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TSMC is considering a 10%–20% price hike for CoWoS. Demand has spread beyond GPUs to server CPUs and custom ASICs. Lead times for chip equipment have extended from 3–6 months to 6–8 months; customers prioritize delivery schedules over negotiating prices. Advanced packaging has emerged as the second major price-increase cycle after memory.
TSMC’s A14 (mass production in 2028) shrinks the high-density 6T SRAM cell to below 0.017 μm², representing a reduction of over 19%. This marks the first meaningful SRAM density improvement since N5, breaking an eight-year bottleneck, and the process is currently in pilot production.
Infineon announced an approximately €1.1 billion investment in Villach, Austria, to build the world’s first large-scale 300mm (12-inch) GaN power semiconductor facility. Production will start at end-2027, with full investment completed by 2034.
Apple launched the 14-inch MacBook Pro and iMac powered by the M6 (2nm) chip. The MacBook Pro starts at USD 1,999 and goes on sale on November 6, signalling the ramp-up of 2nm PC end products.
RBC forecasts HBM prices will rise 80%–100% in 2027, and DRAM contract prices will climb roughly another 15% in Q4, with tight supply lasting into 2027. The Philadelphia Semiconductor Index rebounded about 7% over two sessions to 11,527.
In-depth Analysis
Optical Communications & Optical Chips: CPO-related names rebounded on October 27. Fujing Technology hit the daily limit, with Aofei Optics, Changxin Bochuang and Robotek following higher. The catalyst came from Lumentum’s CEO: some optical component capacity is pre-booked through early 2029, and customers are locking in capacity for 2030. Even with capacity expansion, roughly 70% of demand will remain unmet in 2027. Consolidation is underway on the equipment side: Yifei Laser plans to acquire 100% equity in Xingqihang for RMB 400 million. The target covers TO-CAN, COB, BOX and FA coupling equipment, with product lines extending to CPO and high-speed coupling for 1.6T and above. 3PEAK reported Q3 revenue of RMB 1.086 billion (+86.77% YoY) and net profit of RMB 303 million (+401.54% YoY), backed by steady growth in optical module order intake and shipments. In public fund Q3 filings, Innolight retained its top overweight position, Eoptolink rose to second, and Yuanjie Technology entered the top ten.
Advanced Packaging & Testing: The proposed CoWoS price hike stood out as the strongest signal of the day. Longer AI chip test cycles are further squeezing packaging and testing capacity, and equipment lead times have stretched from 3–6 months to 6–8 months. Citi initiated coverage on ASMPT with a “Buy” rating and a HK$250 target price, bullish on upward capital expenditure from OSATs and capacity expansion by domestic players such as JCET. Westest Technology posted Q3 revenue of RMB 609 million (+35.86% YoY), and its Jan–Sep non-recurring net profit rose 50.34%. It plans to invest RMB 1 billion for Phase II of its Shanghai headquarters, which will go into operation in December 2028. The Annual Packaging & Testing Conference will be held in Nanjing from November 4 to 6, attended by Huatian, JCET, Tongfu, BOE and Yuntian Semiconductor. No new price or order announcements for ABF films and IC substrates were released today, yet the CoWoS price increase creates expectations for cost pass-through to substrates and ABF films.
SiC & Power Semiconductors: Infineon’s 300mm GaN facility (operational at end-2027) marks the most landmark event for the sector. Larger wafer sizes will substantially lower GaN unit costs and accelerate penetration of 800V DC power distribution in data centers and on-board chargers (OBC) for vehicles. Domestically, Yangjie Technology recorded Q3 revenue of RMB 2.668 billion (+40.93% YoY) and net profit of RMB 462 million (+24.22% YoY, +19% QoQ). Revenues from automotive, AI data center and SiC businesses all more than doubled. That said, SiC prices did not follow the uptrend. Silan Micro clarified that its second-half price adjustments exclude SiC. The sector features rising shipment volumes with stable pricing and structural divergence.
Memory & Compute Chips: RBC forecasts SK Hynix Q3 revenue of KRW 101.2 trillion. DRAM contract prices rose 20% QoQ in Q3 and are set to climb another 15% in Q4, with the upcycle expected to extend for five more quarters. Musk stated that memory consumption for robots will exceed that of all existing computing devices, and robots will deploy low-power DRAM instead of HBM. The Bank of Korea projects chip output will rise next year while price gains moderate, and warned that if major US tech firms slow AI infrastructure spending, South Korea’s semiconductor exports could drop by USD 50–100 billion. ChangXin Memory became the fourth-largest overweight stock among public funds and is on track for inclusion in the STAR Composite Index (weighting ~15%) and the SSE Composite Index (4%–5%).
Equipment & Materials: Fuchun Precision posted Jan–Sep net profit of RMB 233 million (+522.10% YoY), demonstrating earnings leverage from component localization. AMEC noted that 3D NAND, 3D DRAM, advanced packaging, backside power delivery and other 3D architectures raise the value content of etching, thin film, metrology and CMP. The impact of the 15% price hike by three Japanese photoresist suppliers effective October 1 continues to propagate. No major new updates for lithography tools, silicon wafers or electronic specialty gases today.
Wafer Foundry: TSMC’s A14 SRAM scaling represents the most critical density validation after N2, with its 2028 mass production timeline unchanged. Pricing power is extending from wafer manufacturing into packaging. SMIC and Hua Hong released no new capacity or pricing announcements today. Earlier 8-inch price increases (SMIC utilization 95.8%, Hua Hong 109.5%, ~10% hike for BCD platforms) remain effective.
Policy & Macro: Goldman Sachs commented that semiconductors now exert far greater influence on financial markets than oil, although sentiment has not yet fallen into the historical buying zone. The new US rules on investment restrictions targeting China remain under consultation; no additional controls took effect today.
Daily Investment Tips
1. Price hikes in advanced packaging and extended equipment lead times are reshaping profit distribution. The CoWoS price increase benefits TSMC and the OSAT chain in the near term, yet equipment lead times of 6–8 months delay capacity expansion for second-tier packaging and testing players. Watch out for delivery gaps where order backlogs are strong but capacity ramps fail to materialize.
2. The power semiconductor sector shows divergence: GaN is moving toward larger wafer sizes while SiC prices have stalled. Infineon’s 300mm GaN roadmap lowers long-term costs. The volume-growth thesis for domestic SiC remains intact, though price upside is limited. The divergence between channel prices and contract prices across the memory chain (channel sales down 20%–30% in October) remains the key risk to monitor in Q4.
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