Core Viewpoint - The strategic partnership between ASE Technology Holding Co., Ltd. and Analog Devices Inc. aims to enhance global supply chain resilience and manufacturing diversity through the acquisition of ADI's Penang facility [1][2]. Group 1: Acquisition Details - ASE plans to acquire 100% of Analog Devices Sdn. Bhd., including its manufacturing facility in Penang, Malaysia [1]. - The acquisition is expected to positively impact ASE's long-term financial health and business development, particularly in AI, automotive, and high-end industrial control applications [1]. - A long-term supply agreement will be established, where ASE will provide packaging and testing services for ADI [1][2]. Group 2: Operational and Market Implications - The acquisition is anticipated to enhance ASE's global manufacturing capabilities, providing greater operational flexibility and scale [2]. - ASE's COO believes this move will strengthen collaboration and provide superior packaging and testing solutions for ADI's high-performance analog, mixed-signal, and digital signal processing chips [2]. - The final agreement is expected to be signed in Q4 2025, with the transaction completion projected for the first half of 2026 [2]. Group 3: Industry Context and Growth Projections - The demand for advanced packaging and testing services is expected to surge, with ASE forecasting revenue growth from $600 million in 2024 to $1.6 billion by 2028, driven primarily by advanced packaging [2]. - The advanced packaging market is projected to reach $46 billion in 2024, growing at a rate of 19% annually, with expectations to hit $79.4 billion by 2030 [2].

Core Insights - TSMC's Q3 2025 revenue reached $33.1 billion, exceeding guidance and showing a year-on-year growth of 40.8%, with net profit increasing by 39.1% [1][2][3] - Global smartphone shipments in Q3 2025 reached 323 million units, a 2.6% year-on-year increase, driven by high-end models, while China's smartphone shipments declined to 6.8 million units, down 0.6% [1][4] Company Performance - TSMC's Q3 2025 revenue was $33.1 billion, surpassing guidance, with a year-on-year growth of 40.8% and a quarter-on-quarter growth of 10.1% [3] - The net profit for TSMC in Q3 2025 was 452.3 billion NTD, reflecting a 39.1% year-on-year increase and a 13.6% quarter-on-quarter increase [3] - The gross margin for TSMC was 59.5%, in line with guidance, with 74% of revenue coming from 7nm and below process technologies [3] Market Trends - The electronic industry is experiencing a moderate recovery, with a focus on structural opportunities in AI computing, AIOT, semiconductor equipment, key components, and rising storage prices [2][6] - The smartphone market is recovering, particularly in high-end segments, with Apple and Samsung leading in shipments, while domestic brands in China face challenges [4][5] Investment Recommendations - The industry is slowly recovering, with storage chip prices rebounding; however, caution is advised against chasing high valuations [6] - Companies to watch include those benefiting from strong domestic and international demand in the AIOT sector, as well as those involved in AI innovation and domestic supply chain replacements [6][7]

Group 1 - The global semiconductor industry is expected to grow from $631 billion in 2024 to over $1 trillion by 2030, with a CAGR of approximately 8% [1] - AI and High-Performance Computing (HPC) will be the core drivers of this growth, with their share projected to increase from 35% in 2025 to 48% in 2030 [1] - SEMI forecasts a 10% year-on-year increase in global Wafer Fabrication Equipment (WFE) capital expenditure in 2026, accelerating from 6% in 2025, indicating strong growth in advanced process logic and memory capital expenditures driven by AI [1] Group 2 - The semiconductor equipment industry may see a turning point in 2026, with advanced packaging equipment expected to reach a scale of $6.3 billion [1] - The semiconductor equipment ETF (159516) tracks the semiconductor materials and equipment index (931743), which selects listed companies involved in semiconductor material R&D, production, and equipment manufacturing to reflect the overall performance of the upstream semiconductor industry [1] - This index focuses on high-tech and high-growth potential materials and equipment sectors within the semiconductor industry, effectively reflecting the development trends and market dynamics of this segment [1]

