260605_ubs_chipbond(1)

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Chipbond Technology

Rising demand and content in optical business

New opportunities for optical transceiver business

We see upside in Chipbond's SiPh business on stronger demand for 800G/1.6T optical transceivers, new customer wins and increasing content. We now expect overall 800G and above transceiver shipments to grow at a 99% CAGR in 2025-28 (prior forecast at 77%), reaching 235m units in 2028, while chips adopting gold bumping could see much faster growth. Chipbond was qualified by its US fabless customer for TIA chips and recently obtained qualifications from new customers for PD and modulator ICs. It continues to work on qualification from other customers, pointing to upside in its revenue and earnings from 2027E. Our industry checks indicate Chipbond will start to provide backend services (dicing and testing) from 2027E alongside gold bumping, offering 50-100% additional value-add vs bumping only in the SiPh business. We raise SiPh sales contribution to 5% for 2026E (4% prior), 13% for 2027E (8% prior), and 24% for 2028E (14% prior) on new project wins.

Stronger bumping capability to keep Chipbond ahead of peers

Chipbond was founded as a gold bumping supplier 30 years ago and has the ability to design and manufacture key equipment internally. We believe its superior gold bumping know-how, sizeable 8" bumping capacity (currently 60-70% utilised, by our estimate), and the newly built capacity in Penang, Malaysia, to meet customers' non-China, nonTaiwan (NCNT) requirements, will help it to keep its dominant position for RF and SiPh bumping in the next several years. Moreover, it is working with its major shareholder UMC on the next-generation 400G-per-lane high-speed solution with the new TFLN (Thin-Film Lithium Niobate) material, which may require different UBM (under bump metallisation). We note its peer ChipMOS is also evaluating entry into the SiPh market, but we believe it will take at least 6-12 months for it to catch up, achieve qualification and start mass production, assuming it has similar bumping know-how to Chipbond.

Q226 revenue tracking better

Chipbond's April sales came in at NT$2,185m, up 7% MoM and 24% YoY, mainly driven by a higher ASP . With better OLED DDI build, price hikes and upward SiPh order revisions, we now expect its Q226 sales to grow 12% QoQ (our prior forecast was 5% growth). We also forecast its GM to expand by 3.7ppt QoQ to 27.2% on better pricing, and expect its GM to further improve in H226 as it gradually ramps SiPh output.

Valuation: Raise PE-based price target from NT$230 to NT$340; reiterate Buy

We raise our 2026E/27E/28E EPS by 1%/8%/21%, primarily reflecting a stronger SiPh demand and higher content value from providing backend services. We raise our PT from NT$230 to NT$340, based on 35x 2027-28E average PE (prior 27x) vs a 7-52x historical range, supported by a 43% EPS CAGR for 2025-28E. We believe the brighter earnings outlook from higher ASPs and SiPh opportunities has not been priced in. We expect the stock to rise further as consensus EPS estimates are raised.

Jerry Su

Analyst jerry.su@ubs.com +886-28-722 7306

Annie Chen

Associate Analyst annie.chen@ubs.com +886-2-8722 7281

Chipbond Technology - 6147.TWO Price

400

Thesis Map UBS Research THESIS MAP a guide to our thinking and what´s where in this report

Pivotal Questions

100

2024

Q: Is Chipbond's driver IC business seeing a recovery as a driver IC back-end supplier?

Yes. Chipbond saw strong demand for driver IC back-end in Q126, driven by customers' restocking amid a higher DRAM pricing environment. Although Q226E shipment could be softer on pulledforward sales, the potential outsourcing by Korean customers to Taiwan's foundries/back-end could support its shipment from H226E. We think this has helped the company negotiate with its customers to raise its driver IC back-end ASP by about 10% from Q226E, which should support a GM recovery from the low-20% range in recent quarters to the high-20% to low-30% range in 2027E.

Q: Will Chipbond face mounting competition from its back-end peers in China?

Competition seems to have stabilised. China's DDI　fabless firms have been gaining share in recent years, especially in TV/IT and LCD smartphone DDIC, and they tend to work with the local supply chain in China. DDIC back-end ASPs corrected in 2023-24 on intensifying competition, but allocation shifts have stabilised as several end-customers have requested chip production to stay outside China due to geopolitical concerns. As a result, DDIC back-end prices have recovered in recent months.

