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Price hikes for mature nodes are translating from expectations into tangible earnings: Global capacity utilization for mature manufacturing processes climbed to 91% in Q3. Quotations for 90nm wafers rose 4% this quarter, with an additional 8% increase projected for Q1 next year. SMIC’s 8-inch fab capacity utilization reached 95.8%, while Hua Hong hit 109.5%. Both firms have raised prices for their 8-inch BCD platforms by roughly 10%.
Samsung Electro-Mechanics has signed a long-term supply agreement (LTA) for memory packaging substrates worth KRW 360.5 billion (approximately RMB 1.8 billion). This marks its first-ever LTA for packaging substrates and will be effective throughout 2027. Its seven LTAs signed this year amount to KRW 4.3 trillion in aggregate, confirming the trend toward long-term contracting for packaging substrates.
Hongchang Electronics plans to invest RMB 270 million in an advanced packaging film (GBF) project and no less than RMB 800 million in high-end copper clad laminate and prepreg projects. Domestic ABF-like materials are moving out of qualification and into capacity deployment.
Tianyue Advanced posted Q3 revenue of RMB 646 million, up 102.89% year-on-year. Its Jan–Sep net profit attributable to parent stood at RMB 27.2162 million, surging 2330.24% YoY. Revenue from 8-inch products accounts for over 50% of its total revenue, signalling an inflection point for profitability in SiC substrates.
Citi forecasts SK Hynix will report Q3 operating profit of KRW 81.3 trillion, a 614% year-on-year jump. Average selling prices for DRAM and NAND rose 28% and 24% quarter-on-quarter, respectively. Tight memory supply will persist into 2028.
In-depth Analysis
Optical Communications & Optical Chips: Fuxin Technology recorded revenue of RMB 505 million in the first three quarters, up 20.62% year-on-year; net profit attributable to parent reached RMB 49.0982 million, rising 50.04% YoY. Growth was driven by thermoelectric coolers (TECs) for high-speed optical modules. Q3 net profit climbed 83% quarter-on-quarter, signalling that power management components for the 1.6T era are entering an earnings delivery phase. Upstream materials: Yunnan Germanium posted Q3 revenue of RMB 632 million (+134.61% YoY) and net profit of RMB 102 million (+2642% YoY); its Jan–Sep net profit surged 869.79% YoY. AI data centers have boosted both sales volume and average prices of indium phosphide, further tightening supply of InP substrates. The medium-term view that CPO/NPO will form a mature ecosystem by 2027 remains unchanged, with no new order or capacity announcements released today.
Advanced Packaging & Testing: Samsung Electro-Mechanics signed an LTA for memory packaging substrates worth KRW 360.5 billion with global clients, effective from January 1 to December 31, 2027. This marks its first long-term agreement disclosed under the Packaging Solutions Division. For supporting capacity, KRW 4.27 trillion will be invested in FC-BGA production in Sejong and KRW 2.51 trillion in substrate equipment in Vietnam, totalling over KRW 8 trillion. On the materials side, Hongchang Electronics announced plans to invest RMB 270 million in a GBF advanced packaging film project, no less than RMB 800 million in high-end copper clad laminate and prepreg projects, and no less than RMB 190 million in Phase II automation works. Localisation of ABF-like films has entered the capital expenditure stage. In packaging and testing, Sunmoon Semiconductor (Chengdu) officially opened, focusing on SOIC, QFN, LGA and FC packaging with a planned annual capacity of 5 billion units. Weijin Advanced filed for IPO counselling. Lingxian Co., Ltd. expects to generate a profit of RMB 336 million in the first three quarters, returning to profitability, with earnings contributed by the consolidated AAMI lead frame business.
SiC & Power Semiconductors: Tianyue Advanced achieved Q3 revenue of RMB 646 million (+102.89% YoY), and Jan–Sep revenue of RMB 1.559 billion (+40.22% YoY). Revenue from 8-inch products accounts for more than 50% of the total, verifying volume ramp-up and price stabilisation for large-size substrates. LIPUS Yangzhou automotive-grade third-generation power semiconductor module base topped out. The project carries a total investment of RMB 1 billion, with Phase I investment of RMB 200 million. Upon full operation, it will deliver an annual capacity of 1.5 million SiC modules. Demand from AIDC and automotive markets remains robust; no new price increase notices were released today.