Group 1 - The peak of the AI semiconductor cycle is expected to arrive in 2028, with Samsung Electronics and SK Hynix's performance projected to more than double compared to current levels [1] - NVIDIA's CEO Jensen Huang mentioned that data center investments could reach $1 trillion (approximately 1427 trillion KRW) by 2028, indicating a significant focus on AI semiconductor investments [1] - The performance of semiconductor stocks is unlikely to decline by 2028, and any potential downturn may only occur after the semiconductor sector enters a consolidation phase [1] Group 2 - The semiconductor market is currently dominated by commodity DRAM, but HBM and advanced foundry services are expected to take center stage starting next year [2] - HBM is transitioning from a commodity to a customized product based on orders, indicating a structural growth shift in the semiconductor industry [2] - AI server memory is predicted to account for 70% of the entire DRAM market next year, despite a slowdown in consumer demand [2]

Core Insights - The demand for AI and high-performance computing (HPC) remains strong, leading to full capacity utilization for TSMC's advanced packaging in the coming year [1] - Major players like ASE Technology and KYEC are also experiencing significant orders, prompting them to expand production [1] - The generative AI wave initiated by OpenAI is driving explosive growth in HPC orders from companies like NVIDIA and AMD, with demand expected to last at least until the end of next year [1] Group 1 - TSMC is the sole supplier of high-performance computing capacity for NVIDIA and AMD, with its 2nm and 3nm advanced processes and SoIC, CoWoS advanced packaging fully booked [1] - ASE Technology is accelerating its advanced packaging and testing outsourcing to meet the substantial demand from AI clients [1] - ASE's subsidiary, SPIL, is set to complete its new facilities in Erlin and Douliu next year, alongside the acquisition of a facility in Kaohsiung, enhancing its operational capacity [1] Group 2 - KYEC has successfully secured a major testing order from NVIDIA for high-performance computing, with GB200/300 orders currently in mass production [2] - The testing capacity for NVIDIA's upcoming Rubin platform is expected to commence by the end of this year [2]

Summary of TSMC's SiC Strategy and Industry Insights Industry and Company Overview - The document focuses on TSMC (Taiwan Semiconductor Manufacturing Company) and its strategy regarding Silicon Carbide (SiC) in the context of advanced packaging and AI chip demands [1][2][3] - Other companies mentioned include NVIDIA, AMD, Google, and AWS, highlighting the competitive landscape in AI and HPC (High-Performance Computing) [22][60] Core Insights and Arguments 1. Challenges in AI Chip Design - The increasing complexity and power demands of AI chips have made traditional power delivery methods inadequate, leading to issues like IR drops and transient voltage droops [5][6] - Single GPUs now require over 1000A of current, pushing legacy power delivery systems to their limits [6][22] 2. Innovative Solutions - Foundries and OSAT providers are proposing solutions like Marvell's PIVR and ASE's VIPack to optimize power delivery and thermal performance [8][9] - TSMC's CoWoS-L platform integrates IVRs and eDTCs to enhance power stability and reduce voltage drop [12][13] 3. SiC's Role in Advanced Packaging - SiC is emerging as a critical material for high-voltage ICs and on-chip power delivery, supporting developments in BSPDN and IVR architectures [19][20] - Its unique properties, such as high thermal conductivity and mechanical strength, position SiC as a key enabler for thermal management and optical interconnects [21][51] 4. Market Dynamics - The demand for ultra-large-scale GPUs and ASICs is driving the need for advanced materials and packaging solutions [22][23] - TSMC is exploring SiC as an interposer material to meet the increasing bandwidth and power demands of AI/HPC packaging [61] 5. Competitive Landscape - TSMC's advancements in SiC could provide a competitive edge over Intel and Samsung, who are also investing in power delivery and packaging technologies [60][61] - The introduction of SiC substrates into TSMC's platforms could reshape the AI semiconductor supply chain [59] Additional Important Insights 1. Bottlenecks in Process and Packaging Technologies - The document identifies three critical bottlenecks: thermal challenges, power delivery bottlenecks, and electro-optical integration demands [26][33][35] - TSMC is addressing these through diversified packaging solutions and exploring next-gen silicon photonics [38][39] 2. Future Directions - The integration of SiC into TSMC's advanced packaging platforms like COUPE could redefine the industry's approach to thermal, electrical, and optical challenges [59] - The document emphasizes the importance of overcoming challenges related to defect density, process compatibility, and cost structure for SiC adoption [66][67] 3. SiC in Optical Applications - SiC is also highlighted for its potential in optical waveguides, particularly for AR glasses, due to its high refractive index and thermal conductivity [68][75] - The combination of SiC with Micro LED technology is seen as a promising pathway for future AR displays [77] 4. Research and Development - Ongoing research is focused on the feasibility of integrating SiC with TSV structures to enhance power integrity and thermal management [64][65] - TSMC's patent portfolio indicates a strong commitment to SiC integration in advanced packaging technologies [65] This comprehensive analysis underscores TSMC's strategic focus on SiC as a transformative material in the semiconductor industry, particularly in the context of AI and HPC advancements.

