Looking at the performance of the semiconductor packaging and testing industry in 2024Q3, the industry continues to recover, with good performance, rising demand and high added value of advanced packaging gradually penetrating, jointly driving the industry's profit level to continue to improve, and inventory turnover days decreasing.
Finance and Economics APP learned that China Galaxy Securities released a research report stating that the integrated circuit packaging and testing industry's quarterly revenue performance is good, with the ongoing recovery of consumer electronics demand and continuous penetration of advanced packaging remaining the main driving forces for the industry's sustained growth.
Event: The half-year performance of the core integrated circuit packaging and testing companies such as JCET Group Co., Ltd., Tongfu Microelectronics, and Tianshui Huatian Technology has been announced. In 2024Q3, a total revenue of 22.379 billion yuan was achieved, a year-on-year increase of 13.39%; the total net income was 1.102 billion yuan, a year-on-year increase of 78.85%.
China Galaxy Securities' main points are as follows:
The semiconductor packaging and testing industry continues to recover, with good performance.
Looking at the performance of the semiconductor packaging and testing companies in 2024Q3, the 13 core testing companies achieved a continuous year-on-year growth in total revenue for four consecutive quarters. For example, China Wafer Level CSP and Weikete Technology had relatively large year-on-year growth rates, at 47.31% and 52.47% respectively; JCET Group Co., Ltd., Unisoc Electronics, X-PAK Technology, Key Technology, Lantron Electronics, HC Semitek, Tongfu Microelectronics, and Tianshui Huatian Technology all achieved year-on-year growth.
In terms of net income performance, Tianshui Huatian Technology, China Wafer Level CSP, Unisoc Electronics, and Weikete Technology had significant year-on-year growth rates of 557.42%, 115.57%, 175.9%, and 171.09% respectively. The arrival of the peak season for consumer electronics and the continuous growth in demand for advanced packaging are driving the continuous improvement in the performance of testing companies.
The profitability has improved, and the inventory turnover days have decreased.
In 2024Q3, the average sales gross margin of the integrated circuit packaging and testing industry was 14.57%, an increase of 1.16pct year-on-year and an increase of 0.17pct month-on-month; the average net margin was 4.34%, an increase of 1.3pct year-on-year and an increase of 0.38pct month-on-month.
From the perspective of inventory turnover days, in the third quarter of this year, the average turnover days of the packaging and testing industry were 58.71 days. Although there was a slight increase month-on-month, the overall trend is decreasing. The simultaneous improvement of profitability and operational capabilities indicates that the industry's utilization rate continues to rise. We believe that the gradual penetration of demand recovery and high value-added advanced packaging will jointly drive the continuous recovery of the industry's profitability.
Foreign-funded testing and packaging factories are adjusting their business layouts, while the merger and acquisition activities of domestic testing and packaging factories are increasing.
In recent years, under pressure from a series of foreign enterprises in the USA and considering the cost factors of the weakening demographic dividend and gradually rising labor costs in China, they have had to reconsider their business layouts in mainland China. Last year, many well-known enterprises including JCET Group Co., Ltd., Qorvo, and Simgui adjusted their strategies and sold their testing and packaging factories in mainland China. ASE and ChipMOS, the leading testing and packaging companies, also successively set up factories and increased investments in Vietnam and Malaysia.
In 2024, domestic testing and packaging factories are continuously constructing production lines and there is also an increase in merger and acquisition activities. Tongfu Microelectronics announced in April 2024 that it plans to acquire 26% equity of King Yuan Electronics held by KYEC through KYEC, thus entering the third-party testing field; JCET Group Co., Ltd. acquired 80% equity of Disc Semiconductor (Shanghai) Co., Ltd., and completed the delivery on September 8, 2024. We believe that the testing and packaging industry chain is currently facing adjustments and restructuring, and whether domestic testing and packaging factories can seize the opportunity during the window period of foreign factory exits and insufficient advanced packaging capacity is key to enhancing competitiveness.
Investment recommendation: It is recommended to pay attention to JCET Group Co., Ltd. (600584.SH), Tongfu Microelectronics (002156.SZ), Wingtech Technology (688362.SH), Tianshui Huatian Technology (002185.SZ), VTest Technology (688372.SH), and China Wafer Level CSP (603005.SH).
Risk warning: Risks of semiconductor industry recovery falling below expectations; risks of escalation in international trade frictions; risks of technology iteration and product certification falling short of expectations; risks of production capacity bottlenecks.
