Bullish on OSAT packaging sector (KLIC, AMKR, ASE) due to structural shift from legacy low-margin wire bonding to high-margin advanced packaging for AI/HPC.
OSATs (Amkor, ASE) are investing in CoWoS and advanced packaging while low-end capacity is pushed to China. This structural shift creates margin expansion and rerating opportunity.
Let’s focus on the first for now; Assembly. Historically, packaging = low-margin wire bonding. Not exciting. ASE once made up ~40% of $KLIC’s wire bonder business. After the COVID boom, capacity flooded the market and growth stalled. (2/10)
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | -3.4% | -4.2% |
| 1 week | -8.2% | -8.1% |
| 1 month | +11.0% | +11.0% |
| 3 months | — | — |
| 6 months | — | — |