Daily Semiconductor Investment Insight | October 29, 2026

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JUMBO SHEEN

INVESTMENT

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Headlines

Marvell plans to acquire Lumentum, with the deal likely to be announced next week. Lumentum has a market cap of around USD 83 billion and Marvell approximately USD 221 billion. Marvell dropped over 10% after hours while Lumentum rose more than 15%, marking the start of consolidation in the AI optical interconnection sector.

Goldman Sachs sharply revised upward its optical module market forecast: the market size will reach USD 67.7 billion, USD 131.4 billion and USD 148.5 billion in 2026–2028, representing upward revisions of 33%, 81% and 115% versus prior estimates, with shipments at 548 million, 691 million and 729 million units respectively.

SK Hynix’s Q3 revenue topped KRW 100 trillion for the first time at KRW 104.62 trillion (+328% YoY), with operating profit of KRW 83.33 trillion (+632%, profit margin at 80%). HBM4 is shipping in full swing, and the company stated that its DRAM and HBM capacity will be nearly fully booked through 2029.

AI spending by cloud service providers is entering the return-verification phase. Alphabet posted Q3 revenue of USD 127.58 billion (+25%), but EPS of USD 2.12 was well below the consensus of USD 2.99. Capital expenditure came in at USD 51.36 billion, missing expectations, with free cash flow (FCF) of negative USD 9.1 billion. The stock fell 10% after hours. Microsoft Azure grew 48%, beating estimates.

Equipment outlook was revised higher again. Lam Research lifted its 2026 global wafer fabrication equipment (WFE) forecast to roughly USD 155 billion and expects the market to exceed USD 200 billion in 2027. ChangXin Memory was included in the STAR Composite Index (15.74% weighting). Bank of America initiated coverage with a “Buy” rating and a target price of RMB 65.

In-depth Analysis

Optical Communications & Optical Chips: Marvell’s negotiations to acquire Lumentum mark the largest M&A deal in the AI optical interconnection sector, with the transaction expected to close as soon as next week. Goldman Sachs raised optical module market size forecasts to USD 67.7 billion, USD 131.4 billion and USD 148.5 billion for 2026–2028 respectively. TFC disclosed that its CPO supporting components have entered mass delivery and will ramp gradually starting in 2027, while NPO remains at the sampling and qualification stage. AVIC Jonhon reported Q3 net profit of RMB 816 million (+172.13% YoY); Xiangtong’s optical communication business revenue doubled.

Advanced Packaging & Testing: Expectations for a 10%–20% CoWoS price hike keep rising, and equipment lead times have extended from 3–6 months to 6–8 months. Shennan Circuits posted Q3 revenue of RMB 10.478 billion (+66.29% YoY) and non-recurring net profit of RMB 1.858 billion (+102.78% YoY). E-Byte Technology plans to invest RMB 1 billion in a high-end AI computing PCB project (80,000 square meters per month). Qinghe Semiconductor completed its Pre-IPO financing and attained unicorn status (post-money valuation above USD 1 billion). The world’s first dual-mode C2W & W2W hybrid bonding tool has been launched, with an annual capacity of 200 sets. No new price quotes for ABF films or substrates today; domestic CBF/NBF/GBF materials are still in a 1–3 year product qualification cycle.

SiC & Power Semiconductors: No major new catalysts today. Prior themes remain intact: Infineon’s €1.1 billion 300mm GaN fab project, and Yangjie’s over 100% revenue growth across automotive, AIDC and SiC segments in Q3. On the materials side, Qinghe’s full production lines for SiC composite substrates and diamond thermal dissipation substrates are now in scaled delivery. SiC prices have not risen in tandem with other components (Silan Micro’s price adjustments exclude SiC). Watch ramp-up progress for 800V DC and automotive-grade main drives.

Memory & Compute Chips: SK Hynix delivered an 80% operating margin in Q3, driven by ramp-up of server DDR5 and 321-layer TLC enterprise SSDs (eSSD). It plans to distribute KRW 30 trillion in dividends and launch a share buyback-and-cancellation program of KRW 60 trillion. Goldman Sachs forecasts HBM blended ASP will surge 122% YoY in 2027 to USD 3.7 per Gb, with revenue jumping 230% to exceed USD 200 billion, and DRAM price strength extending into H1 2028. ChangXin Memory targets monthly capacity of roughly 300,000 wafers by year-end, accounting for 15% of global supply, with DRAM ASP set to rise around 9% in 2027.

Equipment & Materials: KLA reported FQ1 revenue of USD 4.14 billion (consensus: USD 4.04 billion), with FQ2 guidance of USD 4.5–4.9 billion. Lam Research upgraded its wafer fabrication equipment (WFE) forecast. Simgui increased its registered capital to RMB 4.28 billion (with Guosheng Capital participating). Yurun Silicon posted Q3 net profit of RMB 229 million (+372.25% YoY); Jingzhida’s semiconductor business revenue rose 157% YoY.

Wafer Foundry: No new wafer pricing updates today. Price increases in packaging and equipment are propagating along the industrial chain. Price hikes and high utilization for 8-inch and 12-inch mature nodes remain established trends (SMIC’s 8-inch utilization at 95.8%, Hua Hong at 109.5%). Focus on Q3 earnings from the two foundries for Q4 price guidance.

Policy & Macro: The Fed kept rates unchanged at 3.75%–4% (vote: 10–2, two members favored a hike), weighing on high-growth, high-valuation names. The proposed US rules on semiconductor and AI investment restrictions targeting China remain open for comments. The EU is discussing reduced imports from China, pushing up compliance costs for cross-border collaboration.

Daily Investment Tips

1. Consolidation in optical interconnection and upward demand revisions are reinforcing each other. The mass-production timeline for optical modules, optical components and CPO in 2027 will serve as the dominant thematic trend over the next two quarters. Nevertheless, keep track of M&A premiums and the pace at which CPO displaces pluggable solutions. On the risk side, Alphabet missed earnings estimates, posted negative free cash flow (FCF) and fell 10% after hours. Should cloud service providers guide down capital expenditure, the memory-equipment-advanced packaging chain will face pressure on both valuations and order books simultaneously.

2. The quarter-on-quarter gain in DRAM contract prices has narrowed from 90%–95% in Q1 to 10%–15% in Q4. The excess profits module makers have earned from low-cost inventory are nearing an end, which warrants caution.

Jumbo Sheen  Fund

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