Advanced packaging is an important technological path to meet the upgrading of storage and computing demand. With the recovery of the semiconductor cycle, the bottom of the packaging and testing cycle has been consolidated, and a new round of rise has begun in 2024H1. In terms of product structure, the operating income of products ranging from 10 to 30 billion yuan is 401/1288/60 million yuan respectively, with a continuous increase of the proportion of advanced packaging, which will exceed 50% in 2025.
It is reported on the WallstreetCN app that due to the recovery of computing and consumer electronics such as mobile phones, the recovery trend of the global semiconductor industry has been further established. For 2024, all institutions (except Future Horizons) predict that the prediction value is above 10%. AI is changing the data center and edge. The rapid growth of data center computing power and storage demand; AIPC and AI mobile phones at the chip and product ends on the edge are quickly advancing, and they will also drive the recovery of the entire machine and parts market. With the recovery of the semiconductor cycle, the bottom of the packaging and testing cycle has been consolidated, and a new round of rise has begun in 2024H1. Among them, the proportion of advanced packaging continues to increase and will exceed 50% in 2025.
The main points of Ping An Securities are as follows:
Review: Overall industry rebound is obvious, storage and logic lead growth
In September 2023, the industry emerged from the negative growth range and entered an upward cycle; since 2024, the industry has continued to rise, with a year-on-year increase of 15.70% in March. But this round of recovery is uneven, with huge regional and product differences. Looking at the regions, areas that are good at consumer and computing electronics, such as North America and Asia Pacific, have more obvious recoveries; Europe and Japan's products are more concentrated in the industrial, automotive, and other corridors, and the market pressure remains high; our country is a globally important manufacturer and exporter, and the output and export of integrated circuits have shown rapid growth.
Looking at the products, the storage market is rebounding rapidly, and both particle originals and module manufacturers are benefiting from it; logic circuits (including microprocessors) are benefiting from the recovery of consumer electronics and the rise in AI computing power; although the international market for analog circuits still has pressure, the domestic market has already initiated recovery. However, the fragility of this round of recovery still exists, and the demand for rising and high inventory coexists, and the worries of overcapacity still exist.
Trend: The upward trend in 2024 will continue, and storage and computing will still be the main characters
Ping An Securities believes that due to the recovery of computing and consumer electronics such as mobile phones, the recovery trend of the global semiconductor industry has been further established. For 2024, most institutions (except Future Horizons) predict that the prediction value is above 10%. WSTS raised its forecast for the spring of 2024 on June 7 to predict that the global semiconductor market will increase by 16.0% year-on-year; in 2025, the industry market size is expected to increase by 12.46%; looking at the country, North America and Asia Pacific regions (excluding Japan) will lead the growth, and Europe and Japan’s recovery will still require some time; looking at the products, the storage chip is expected to maintain high-speed growth in 2024, and the growth rate is expected to remain above 20% in 2025; logic circuits and microprocessors benefit from the outbreak of global computing chip demand and recover quickly; analog circuits are expected to still be in a downward channel in the short term.
Ping An Securities pointed out that AI is changing the data center and edge. The rapid growth of data center computing power and storage demand; AIPC and AI mobile phones on the edge at the chip and product ends are advancing rapidly, and they will also drive the recovery of the entire machine and parts market.
Bullish on the localization of the advanced packaging industry chain, with wide space for substitution
Ping An Securities pointed out that advanced packaging is an important technological path to meet the upgrading of storage and computing demand. With the recovery of the semiconductor cycle, the bottom of the packaging and testing cycle has been consolidated, and a new round of rise has begun in 2024H1. Among them, the proportion of advanced packaging continues to increase and will exceed 50% in 2025. According to Yole's forecast, the global advanced packaging market will reach 78.5 billion US dollars by 2028. NVIDIA, as the world's leading AI chip, uses a new wafer-level CoWoS/panel-level FOPLP packaging for its latest AI chips, proposing higher indicators for TSV/Bumping/TGV/RDL and other technologies, which will drive the development of advanced packaging equipment and the industrial chain.
The mainstream semiconductor packaging equipment mainly includes probe station, sorting machine, testing machine, dicing saw, placer, wire bonder, etc. In 2021, the domestication rate of dicing saw, placer, and wire bonder was less than 5%, and there is a broad space for domestic substitution in the future.
HBM: AIGC drives high-bandwidth memory demand, and the market potential is highlighted
The third phase of the National Large Fund is expected to continue to increase investment in upstream key equipment, materials, and parts related to semiconductors that match the manufacturing process, especially advanced processes and advanced packaging. It may also pay more attention to front-end advanced areas such as AI chips and HBM, which are currently relatively weak domestically. NVIDIA and AMD's development of AI chips will accelerate, and HBM (high-bandwidth memory) technology is expected to grow rapidly with the wave of artificial intelligence. According to Yole's data forecast, the high-bandwidth memory HBM market will grow from 14.1 billion US dollars in 2024 to 38 billion US dollars in 2029, with a compound annual growth rate during the forecast period (2024-2029) of 22%.
Investment recommendation: In 2024, with the support of AIGC and the good downstream demand, the semiconductor industry will continue to perform well. We maintain our rating of "outperforming the market" for the industry.
In the advanced packaging field, driven by various applications such as AI, computational power requirements are constantly increasing. As an important way to enhance computational power, the advanced packaging industry chain will continue to benefit. We recommend paying attention to leading packaging and testing companies, equipment and materials industry chains, and suggest focusing on Tongfu Microelectronics (002156.SZ), Xinqu Microelectronics (688630.SH), and monitoring Huahaichengk (688535.SH), GL Tech Co., Ltd (300480.SZ), and other companies in the field.
In the HBM (high-bandwidth memory) storage field, NVIDIA's AI super chip will drive explosive development of high-performance storage. The domestic NAND module and DRAM testing and packaging industry chains will benefit. We recommend focusing on targets such as Jingzhida (688627.SH) and Shenzhen Kaifa Technology (000021.SZ).
For the chip design sector, we suggest paying attention to companies such as Jiangbolong (301308.SZ), SG Micro Corp (300661.SZ), Naxin Microelectronics (688052.SH), Deming Li (001309.SZ), and Nianxin Technology (688484.SH).
Risk Warning: Risks include increasing supply chain risk, decreased policy support, lower-than-expected market demand, and slower-than-expected progress in domestic substitution.