Memory & Compute Chips: Citi forecasts SK Hynix Q3 operating profit of KRW 81.3 trillion, up 34% QoQ and 614% YoY. Average DRAM selling prices rose 28% QoQ and NAND prices 24% QoQ. eSSD demand is projected to rise 52.9% YoY in 2027, with tight supply extending into 2028. Signs emerged that end-market demand is being suppressed by price hikes: Samsung cut next year’s shipment target for OLED Galaxy A models from 120 million units to 100 million units due to memory inflation, and total mobile phone shipments may fall more than 20 million units below the original 250 million plan. Hongxinyu passed the Hong Kong Stock Exchange listing hearing; proceeds will fund memory products and controller chips. Micron held a DRAM/HBM/NAND technical briefing on October 21.
Equipment & Materials: Chunpure Materials stated that core components for etching tools for 5nm and below nodes have achieved stable mass production, and component localisation is penetrating advanced process nodes. Data from JWEI Consulting shows the dry photoresist stripping equipment market is a duopoly: Lam Research holds 40% share and YiTang 33.7%. For silicon wafers, Eswin Materials showcased at the 9th Semiconductor Large Silicon Wafer Forum, with 12-inch supply-demand balance and domestic substitution as the core themes.
Wafer Foundry: Per Sigmaintell, mature-node capacity utilisation reached 91% this quarter. Prices for 8-inch and 12-inch mature processes will rise 4%–8% QoQ in Q1 next year. Specifically, 90nm quotations increased 4% this quarter and are set to rise another 8% in Q1 next year; 28nm and 40nm will climb 6% and 5% respectively in Q1 2027. Samsung and TSMC’s combined 8-inch capacity will drop 6% this year and another 2% next year, indicating rigid supply contraction. UMC’s Q3 shipments posted a high-single-digit QoQ gain, capacity utilisation exceeded 90%, and gross margin stood at roughly 35%. Vanguard International Semiconductor also reported utilisation above 90% with a roughly four-month order visibility window. Powerchip lifted DRAM wafer-in pricing by 45% in July, and 8-inch / 12-inch logic foundry prices increased 10%–15%. Domestic peers: SMIC’s 8-inch capacity utilisation is 95.8%, and Hua Hong’s is 109.5%.
Policy & Macro: A Pentagon official warned that export control tools will be deployed if AI labs fail to cooperate with the government. The Ministry of Commerce imposed export controls on shield machines and other items on October 19 (effective November 18), with limited new measures directly targeting semiconductors. On US markets, the Philadelphia Semiconductor Index (SOX) dipped as much as 2.3% intraday on October 20 before closing 0.23% higher at 11,342. BTIG noted the 10-day correlation coefficient between SOX and Apple is around -0.9, and advised trimming semiconductor exposure after rebounds.
Daily Investment Tips
1.Price hikes across mature nodes represent the most definitive thematic trend at present. That said, it is critical to distinguish between “structural tightness” and “broad overheating”: consumer electronics demand remains weak, and second-tier foundries are competing for orders via aggressive pricing, which may delay the pace of price realization versus guidance. We recommend focusing on foundry and analog players with high exposure to 8-inch BCD processes, NOR flash and MCUs. Meanwhile, watch out for secondary order impacts stemming from Samsung’s downward revision to mobile shipment targets.
2.Substrates and ABF-like materials are entering a phase where long-term supply agreements (LTAs) and capacity expansion reinforce each other. Samsung Electro-Mechanics’ LTA and Hongchang Electronics’ GBF project jointly signal tight supply into 2027. Nevertheless, domestic materials face a 1–3 year qualification cycle, limiting near-term earnings upside even as valuations have moved ahead of fundamentals.
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