Why do AI chips need more test interfaces?

  • Probe cards are used for wafer testing before packaging; test sockets are used for final testing and system-level testing after packaging. Chiplets place multiple chiplets in a single package. Each type must be screened separately, and after assembly, checks are also needed for problems when different components operate together.
  • JPMorgan expects the potential market for high-performance computing (HPC) probe cards to grow from 1.6 billion dollars to 5.9 billion dollars from 2026 to 2028, while the market for final-test and system-level test sockets grows from 900 million dollars to 3.7 billion dollars.
  • The longer the test time, the lower the output from each test site, requiring customers to add parallel test sites; higher pin counts also increase the value of the product at each site. If test equipment efficiency improves faster than expected and test times shorten, expansion of the test socket market will be constrained.

Why does the bank prefer test sockets?

  • Probe cards have higher technical barriers and margins, but mass production after project qualification is usually concentrated among one or two suppliers. Capacity expansion by competitors can change the allocation of shares in the next generation of products.
  • There are fewer qualified suppliers of high-end test sockets. Early joint development, local engineering support and existing qualification records help sustain orders. JPMorgan therefore sees a clearer path from testing demand to WinWay’s share and profits, although it could still lose share during platform transitions.

What supports WinWay’s growth?

  • WinWay has more than 70% share of NVIDIA’s final-test sockets and entered its system-level test socket business in 2026. JPMorgan expects NVIDIA system-level test socket revenue to rise from 23% of WinWay’s total revenue in 2026 to 44% in 2028.
  • The bank expects WinWay’s HPC test socket pin capacity to rise to between 200 million and 250 million pins by 2028, about 4 times its previous level. Whether its share can carry over across platforms depends on service levels, product quality and consistent delivery.
  • Expansion will also weigh on near-term margins. The bank’s 2028 revenue forecast for WinWay is about 7% above the market consensus, but it expects a lower gross margin, leaving its earnings per share forecast roughly in line with consensus. Its MEMS probe cards also rely on externally purchased key pins and have lower margins than the test socket business.

Why is MPI rated only Neutral despite rapid expansion?

  • JPMorgan expects MPI’s MEMS pin capacity in 2027 to exceed 4 times its 2025 level, and the MEMS business’s share of total revenue to rise from 20% in 2026 to 48% in 2028. But Technoprobe and FormFactor are also expanding capacity, and whether the additional capacity becomes revenue depends on project qualification and customer allocation.
  • Probe card PCBs are becoming a supply bottleneck. MPI plans to raise the proportion of PCBs produced in-house from about 5% to about 50% in the second half of 2027, but ramping up mass-production yields for high-layer-count PCBs takes time, and lead times for related equipment exceed 12 months. Insufficient progress could limit probe card shipments.
  • CPO equipment is another variable. The bank’s model for MPI assumes that the second testing stage could be eliminated. After cutting related revenue in half, it expects that revenue to account for about 3% of total revenue in 2028; if the stage remains, there is upside potential for revenue.

How do the bank’s valuations of the two companies differ?

  • JPMorgan initiated coverage of WinWay with an Overweight rating and a target price of NT$7,500 for December 2027, valuing it at 26 times 2028 test socket-related earnings per share. It initiated coverage of MPI with a Neutral rating and a target price of NT$5,350, valuing it at 28 times 2028 earnings per share.
  • The bank retains a technology premium for probe cards, but the two target valuation multiples differ by only 2 turns, less than the 6 to 8 turns it says the market typically assigns. It expects compound annual growth in WinWay’s test socket-related earnings per share from 2026 to 2028 to be 108%, compared with 73% for MPI overall.