IC Packaging & Test (OSAT)

Let me start with cyclicality. After tracking these four quarters, the most obvious pattern is "Q1 dip, Q2 rebound, Q3 strength, Q4 stability" — 2026Q1 revenue fell back to 9.17 billion with gross margin at 14.5%, a textbook semiconductor packaging and testing off-season, nothing surprising there. So my core assumption for 2026Q2 is a seasonal recovery + continued ramp in AI advanced packaging, with revenue returning to around 9.85 billion, representing roughly 6% YoY growth versus 9.27 billion in 2025Q2, driven mainly by capacity ramp in 2.5D/Chiplet and overseas key-customer new programs entering mass production. My second key assumption is that product mix improvement will continue pushing gross margin higher. 2025Q4 gross margin surged to 15.3%, and I don't read that as a one-off — it's an inflection point driven by advanced packaging's rising share of the mix. Q1 dropped to 14.5% on soft utilization, and for Q2 I'm assuming a recovery to 14.8%. In Q3, peak-season utilization maxes out and, layered on top of further high-end mix optimization, I put gross margin at 15.2%. On the expense side, I assume R&D investment keeps climbing — this is the lifeline of the advanced packaging business, and it's not something you can cut. So operating margin recovers to roughly 5% in Q2 and stretches to 6.4% in Q3. Q3 net margin steps up meaningfully versus Q2, with net profit expected at 568 million, translating to EPS of roughly 0.32. The single biggest risk I want to flag: **the AI compute supply chain inventory cycle**. If overseas key customers' pull-in cadence on AI chips adjusts, 2.5D utilization will show up in gross margin immediately — that's the wake-up call the cliff-like net profit drop from 2025Q4 into 2026Q1 already gave us once. A second concern is the price war in domestic mature packaging — if consumer electronics-related orders fail to recover, we won't be able to hold the 15% gross margin line. Overall, I'm cautiously optimistic on the second half, but the margin for error is tighter than it was in 2025.