Core Viewpoint - The company,卓胜微, has successfully validated and achieved scale shipments of products utilizing advanced packaging technology, with a focus on meeting the requirements of key clients by mid-2025 [1] Group 1: Product Development - Products employing advanced packaging technology have passed key customer validation and are now in scale production [1] - The production line specifically designed for advanced integration processes has successfully transitioned from technical implementation to large-scale production [1] Group 2: Market Application - Advanced packaging technology is particularly suitable for products with high demands on size and form, such as smart glasses [1] - Related products are currently being advanced in certain customer projects, although the overall market presence remains in the early stages [1]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 34.00 CNY based on a 50x PE valuation for 2025 [3][6]. Core Views - The company benefits from a stable core customer base and the AI wave, being the primary packaging supplier for AMD, which accounts for over 50% of its revenue in 2024 [11]. - The global advanced packaging market is expected to grow to 65 billion USD by 2027, with the company positioned to leverage advanced packaging technologies to enhance performance and reduce costs [11]. - The company is actively investing in capacity expansion, with a total planned investment of 6 billion CNY in 2025 to upgrade existing products and meet the demand for large multi-chip servers and AI products [11]. Financial Forecasts and Investment Recommendations - The company is projected to achieve earnings per share of 0.68 CNY, 0.86 CNY, and 1.08 CNY for the years 2025, 2026, and 2027 respectively, reflecting adjustments in revenue and expense rates [3][12]. - Revenue is expected to grow from 22,269 million CNY in 2023 to 34,393 million CNY in 2027, with a compound annual growth rate of approximately 11.6% [5][14]. - Operating profit is forecasted to increase significantly from 243 million CNY in 2023 to 2,369 million CNY in 2027, indicating a strong recovery and growth trajectory [5][14].

Core Viewpoint - The emergence of CoWoP technology by Nvidia is seen as a potential disruptor to TSMC's CoWoS technology, which has been dominant in advanced packaging for AI chips. The industry is debating whether CoWoP is merely a temporary trend or a significant shift in semiconductor packaging [1][3]. Summary by Sections CoWoP vs CoWoS - CoWoP (Chip on Wafer on PCB) integrates the packaging substrate with PCB, allowing for a thinner, lighter, and higher bandwidth module design compared to CoWoS (Chip-on-Wafer-on-Substrate). This integration reduces material and manufacturing costs while accelerating production timelines [2][3]. Market Impact - The introduction of CoWoP has sparked discussions about its potential to replace CoWoS and has raised questions about the future of TSMC's CoPoS (Chip-on-Panel-on-Substrate) technology, which is designed to address CoWoS's production bottlenecks [3][4]. Advantages of CoWoP - CoWoP offers several advantages, including simplified system architecture, improved thermal management, reduced substrate costs, and potentially fewer backend testing steps. It aims to solve issues like substrate warping and enhance NVLink coverage without additional substrate layers [4][5]. Challenges and Risks - Despite its potential, CoWoP faces significant challenges in commercial viability, particularly in scaling up for high-capacity GPUs. The transition from existing technologies to CoWoP involves risks, especially given TSMC's current high yield rates with CoWoS [6][7]. Industry Sentiment - PCB manufacturers express skepticism about CoWoP's ability to replace CoWoS in the short term, citing the need for substantial advancements across the entire supply chain. They believe that existing technologies remain adequate and that the transition to CoWoP will take considerable time [7][8].

Summary of Luvi Optoelectronics Conference Call Company Overview - **Company**: Luvi Optoelectronics - **Date**: August 20, 2025 Key Points Industry and Business Segments - Luvi Optoelectronics' revenue split for Q2 2025 was 85% from display business and 15% from semiconductor business [2][4] - Display business gross margin ranged from 30% to 35%, while semiconductor business gross margin was between 55% and 60%, with a 5 percentage point increase from Q1 [2][4] - Both business segments achieved double-digit growth [2][4] Semiconductor Business Insights - Within the semiconductor segment, devices accounted for 60% and packaging for 40% [6] - The rapid growth of IC mask business was noted, with major clients including Shenghe Jingwei and Jingfang [2][7] - The domestic semiconductor mask market is approximately 20 billion RMB, with advanced packaging masks accounting for less than 5 billion RMB [8] Expansion Projects - The Xiamen expansion project has a total investment of 2 billion RMB, with 11 production lines planned; the first phase will have 5 lines operational [9] - Expected revenue contribution from the first phase is around 200 million RMB in 2026, with full capacity potentially reaching 400-500 million RMB [10] - High-precision products from the Xiamen project are expected to have a gross margin of 35%-40% [11] Production Capacity and Equipment - Significant progress was made in H1 2025, including the arrival of a 40nm electron beam lithography machine, with trial production expected in H2 [3][5] - The company plans to advance to 14nm technology by 2027-2028 [17] - Equipment procurement for advanced processes is not hindered by international conditions [18] Market Demand and Competition - Demand for semiconductor and display products is expected to remain strong, with a focus on capacity and release rhythm for growth [12][13] - The domestic third-party mask market is estimated at 15 billion RMB, with new entrants like Jinghe impacting competition dynamics [20][21] Financial Performance and Projections - Q2 2025 exchange losses decreased significantly compared to Q1 [23][27] - The company anticipates better performance in H2 2025, driven by new equipment and production lines [33] - Depreciation costs are expected to peak in 2026, exceeding 100 million RMB, but revenue growth is expected to offset this [34] Strategic Goals - Luvi aims to capture 30%-40% of the domestic market share in display mask production within five years [32] - The long-term goal for the semiconductor sector is to achieve a 30% market share, with a dual focus on display and semiconductor businesses [32] International Expansion Plans - Currently, there are no plans to supply masks to South Korea, but the company is exploring opportunities in Southeast Asia and potential partnerships in the Korean market [35] Additional Insights - The company is actively working on domestic production of grinding substrates and has made investments in local manufacturers [22] - The verification cycle for new technologies like 40nm is lengthy, impacting the timeline for mass production [25]

