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On Friday, Bernstein highlighted Tokyo Electron Limited (TEL) as a significant beneficiary of the emerging NAND wafer-to-wafer (W2W) hybrid bonding market. Analyst David Dai pointed out that as NAND technology advances to include more layers, W2W hybrid bonding will become a key manufacturing process. This method involves bonding separate wafers for the NAND cell array and CMOS logic transistors to enhance performance and potentially reduce costs. According to InvestingPro data, major industry player Micron Technology (NASDAQ:MU) has shown strong momentum with nearly 80% revenue growth in the last twelve months, highlighting the semiconductor sector’s robust growth trajectory.
KIOXIA is set to be the first major global NAND manufacturer to adopt this technology, with Samsung (KS:005930), SK Hynix, and Micron expected to follow suit. KIOXIA’s focus on its BiCS8 with 218 layers will see most of its FY25 capital expenditures dedicated to this equipment, aiming to increase shipments by the end of FY25 (March 2026). The adoption of W2W bonding is anticipated to become more significant starting this year with KIOXIA’s implementation. Micron appears well-positioned for this transition, with InvestingPro analysis showing a healthy current ratio of 2.72 and moderate debt levels, providing financial flexibility for technology investments.
The W2W bonding process is intricate, requiring precision grinding of the wafers to expose the wiring. This presents an opportunity for companies like DISCO, which specializes in grinders and is expected to benefit from the increased demand for NAND W2W bonding from 2026 onwards. DISCO, along with Tokyo Seimitsu, are the primary suppliers for W2W bonding grinders.
Despite recent challenges in HBM and SiC markets, Bernstein remains confident in DISCO’s future prospects. The firm’s conservative estimates suggest a potential 10-30% upside from DISCO’s FY25/3E shipment of equipment, based on market share and penetration rates.
TEL, with over 20% market share in W2W bonders and trailing only behind EVG, is well-positioned to capitalize on this market growth. TEL’s revenue from bonders has already doubled year-over-year, and with the NAND bonding market poised to triple from ¥100 billion in 2025 to ¥300 billion in 2030, further revenue upside is expected for TEL. The company’s improved product offerings and client relationships are likely to drive market share gains in the coming years.
In other recent news, Nvidia (NASDAQ:NVDA) has seen positive developments following Broadcom (NASDAQ:AVGO)’s optimistic forecast regarding AI computing. Broadcom reported first-quarter adjusted earnings per share of $1.60, surpassing the Bloomberg Consensus estimate of $1.50. The company’s adjusted net revenue reached $14.92 billion, exceeding the projected $14.61 billion, and they forecast second-quarter revenue of about $14.9 billion. Meanwhile, Micron Technology has been in focus with Raymond (NSE:RYMD) James maintaining an Outperform rating and a $120 price target. Despite expectations of a decline in fiscal third-quarter gross margins, Raymond James remains optimistic about Micron’s future, citing potential in High Bandwidth (NASDAQ:BAND) Memory (HBM).
Citi also maintained a Buy rating for Micron with a $150 price target, adjusting their gross margin estimate for the fiscal third quarter of 2025 from 40.0% to 35.0%. Micron attributed the anticipated margin decline to shifts in product mix and pricing challenges in the NAND market. However, Citi remains positive about Micron’s prospects in AI HBM and expects a recovery in the DRAM market. Lastly, SK Hynix plans to increase capital expenditure in 2025, focusing on high bandwidth memory and fabrication infrastructure in Korea. Despite conservative shipment forecasts, SK Hynix is optimistic about HBM revenue, projecting significant growth in 2025.
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