Semiconductor Production Equipment_ Investment Strategy for 2025

Industry Overview * WFE Market: Expected to contract in 2025 with a -6% YoY growth rate, but expected to recover with a +6% growth rate in 2026. [4] * Front-End SPE: Demand is solid for cleaning equipment, particularly from companies like Tokyo Electron and SCREEN Holdings. [8] * Back-End SPE: Demand is more robust than front-end, driven by strong demand for AI devices and CoWoS applications. [9] * Advanced Packaging: Evolving rapidly with various types of advanced chip package technologies like 3D, 2.5D, and 2.1D/2.2D/2.3D. [10] * Hybrid Bonding: Increasingly adopted in advanced packaging, with Disco leading in hybrid bonding systems. [12] * Plasma Dicing: A promising technology in hybrid bonding, with KLA leading in commercialization and Panasonic Connect pursuing the technology. [15] Company Analysis * Advantest: Tester market bottomed out and expected to grow as demand for devices with long test times increases. Target P/E of 20.0x. [21] * Disco: Strong position in hybrid bonding processes with several systems for high-cleanliness grinders and edge trimmers. Target P/E of 25.1x. [18] * Tokyo Electron: Production lines for cleaning systems at full capacity, expecting high demand to continue. [8] * SCREEN Holdings: Production lines for cleaning systems at full capacity, expecting high demand to continue. [8] Risks * Upside Risks: SiC related equipment taking off, growth for HBM grinders, recovery in smartphone and semiconductor markets. [19, 22] * Downside Risks: Sluggish global demand for electronics, longer replacement cycle for smartphones, commoditization of SPEs. [20, 23]