Core Viewpoint - The company reported a steady growth in revenue and profit in the first half of 2025, driven by increased demand in the封测 industry, particularly in automotive electronics and memory sectors [4][5]. Group 1: Financial Performance - In the first half of 2025, the company achieved a revenue of 7.78 billion, representing a year-on-year growth of 15.81%, and a net profit attributable to shareholders of 226 million, with a year-on-year increase of 1.68% [4]. - In Q2 2025, the company recorded a revenue of 4.21 billion, an increase of 643 million compared to Q1, marking a new high for quarterly revenue; the net profit for Q2 was 245 million, up by 264 million from Q1 [5]. - The gross margin for the first half of 2025 was 10.82%, while the net margin stood at 3.02%. The company has been focusing on cost reduction and efficiency improvement, with sales, management, and R&D expense ratios decreasing year-on-year [5]. Group 2: Technological Innovation - The company has made progress in developing high-density memory and automotive-grade products, completing the development of ePoP/PoPt high-density memory and FCBGA packaging technology for smart cockpits and autonomous driving [6]. - The company has successfully completed the wiring of its 2.5D/3D packaging production line and has initiated research and development for CPO packaging technology, with key unit process development currently underway [6]. - The company has mastered advanced integrated circuit packaging technologies including SiP, FC, TSV, Bumping, Fan-Out, WLP, and 3D [6]. Group 3: Advanced Packaging Initiatives - The company has established a wholly-owned subsidiary, Huatiang Advanced, focusing on the development of products related to AI, XPU, memory, and automotive electronics, while promoting the maturation of 2.5D platform technology and FOPLP [7]. - Subsidiaries such as Huatiang Kunshan, Huatiang Jiangsu, Pangu Semiconductor, Huatiang Nanjing, and UNISEM are primarily engaged in advanced packaging business, with efforts to gradually release production capacity from various investment projects [7][8]. - The establishment of Nanjing Huatiang Advanced Packaging Co., Ltd. aims to accelerate the development of the company's advanced packaging business and expand its market share in the advanced封测 industry [8].

Group 1 - Huahai Qingsi Co., Ltd. has completed a strategic investment in Suzhou Bohongyuan Equipment Co., Ltd. [1] - Huahai Qingsi, established in 2013 and listed on the Shanghai Stock Exchange's Sci-Tech Innovation Board in 2022, specializes in semiconductor equipment manufacturing, including CMP, thinning, and cutting equipment [1] - Suzhou Bohongyuan, founded in 2016, focuses on high-precision grinding and polishing equipment for hard and brittle materials, successfully entering overseas markets [1] Group 2 - The power semiconductor sector is evolving towards higher efficiency and power density, particularly with the adoption of wide bandgap semiconductor technologies like silicon carbide and gallium nitride, which demand improved substrate material performance [1] - Advanced packaging technology is also raising stringent standards for substrate flatness and purity, driving increased market demand for silicon carbide and gallium nitride [1] - The collaboration between Huahai Qingsi and Suzhou Bohongyuan aims to leverage their expertise in precision manufacturing equipment to create a one-stop platform for thinning, grinding, and polishing equipment, expanding market opportunities [2]

Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The semiconductor industry is experiencing a recovery, which is expected to drive demand for the company's products. The company is anticipated to enter a period of accelerated performance in the second half of 2025 as production capacity is gradually released and orders are fulfilled [4]. - The company reported a revenue of 7.78 billion yuan in the first half of 2025, a year-on-year increase of 15.81%, and a net profit attributable to shareholders of 226 million yuan, up 1.68% year-on-year. The automotive electronics and memory orders saw significant growth [1][4]. - The company is actively investing in advanced packaging technologies, including high-density memory and automotive-grade products, which are expected to enhance its market position [2][3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 4.21 billion yuan, an increase of 6.43 billion yuan from Q1, marking a record high for a single quarter. The net profit for Q2 was 245 million yuan, up 264 million yuan from Q1 [1]. - The gross margin for the first half of 2025 was 10.82%, with a net margin of 3.02%. The company has successfully reduced its sales, management, and R&D expense ratios compared to the previous year [1]. Technological Advancements - The company has completed the development of ePoP/PoPt high-density memory and automotive-grade FCBGA packaging technology for smart cockpits and autonomous driving applications. It has also initiated research on CPO packaging technology [2]. - The establishment of a wholly-owned subsidiary, Huati Advanced, aims to focus on AI, XPU, memory, and automotive electronics applications, further enhancing the company's advanced packaging capabilities [3]. Profit Forecast and Valuation - The profit forecasts for the company are set at 994 million yuan for 2025, 1.38 billion yuan for 2026, and 1.60 billion yuan for 2027. The report anticipates a significant increase in net profit growth rates over the next few years [4][10].