Core Insights - Amkor Technology announced a significant investment to build a state-of-the-art semiconductor advanced packaging and testing campus in Arizona, increasing total investment to over $7 billion [2][3] - The project aims to enhance U.S. semiconductor leadership and will create up to 3,000 high-quality jobs [2][3] Investment Details - The expansion includes new cleanroom space and a second packaging factory, with a total investment exceeding $5 billion, bringing the overall investment to $7 billion [2] - The project will be implemented in two phases, with the first production facility expected to be completed by mid-2027 and operational by early 2028 [2] Strategic Importance - The new campus will focus on advanced packaging and testing technologies, complementing TSMC's front-end wafer manufacturing, thus establishing a complete domestic semiconductor manufacturing ecosystem [3] - The facility is strategically located in Arizona's high-tech corridor, leveraging local talent, infrastructure, and industry clusters [3] Industry Support - The project has received support from the CHIPS for America Program and advanced manufacturing investment tax credits [2] - Key industry leaders, including executives from Apple and NVIDIA, expressed their support, highlighting the importance of this investment for the U.S. semiconductor supply chain and innovation [3]

Investment Rating - The report rates the semiconductor industry as "Outperform" [1] Core Insights - The dual engines of storage and computing power are driving the AI era, with Q2 revenue for the top 60 global semiconductor companies increasing by 9% quarter-on-quarter, and an expected 8% increase for Q3 [12][15] - The semiconductor sector is experiencing a strong recovery, with various segments showing significant growth in revenue and profit margins [19][24] Summary by Sections Global Semiconductor Leaders - The top 60 global semiconductor companies saw a Q2 revenue increase of 9% quarter-on-quarter, with an expected 8% increase for Q3 [15][19] - The semiconductor sales for Q2 reached approximately $179.7 billion, with a year-on-year growth of 20% [15] - The expected Q3 revenue for these companies is projected to be around $225.5 billion, reflecting a year-on-year increase of 23% [15] Semiconductor Equipment - The semiconductor equipment sector's revenue increased by 4% in Q2, primarily due to sales growth in Taiwan [2][21] - Q3 revenue is expected to decline by 1% due to a decrease in guidance from equipment manufacturers [2][21] Semiconductor Silicon Wafers - The silicon wafer sector's revenue increased by 7% in Q2, with strong demand for AI products [3][24] - Q3 revenue is expected to remain flat, as demand for AI continues while inventory digestion in other areas takes time [3][24] Packaging and Testing - The packaging and testing sector's revenue increased by 9% in Q2, with an expected 14% increase in Q3 due to strong demand for advanced packaging [4][21] Upstream Manufacturing - The wafer manufacturing sector is benefiting from strong demand for advanced processes, with Q2 revenue increasing by 16% and an expected 6% increase for Q3 [3][21] Semiconductor Design - The storage segment is expected to see a revenue increase of 11% in Q3, driven by strong AI demand and geopolitical factors [4][21] - The MPU segment is projected to grow by 15% in Q3, supported by robust data center demand [4][21] - The RF segment is expected to rebound with a 14% increase in Q3, driven by the launch of the iPhone 17 series [4][21] Investment Recommendations - The report emphasizes the importance of focusing on companies within the AI supply chain and those that are undervalued or in a turnaround situation [11][24]

