Morgan Stanley is bullish on these global stocks from a corner of the semiconductor sector
The semiconductor sector has been under pressure, but Morgan Stanley sees opportunities in one corner: the bonder market. It’s a market that involves the production of integrated circuits and microelectronic components and is driven in part by the demand for electronics such as smartphones and electric vehicles. “Overall cycle is recovering slowly and equipment vendors with higher advanced packaging exposure should outgrow peers in 2H24 … We remain optimistic about the bonder market due to a combination of cyclical and secular tailwinds,” investment bank’s analysts wrote in an Aug. 22 research note. “The cyclical recovery that many were expecting in 2H24 is likely pushed out. However, we do expect the cycle to turn in 1H25 and coincide with material growth for [thermo compression] and Hybrid bonders,” they added. Thermo compression (TCB) and hybrid bonding should add over $1 billion to the back-end total addressable market from 2025, Morgan Stanley’s analysts wrote. “We see this new product cycle becoming a meaningful part of revenue for back-end equipment companies from 2025,” on the back of a 96% growth between 2023 and 2026, they added. Stocks to watch Here are three global equipment vendors that Morgan Stanley is bullish on. BE Semiconductor Industries : The investment bank describes this Dutch company as a “virtual monopolist in the nascent hybrid bonding technology currently being adopted by multiple large semiconductor manufacturers.” The analysts expect the company’s revenue to continue growing in the years ahead. Shares in BESI are listed on the Euronext Amsterdam and trade as an American Depositary Receipt (ADR) in the U.S. Morgan Stanley has a target price of 180 euros ($201.04) on the stock, giving it just over 50% upside potential. ASMPT : Morgan Stanley says this Hong Kong-listed player has “technology leadership” in the thermo compression bonder market. The bank says it expects 60% revenue CAGR (compound annual growth rate) from the TCB tool in the next three years. Shares in ASMPT also trade in the U.S. as an ADR . Morgan Stanley has a target price of 130 Hong Kong dollars ($16.67) on the stock, giving it nearly 50% upside potential. Hanmi Semiconductor: Morgan Stanley says now is a “good time to accumulate positions” in the stock thanks to its “continued dominance” in SK Hynix for HBM3/3E, strong TCB demand growth outlook and share gains at Micron , among other things. Shares in Hanmi Semiconductor are listed on the Korea Exchange and are traded in the Cambria Emerging Shareholder Yield ETF (2.2% weighting) and Invesco Dorsey Wright Developed Markets Momentum ETF (1.2%). Morgan Stanley has a price target of 160,000 Korean Won ($120.28) on the stock, implying just over 30% potential upside. — CNBC’s Michael Bloom contributed to this report.
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