Core Viewpoint - The article discusses the evolution and significance of on-die interconnects in advanced packaging technologies, highlighting the transition from traditional single-die packages to multi-die packages that require internal interconnects [2][6]. Group 1: On-Die Interconnects - On-die interconnects have become essential for signal transmission within chips, especially as advanced packaging allows for multiple components within a single package [2][6]. - The internal interconnect methods can be categorized into bonds and various interconnect structures, with bonding being a direct connection to the die or package substrate [2][6]. Group 2: Bonding Techniques - Bonding methods are broadly classified into three categories: wire bonding, C4 bump bonding, and direct bonding, with wire bonding being the oldest and still widely used for small dies [6][7]. - C4 bonding involves connecting solder balls directly to the die pads, allowing for higher connection density, particularly in BGA packages [20][24]. - Hybrid bonding, a newer technique, allows for direct bonding of metal pads without intermediary materials, enhancing connection reliability [38][39]. Group 3: Substrate and Interposer Technologies - Substrates in advanced packaging are similar to PCBs, consisting of alternating layers of metal wiring and dielectric materials, facilitating signal routing [47][50]. - Interposers serve as intermediary layers that enable multiple chip connections, improving signal integrity and reducing communication power consumption [58][61]. - The use of silicon interposers is prevalent due to their high wire density, although they are more expensive than organic materials [63][64]. Group 4: Material Considerations - The choice of materials for substrates and interposers is critical, with options including organic materials, silicon, and glass, each offering different performance characteristics [51][68]. - Organic interposers are being explored as a cost-effective alternative to silicon interposers, with ongoing developments in their manufacturing processes [69][70]. Group 5: Future Trends - The article emphasizes the ongoing research and development in hybrid bonding and interposer technologies, aiming to achieve tighter connection pitches and improved performance in future semiconductor applications [39][42][73].

Core Viewpoint - TSMC has launched a new advanced packaging platform called CoPoS (Chip-on-Panel-on-Substrate), which integrates the advantages of CoWoS and FOPLP, addressing warping and cost issues for large AI chips, positioning it as a key technology for next-generation efficient packaging [2][4]. Group 1: CoPoS Technology Overview - CoPoS technology utilizes a square panel design and replaces traditional circular silicon interposer with materials like glass or sapphire, significantly improving area utilization and yield for large AI and HPC chip applications [2][4]. - The panel sizes for CoPoS include 310×310mm, 515×510mm, and 750×620mm, targeting large-scale AI and HPC chip applications [4][5]. - TSMC plans to establish the first CoPoS experimental line in 2026 and aims for mass production by the end of 2028, with additional facilities in Arizona, USA [2][5]. Group 2: Comparison with CoWoP - CoWoP (Chip on Wafer on PCB) differs from CoPoS in that it uses a PCB instead of a glass substrate, focusing on high-end chip cooling and performance enhancement, while CoPoS emphasizes packaging efficiency and scalability [5]. - CoPoS is expected to significantly increase advanced packaging capacity for high-end AI chips, while CoWoP is more specialized for high-performance GPU chips [5].

Core Viewpoint - Huahai Chengke plans to acquire 70% of Hengsu Huawai's equity for 11.2 billion yuan, with a premium rate of 321.98%, and will raise 800 million yuan in supporting funds [4][6]. Group 1: Acquisition Details - The acquisition will result in a goodwill of 10.81 billion yuan, which will account for 74.97% of the combined net assets post-acquisition [4]. - Huahai Chengke's rapid acquisition follows the termination of a previous acquisition attempt by Debang Technology, which faced issues during due diligence [6][7]. - The acquisition is expected to enhance Huahai Chengke's international market presence and resource integration [9]. Group 2: Financial Performance - Huahai Chengke's revenue decreased by 12.67% and 6.70% in 2022 and 2023, respectively, but showed improvement in 2024 with a revenue increase of 17.23% [9]. - Hengsu Huawai's revenue for 2023 and 2024 was 4.61 billion yuan and 4.68 billion yuan, respectively, with a declining trend in external sales [10]. Group 3: Market Position and Competition - Huahai Chengke ranks second in domestic shipments of semiconductor epoxy encapsulation materials, while Hengsu Huawai ranks first [5]. - The acquisition will allow Huahai Chengke to leverage Hengsu Huawai's established brand and client base, including international customers [9]. Group 4: Risks and Concerns - The acquisition may face challenges in actual control post-acquisition, as Hengsu Huawai will maintain operational independence with a board comprising more original shareholders [12]. - High goodwill and accounts receivable levels raise concerns about potential financial risks, with accounts receivable increasing significantly compared to revenue growth [16].