Sealed testing giant Riyuguang disclosed its May performance yesterday. The company said that it benefited from the slow recovery of customer demand, and its May revenue reached a new high this year, the second highest in the same period in history.
In that month, it achieved a revenue of NT $47.493 billion, a month on month increase of 3.65% and a year-on-year increase of 2.71%. Among them, the revenue of the testing and materials business was NT $26.568 billion, a month on month increase of 5.5% and a year-on-year increase of 1.3%; In May, the cumulative revenue was 226.16 billion New Taiwan dollars, an increase of 2.57% year-on-year.
Sun and Moon also gave an optimistic outlook - looking at the business lines, the company is optimistic about the performance of its testing and sealing business this year. It is expected that the turnover rate will increase to over 60% in the second quarter, and it will further rebound in the second half of the year, driving the gross profit margin of the testing and sealing business to rise to the range of 24% -30%.
Looking at the domestic integrated circuit packaging and testing industry, according to Bank of China Securities, leading companies generally experienced a year-on-year increase in operating revenue and a year-on-year recovery in net profit attributable to shareholders in Q1 2024.
Changdian Technology's operating revenue in Q1 2024 was approximately 6.84 billion yuan, a year-on-year increase of 17%; The net profit attributable to the parent company was approximately 140 million yuan, a year-on-year increase of 23%. In Q1 2024, the operating revenue of Tongfu Microelectronics was approximately 5.28 billion yuan, a year-on-year increase of 14%; The net profit attributable to the parent company was approximately 100 million yuan, a significant year-on-year increase. Huatian Technology's operating revenue in Q1 2024 was approximately 3.11 billion yuan, a year-on-year increase of 39%; The net profit attributable to the parent company was approximately 60 million yuan, turning losses into profits year-on-year.
It is worth noting that the demand for high-end beta testing, represented by Chiplet, is expected to further increase. Sun and Moon stated that all applications will recover from the bottom, especially in the AI and HPC fields, which will continue to grow strongly, with growth rates higher than other applications.
At the same time, many institutions view high-end testing as a bottleneck on the supply side of computing power, and are optimistic about the elasticity of expanding production in this link. TSMC, the leader in wafer foundry, has provided a demonstration.
According to the report of Taiwan, China Economic Daily today, due to the hot sale of AI chips from Nvidia, AMD and other major manufacturers, the supply of advanced packaging capacity falls short of demand. It is reported from the industry that TSMC is trying its best to build the advanced packaging capacity of CoWoS, and the relevant equipment manufacturers have "full orders". TSMC's new CoWoS plant in Nanke Chiayi Park is entering the environmental impact review stage, starting to purchase equipment. At the same time, the planned construction of two new CoWoS plants in Nanke Chiayi Park is not enough, and TSMC is also rumored to be surveying the land of the third plant.
The recovery signal of the sealing and testing end industry is obvious, and high-end sealing and testing are more flexible
Huafu Securities stated that the semiconductor packaging and testing process, as a post production process of integrated circuits, has a high degree of consistency between its revenue and semiconductor sales. With the gradual recovery of semiconductor prosperity and downstream demand, the packaging and testing process is expected to benefit first and usher in new growth.
Guotai Junan also stated that with the recovery of downstream demand, the turnover rate of traditional packaging, which accounts for a relatively high proportion, has reached over 90%. Advanced packaging is gradually recovering with the recovery of overseas markets and the release of new products on domestic mobile phones. The inventory turnover days on the testing end bottomed out in 1Q21-4Q21 and gradually increased thereafter. The high inventory level in 1Q23 is similar to the level before the inventory was removed in 2019. As demand improves, it improves quarter by quarter. The inventory decline in 1Q24 accelerates, and the performance is poised for growth. On the price side, due to the rebound in demand and the soaring prices of upstream raw materials such as copper, gold, and tungsten, some packaging and testing factories have started to raise prices. The trend of price increase in 2Q24 has been confirmed, and the crop turnover rate has increased month on month. The performance of the testing end is expected to rise in both quantity and price, and continue to improve.
Huajin Securities stated that advanced packaging provides technical support to continue Moore's theorem and improve chip performance and integration. As the Chiplet packaging concept continues to advance, various industrial chains of advanced packaging (packaging/testing/equipment/materials/IP, etc.) will continue to benefit.