JPMorgan: Record Revenue at Chinese Wafer Fabs Bodes Well for OSAT Sector
Nashnova编辑部
SMIC and Hua Hong both posted record quarterly revenue in Q2 2026. JPMorgan reads this as a forward demand indicator for the OSAT sector and rates JCET and Weitest Overweight.
Record foundry shipments — what does that mean for packaging and testing?
SMIC's Q2 revenue grew 20% quarter-on-quarter and 36% year-on-year; Hua Hong grew 9% QoQ and 27% YoY — both all-time highs.
Q3 guidance is equally firm: SMIC implies roughly 3%/30% QoQ/YoY growth; Hua Hong roughly 8%/22%.
This means → wafers leaving a foundry typically take one to two quarters to convert into packaging and testing demand. Near-full utilisation plus a strong order backlog point to a well-fed OSAT pipeline in H2.
What is driving JCET's profit surge?
Q2 net profit (ex-non-recurring items) came in at roughly RMB 560 million, up 112% QoQ and 28% YoY.
JPMorgan attributes this to three overlapping forces: AI-driven demand + "local-for-local" onshoring orders + stronger pricing power as raw-material costs rise.
Looking into H2, margins should keep improving — tight supply is tilting the product mix toward higher-value, large-customer orders.
An advanced-packaging capex wave — does it pay off soon?
JCET, TongFu, SiGen, and MaxScend have each announced record capital spending, focused on 2.5D/3D advanced packaging.
In plain terms = the money is laying groundwork for long-term growth, but near-term earnings contribution will be minimal.
JPMorgan sets a JCET target price of RMB 110.0 (December 2027), based on a 40× forward P/E; the current price implies 42.1× 2027E P/E — 19% above the historical average.
Why does JPMorgan call Weitest a "scarce asset"?
JPMorgan initiated coverage on Weitest (偉測科技), calling it one of the market's few pure-play test houses positioned to capture the 2027–2028 domestic AI chip ramp.
Q2 revenue and net profit are projected at RMB 570 million and RMB 92 million, up 63% and 23% YoY respectively.
This reflects a shift: testing is moving from a supporting role to an indispensable link in the AI chip supply chain.
Weitest faces near-term pressure — when is the inflection point?
Q2-to-Q3 margin improvement will be limited for three reasons: rapidly rising depreciation, soft consumer-electronics demand, and heavy engineering resources poured into new AI chip programmes.
This means → the real earnings release comes in Q4, when domestic AI chips begin shipping at scale and test orders surge.
JPMorgan projects a 2026–2028 sales and earnings CAGR of 59% and 73% respectively.
Is Weitest's valuation attractive?
Target price is RMB 220.0 (June 2027), based on a 30× forward P/E.
The current price implies 25.5× 2027E P/E — 17% below the historical average. JPMorgan sees this discount as offering a favourable risk/reward profile.
Weitest is up 27% year-to-date but still trails the OSAT sector's average gain of 96%. In plain terms = the market has not fully bought in; whether the stock can deliver earnings leverage during the AI chip ramp is the key test for a re-rating.
Content is for reference only, not financial advice.