment sales are forecast to grow in 2026. High-bandwidth memory investments for AI are driving this growth. HBM production uses three times more wafers than standard DRAM. This requires additional fab tool installations. VAT supplies valves for these upgrades. Any HBM capacity announcement translates into valve orders within weeks.

• China Orders Find a Floor: China equipment spending remains the largest regional market. If orders stabilize rather than falling further, it signals VAT's revenue floor is holding. This removes a major downside uncertainty.

Advanced Fab Construction Peaks Mid-2026: Equipment spending is expected to climb in 2026. Leading-edge logic and memory capacity expansions are driving this growth. Management confirmed customers see early 2026 as the low point. Gradual improvement follows toward a record 2027. As TSMC, Intel, and Samsung ramp equipment installations, VAT's order intake accelerates. Leading-edge nodes demand more vacuum systems per tool.

• Chip Complexity Drives Valve Demand: Each new chip node requires more process steps. More etch, deposition, and cleaning means more vacuum valves per tool. TSMC's 2nm production ramps in 2026. As foundries scale these nodes, valve content per fab doubles versus prior generations. VAT grows faster than equipment spending because complexity drives incremental demand.
  

• Display and Industrial Diversification Kicks In: VAT serves OLED display manufacturing and industrial vacuum applications beyond semiconductors. If equipment spending plateaus, the company leans into display upgrades for foldable screens and AR/VR devices. Industrial applications like glass coating and solar panels also offer growth. These markets represent roughly 20% of sales but offer margin-accretive growth.

Semiconductor equipment spending swings violently with chip demand cycles. Q3 2025 orders fell 8% year-over-year to CHF 238 million as global uncertainties weighed on fab spending. If AI infrastructure buildout slows or memory chip oversupply returns, equipment orders drop 30-40% in months, directly hitting VAT's revenue since 84% depends on new tool installations.

China represents a significant portion of VAT's semiconductor sales, exposed to export controls and geopolitical restrictions. Tightening technology transfer rules or import bans on advanced chipmaking equipment could cut off access to this market overnight, eliminating a key growth driver with no immediate replacement.

VAT's 70% market share commands premium pricing when fabs are expanding, but Q3 2025 showed the downside: EBITDA margin guidance dropped to the lower end of the 30-37% range as customers demanded discounts during the spending slowdown. Strong FX headwinds pushed H1 2025 reported margins to 29.6% versus 31.2% at constant currency, showing how quickly pricing power disappears.