TSMC's financial report for the third quarter of 2024 has not only delivered impressive results, but its AI prospects have instilled high confidence in the market, subsequently boosting the operational outlook for semiconductor material distributors. However, opinions on non-AI sectors remain relatively mixed among industry players.
Prior to TSMC's third-quarter earnings call, several semiconductor material distributors, including Topco Scientific (TSC), Wahlee, Chang Wah (CWE), Niching, and Topco, disclosed their third-quarter financial reports, all demonstrating similar strong performances.
The semiconductor supply chain is capitalizing on the surge in AI business opportunities. With the ongoing production expansion of CoWoS, material distributors are actively participating in these opportunities. Many executives have expressed optimism during interviews, stating, "As long as major clients perform well, we will grow alongside them," reflecting a near-universal positive attitude towards the market outlook brought by AI.
Despite some discussions about an AI bubble, insights from both upstream and downstream segments of the semiconductor supply chain suggest that the AI trend will continue to drive growth in the semiconductor market over the next two years.
TSC leads growth with record revenue
TSC chairman Jeffery Pan noted in an interview that demand for advanced processes continues to rise, with production capacity nearly at full load. He is very optimistic about the market outlook for 2025, indicating that as major clients expand their capacities, the materials used in advanced packaging will grow alongside them.
With the continuous push for advanced process capacity, there is increasing demand for semiconductor materials such as photoresists and wafer cassettes. Additionally, the second half of the year is traditionally the peak season for the semiconductor industry, leading to a steady increase in TSC's revenue over the past three months.
TSC's consolidated revenue for the third quarter of 2024 reached a record high, surpassing NT$15 billion (approx. US$469 million) for the first time, totaling NT$15.366 billion, representing an increase of 11.42% quarter over quarter and 23.01% year over year. Cumulative revenue for 2024 has reached NT$41.09 billion, marking an increase of 10.93% year over year, with expectations for outstanding performance in both revenue and profit for the year overall.
Wahlee and others report strong growth
Wahlee also reported consecutive quarterly growth for three quarters in 2024, achieving consolidated revenue of NT$21.412 billion in the third quarter, up 1.22% quarter over quarter and 12.59% year over year. The cumulative revenue for 2024 stands at NT$59.818 billion, reflecting a year-over-year increase of 20.69%.
Wahlee chairman Tsuen-Hsien Chang previously stated that the CoWoS-related business could potentially see exponential growth by 2025, with the growth momentum coming from advanced packaging and 2nm processes.
Beyond materials, CWE has gained traction by acting as a proxy for the wafer-level molding equipment of Japan's Apic Yamada, securing widespread adoption from major wafer foundry clients in advanced packaging processes. By 2025, order visibility is expected to extend by two more years as more client capacities come online.
Niching stated that since 2024, key products related to packaging & testing and BT substrates have shown continuous growth, with increases of 24% year over year and 27% year over year, respectively, and increases of 13% quarter over quarter and 10% quarter over quarter. Their performance has exceeded market expectations, and as the final quarter approaches, revenue in the second half is anticipated to outperform the first half more definitively.
Perspectives for non-AI sectors remain uncertain
While advanced packaging brings hope for future operations among material distributors, views on non-AI businesses, such as consumer electronics, vary slightly. Some supply chain players believe there are signs of recovery in the second half of 2024, with high-performance plastic product lines continuing to ramp up in volume.
In contrast, some industry players hold a more pessimistic view of the consumer electronics market, suggesting that geopolitical factors and inflation have hindered noticeable recoveries in areas like PCs, notebooks, and smartphones. Therefore, aside from the clear trend of AI, perspectives on other application sectors remain relatively conservative for 2025.