Summary of Key Points from the Conference Call Industry and Company Overview - The discussion centers around the semiconductor industry, particularly focusing on advanced packaging technologies and the role of Silicon Carbide (SiC) in AI chip design and manufacturing. Key players mentioned include TSMC, NVIDIA, AMD, Google, and AWS, with a specific emphasis on TSMC's strategies and innovations in packaging solutions [1][2][3]. Core Insights and Arguments 1. **Challenges in AI Chip Design**: The increasing complexity and power demands of AI chips have led to significant challenges in power delivery networks (PDNs) and thermal management. Traditional methods are becoming inadequate, with single GPUs now requiring over 1000A of current [5][19]. 2. **Innovative Solutions**: Companies like Marvell and ASE are proposing solutions such as Package-Integrated Voltage Regulators (PIVR) and optimized PDN platforms to address these challenges. TSMC is also innovating with its CoWoS-L platform, which integrates embedded voltage regulators and advanced thermal management techniques [7][10][11]. 3. **Emergence of SiC**: SiC is highlighted as a critical material for AI chip and system design due to its superior properties, including high thermal conductivity and mechanical strength. It is increasingly being viewed as essential for advanced packaging and heterogeneous integration [13][14][16]. 4. **Market Demand**: The demand for ultra-large-scale GPUs and ASICs is driven by generative AI and large-scale model training, with power consumption often exceeding 1 kW. This has exposed bottlenecks in thermal management and power delivery [19][20]. 5. **Bottlenecks Identified**: The exponential growth in AI computing has revealed three critical bottlenecks: thermal challenges, power delivery bottlenecks, and electro-optical integration demands. TSMC is actively addressing these through its 3DFabric strategy and various packaging solutions [22][28][30][32]. Additional Important Content 1. **SiC's Role in Advanced Packaging**: SiC is positioned as a hybrid integration enabler, linking power delivery, thermal dissipation, and optical interconnects. Its unique properties make it suitable for high-voltage integrated circuits (HVICs) and optical interposers [40][44]. 2. **Competitive Landscape**: TSMC's exploration of SiC as an interposer material could provide a competitive edge in thermal management and electro-optical integration, especially compared to Intel and Samsung, who are also advancing their own technologies [45][46]. 3. **Challenges Ahead**: The successful commercialization of SiC in advanced packaging faces challenges such as defect density control in large-size wafers, process compatibility, and cost structure improvements [53][54]. 4. **Future Directions**: The integration of SiC into TSMC's platforms like COUPE and CoWoS-Next could reshape the AI semiconductor supply chain, establishing new industrial advantages in the AI and high-performance computing (HPC) era [44][97]. This summary encapsulates the critical insights and developments discussed in the conference call, emphasizing the strategic importance of SiC in the evolving semiconductor landscape.

Group 1: Market Overview - The semiconductor technology is experiencing breakthroughs, enhancing chip performance and energy efficiency, with probe cards playing a crucial role in ensuring chip quality and performance [1] - The probe card market growth is driven by increasing demand from sectors such as automotive, communications, medical, and consumer electronics, particularly in MEMS probe cards [1] - The expansion of upstream wafer fabs is raising the overall test intensity, leading to higher prices and consumption of probe cards due to more stringent testing conditions [1] Group 2: Company Insights - Ingrasys focuses on high-frequency, high-end markets, with significant revenue contribution from vertical probe card products, and aims to increase its probe production capacity from 3 million to 4.5 million units this year [2] - Wangsu is experiencing strong demand from international clients, with its vertical probe card capacity reaching approximately 1.2 million units per month in Q2, and aims to challenge 1 million units for MEMS probe cards by year-end [2] - Precision Testing is expanding its market share in North America, supplying essential components for wafer and finished product testing, with recent product validations from major GPU clients [2]