China was half their revenue in Q1, and they just guided it to 'greatly decrease' while raising full-year targets.
Thesis: Screen is attempting a high-wire act: swapping easy, high-volume Chinese legacy revenue for contested Leading Edge/Foundry wins without missing a beat. The 'Beat and Raise' track record is strong, but the structural headwind is severe. Management admits H2 details aren't 'hammered out' yet kept the raise. That's a hope-based forecast, not a backlog-based one.
Verdict: AVOID — Conviction: MEDIUM
Catalyst: S-Cube 5 operational ramp in H2. This capacity must be filled immediately by non-China orders to validate the substitution thesis.
Key Risk: China demand collapses faster than Foundry/Logic ramps up, leaving the new S-Cube 5 capacity underutilized and margins crushing.
The Tell: "As for the second half, we don't have the order finalized yet. So we haven't made the detailed analysis yet. So this is a -- we have committed to this figure, but..."
Friction Level: HIGH_FRICTION — Can Leading Edge/Foundry growth visibly replace the massive, high-margin legacy China revenue (51% of Q1) that is evaporating due to policy?
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