Advanced Packaging Concept Surges as JCET Rebounds to Hit Limit Up

Taiwan Semiconductor Manufacturing Company shares touched intraday all-time highs on Monday after Elon Musk confirmed early-stage talks with the chipmaker about a potential collaboration on his Terafab semiconductor initiative. Musk responded on X over the weekend to a newsletter from tech journalist Tim Culpan, who wrote that TSMC is exploring ways to work with Terafab to help the startup chipmaker run its new semiconductor factories in Texas, saying, "Just discussions, but something may come of it." Terafab is Musk's plan to build a giant semiconductor factory to serve Tesla, SpaceX, and xAI. US chip maker Intel, which joined Terafab back in April, was down roughly 2%. TSMC is the world's largest foundry, and its business has boomed on demand for semiconductors used in artificial intelligence, with the stock up about 60% year to date as the company expands in the US to manufacture chips for clients including Apple, Nvidia, and AMD.

GF Securities expects United Microelectronics to post stronger earnings per share over the next two years on a combination of stronger prices and margins, supported by rising orders from key clients that are lifting utilization rates at its foundry. Analyst Jeff Pu said 12-inch utilization should reach about 93% by end-2026 on strong DDIC volumes from Novatek and Samsung LSI at 22/28nm and Apple's Mac at 55/65nm, with upside from Sony's sensors, while 8-inch utilization should reach about 90% by end-2026 and full loading by 2H27 on intact demand for datacenter PMIC, MCU and embedded memory. Pricing momentum extends from 2H26 for selective customers into 1H27 at 10-30% across 12-inch and 8-inch, and into 2H27 where negotiations are ongoing, suggesting visibility extending into 2H27. GF Securities raised its EPS forecasts for the entirety of 2026 and 2027 by 2% and 8% respectively and maintained its Buy rating, with UMC expected to begin another growth phase in 2028 when it transitions to asset-light FinFET and optical full solutions, driven by Intel 2nm as a major inflection. Interposer and advanced packaging are expected to begin contributing during the second half of 2027, supported by silicon capacitor, DTC, hybrid bonding and controller-to-bonding integration. UMC shares were down 8% in pre-market trading on Monday, but the stock has surged 32% over the past month and more than 230% year-to-date.

Onto Innovation has emerged as a key beneficiary of the AI semiconductor investment cycle, with its stock jumping 125.6% in a year, roughly matching the Zacks Nanotechnology industry's 125.7% gain and outpacing the Zacks Computer and Technology sector and the S&P 500 composite, which rose 26% and 15.5%, respectively. The company reported record second-quarter revenue of $343.1 million, up 35.3% year over year and nearly 18% sequentially, with non-GAAP earnings per share of $1.93 versus $1.25 a year earlier, while backlog exceeded $1 billion for the first time. Management raised its second-half 2026 revenue, margin and EPS outlook, guiding third-quarter revenue of $380 to $400 million and expecting gross margin to expand by another 50 basis points in each of the third and fourth quarters, with operating margin improving 200 basis points to 31.5-32.5% in the third quarter and exceeding 33% by year-end. The company also raised its 2026 advanced-packaging growth outlook to at least 80% from more than 50% previously and now expects advanced-nodes revenue to grow more than 35% in 2026, up from about 25%, helped by its Dragonfly G5 platform and more than $200 million in Dragonfly orders from a single OSAT, mostly for 2027 delivery. In April 2026, Onto Innovation agreed to acquire a 27% stake in Rigaku Holdings for about $710 million, and it ended the second quarter with $1.88 billion in cash and short-term investments, though risks include customer concentration, with four customers accounting for 57.3% of first-half 2026 revenue, and a forward price/earnings multiple of 30.23X versus the industry's 5.83X.

Rapidus, which aims to mass-produce advanced semiconductors, announced on the 5th that it will partner with 17 semiconductor design-related companies in Japan and abroad, including Toshiba. The partners include Toshiba Information Systems, a Toshiba subsidiary, as well as Dai Nippon Printing, TOPPAN, and major U.S. semiconductor design firms Synopsys and Cadence Design Systems. The aim is to strengthen its support system spanning everything from the design to the manufacturing of advanced semiconductors in line with customer needs, thereby winning more orders. Going forward, it plans to work with its partners to support customers' semiconductor design and increase the volume of production contracted to Rapidus.

TSMC is considering building a new chip manufacturing plant in Texas, with expectations of adding several tens of billions of dollars in investment under a multi-year plan to expand its chipmaking business in the United States. Sources say the Texas project covers the construction of multiple chip plants, and if the investment goes ahead, each plant would cost at least 20 billion dollars. Previously, TSMC pledged to invest 265 billion dollars in Arizona, where several plants are currently under construction. The Texas investment depends on whether the U.S. government extends a tax credit measure for advanced manufacturing that is set to expire at the end of this year. The plan is still at an early stage and no details have been officially disclosed. TSMC is a key chip supplier to Nvidia and Apple, with revenue from wafer manufacturing in America accounting for more than 75% of its revenue from that business this year.