Introduction#

Bernstein has spotlighted several companies in the chip testing and advanced packaging sector that are set to gain from the rising demand for artificial intelligence (AI) chips and the increasing complexity of semiconductor technologies. These firms provide essential equipment and materials for advanced packaging processes, which are crucial as chipmakers adopt more sophisticated methods to enhance performance for AI applications.

Key Players in Chip Testing#

Bernstein's analysis identifies four major companies in the chip testing sector:

1. DISCO#

DISCO is a leading supplier of grinders and dicers, making it a significant player in the advanced packaging landscape. The company’s equipment is vital for various stacking and packaging processes. Bernstein anticipates that as AI-related demand grows, DISCO will see an acceleration in CoWoS (Chip-on-Wafer-on-Substrate) capacity and an increase in capital expenditures for High Bandwidth Memory (HBM). Recently, DISCO reported a 9.7% rise in operating profit for the first nine months of its fiscal year, with third-quarter orders and sales exceeding expectations.

2. Advantest#

Advantest is well-positioned to benefit from the rising demand for System on Chip (SoC) testing, which is expected to increase as chips become more complex. The company is likely to see more test insertions, particularly in wafer-level and die-level testing. In its latest financial update, Advantest announced third-quarter revenue of 273.8 billion yen, surpassing analyst forecasts, with earnings per share at 108.41 yen.

3. BE Semiconductor#

BE Semiconductor is recognized as a long-term leader in the advanced packaging sector, especially due to its strong position in D2W (Die-to-Wafer) hybrid bonding. While the adoption of hybrid bonding may take time, Bernstein believes it will eventually be embraced in both logic chips and HBM. The company recently reported a 43% sequential increase in preliminary fourth-quarter orders, driven by demand from data center applications.

4. Ibiden#

Ibiden has seen significant benefits from upgrades in ABF (Ajinomoto Build-up Film) substrates and the adoption of new technologies like the Embedded Multi-die Interconnect Bridge. The company is expected to gain further as Nvidia transitions to new substrate technologies, which could double the value of ABF content.

These companies are positioned to thrive as the semiconductor industry evolves to meet the demands of AI and advanced technologies.