J.P. Morgan: ASMPT sees stronger logic-chip packaging demand, while HBM equipment recovery is delayed

Why have logic chips become the main source of growth for thermocompression bonding?

Management expects demand for logic-chip thermocompression bonding (TCB) to remain strong, with demand from both foundries and outsourced assembly and test providers. JPMorgan estimates that ASMPT has a share of more than ninety percent of C2S equipment in the CoWoS-L ecosystem; C2W equipment also has room to grow as CPU demand remains solid and AI accelerators shift to SoIC packaging.
The company maintains its guidance that the potential market for TCB equipment will exceed US$1.6 billion in 2028. JPMorgan expects logic chips to account for 70%–80% of that market in 2027–2028; EMIB-T and panel-level packaging are expected to see a more pronounced ramp-up in 2028.
China’s advanced packaging capacity build-out is another source of incremental growth: management expects new orders in the next six months, and JPMorgan believes the company’s historical revenue exposure to China of more than 40% positions it to capture this opportunity.

Management expects memory TCB growth to remain sluggish in 2027–2028. HBM4E may remain at 8- or 12-layer stacks, below the previous expectation of 16 layers; the company attributes the change to tight memory capacity and trade-offs involving cost, bandwidth and heat dissipation.
ASMPT expects a more meaningful recovery in demand only by 2029, as 16-layer solutions see broader adoption. JPMorgan believes HBM TCB already accounts for only a small portion of the company’s advanced packaging revenue in fiscal 2026, leaving limited further downside.

Management says its second-generation hybrid bonding equipment is now close to the market leader in technical capability. It aims to begin customer qualification in the next 12–18 months and become a second supplier. JPMorgan expects logic chips to adopt the technology first and believes a breakthrough ahead of its expected 2028 ramp-up of 3D SoIC would expand the company’s advanced packaging market.
In optics, management expects second-half 2026 revenue to grow significantly from the low base of US$75 million in the first half, with strength continuing into 2027. The main drivers are 800G and 1.6T pluggable optical modules; the company also received volume orders for its high-precision bonding equipment for near-packaged optics (NPO) in the third quarter of 2026.

Strategic options for the SMT business remain under evaluation. Shipments and orders are currently strong, and most orders will convert into revenue over the next few quarters. Management attributes demand to AI servers, particularly from US cloud service providers; JPMorgan expects SMT revenue to grow 38% and 20% in 2026 and 2027, respectively.
Management expects a higher share of advanced packaging and AI server business to support group gross margin expansion, but tight equipment supply and rising component costs are creating pressure, with delivery lead times for many machines extending by about three months. The company is seeking to offset the price impact, and JPMorgan forecasts a group gross margin of 41%–42% in 2026–2028.
The bank forecasts year-on-year revenue growth of 15%–40% in 2026–2028, faster than operating expense growth in the low to mid double digits; operating leverage is still expected to improve even as R&D spending continues to rise.

The report says ASMPT shares fell 14% over the past week, while the Hang Seng Tech Index was broadly flat over the same period. Reasons included weaker sentiment toward AI infrastructure, a disappointing HBM TCB market size, and concerns about a near-term peak in orders and the advanced packaging opportunity in China.
JPMorgan maintains its Overweight rating and a June 2027 price target of HK$200, equivalent to about 24 times expected earnings over the next 12 months. The bank expects earnings to grow approximately 69% and 19% year on year in 2027 and 2028, respectively; its main basis is logic-chip TCB and the AI-driven SMT recovery.