J.P. Morgan: ASE Technology Holding (3711.TW) — CPU Demand Creating Severe Shortage in 2.5D Packaging; Target Price Raised to NT$650
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Key Views
ASE Technology's capacity utilization is approaching full load as 2.5D packaging supply falls short of demand. Pricing is expected to rise, supporting gross margin improvement and earnings growth. Notably, J.P. Morgan emphasizes that CPU demand, rather than GPU demand, is the principal driver of the current shortage.
Competitors face limited capacity, reinforcing ASE Technology's leadership position in the 2.5D packaging market. The company's capacity expansion plans are progressing steadily to address rising requirements.
Outlook
The 2.5D packaging shortage is projected to persist through 2026, with ASE Technology prioritized for customer orders. Current valuations do not fully reflect the earnings upside from this structural tightness. J.P. Morgan expects both revenue and profit to exceed market expectations.
Recommended Securities
- ASE Technology Holding (3711.TW): Overweight rating, target price NT$650. Rationale: direct beneficiary of CPU-driven 2.5D packaging shortages, with significant earnings upside potential.
Key exhibits
Exhibit 1
Exhibit 2