Q: Will Chipbond diversify from its core driver IC business?

Chipbond has been diversifying from conventional DDIC and has moved into RFID and RF IC back-end in the past decade. It recently entered the SiPh market for high-speed optical transceivers by leveraging its gold bumping technology. We expect sales of RF and SiPh for optical transceivers to continue outperforming DDIC, rising at a 43% sales CAGR in 2025-28E, lifting the non-driver IC contribution to about 36% of total sales in 2028E (up from around 20% in 2024-25).

We reiterate our Buy rating and raise our EPS forecasts by 1%/8%/21% for 2026E/27E/28E, reflecting stronger SiPh demand and higher content value. We raise our price target from NT$230.00 to NT$340.00, based on a 35x 2027-28E average PE from prior 27x (vs 7-52x historical range). We believe a more favourable ASP environment and the optical transceiver business ramp-up should support an earnings recovery after the 2025 trough. Our 35x target PE multiple is supported by a 43% EPS CAGR forecast for 2025-28E and is in line with our SOTP valuation cross-check. We are bullish on Chipbond due to our expectations of: 1) an EPS recovery for DDIC back-end driven by higher ASPs and Korean customers' outsourcing; 2) robust demand for RF IC on customers' market share gains; and 3) new opportunities in SiPh supporting diversification and future growth.

Chipbond's GM has contracted to a 20-23% range since Q423 on intensifying competition and weaker demand. With Korean customers outsourcing DDIC production to Taiwan's supply chain, we expect Chipbond's loading rate and DDIC back-end ASPs to rebound. The improving loading rate and pricing environment are also consistent with the views of foundries and driver IC back-end peers.

The stock is up 410% in the past three months, outperforming TAIEX's 34% gain, and is trading at 49x/33x 2026E/2027E PE, still below optical supply chain players and the average for OSAT peers. We believe the brighter earnings outlook, driven by improving ASPs and new opportunities in SiPh, has not been priced in, and we expect the stock to rise further as consensus earnings estimates are raised.

Source: UBS estimates

Chipbond is a semiconductor back-end supplier with 75% of its sales from display driver IC.

kevinlu@ lenovo.com

UBS VIEW

EVIDENCE

WHAT´S PRICED IN?

Upside/Downside Spectrum

Company Description

2025

TWD 270.0

05 Jun

520.0

Upside to Downside

Upside:

2.1 to 1

+93%

Financial summary

Figure 1: Our estimates vs consensus for Chipbond's Q226-Q326 and 2026-27

Source: Company data, Visible Alpha, UBS estimates

Figure 2: 800G+ transceivers seeing robust growth due to networking speed upgrades

Source: Company data, UBS estimates

Figure 4: Summary of our estimates for annual P&L

Source: Company data, UBS estimates. Note: Prices as of 5 June, 2026.

kevinlu@ lenovo.com

Figure 3: Chipbond's SiPh revenue to account for 24% of total sales in 2028E

Source: Company data, UBS estimates

Figure 5: Summary of Chipbond's annual and quarterly forecasts

Source: Company data, UBS estimates

Figure 6: Chipbond is trading below optical and RF supply chain stocks and the average of OSAT peers

Source: LSEG. Note: Prices as of June 5, 2026.

Figure 7: Chipbond's share price could further re-rate as consensus catches up on earnings revisions

Source: LSEG

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Figure 8: Chipbond's share price vs FINI Holdings - we see further upside

Source: TEJ

kevinlu@ lenovo.com

Chipbond Technology - 6147.TWO Price

400

Upside/Downside Spectrum

Upside/Downside Spectrum

Risk to current share price is skewed (2.1:1) to the upside

Chipbond is trading at NT$270.00 (as of 5 June, 2026).

UPSIDE (NT$520.00): Our upside scenario factors in a brighter end-demand outlook for consumer electronic products, higher allocation of outsourcing orders and new project wins for SiPh, driving faster growth in the non-driver IC business. In this scenario, sales would grow by 24%/19% in 2026E/2027E, while GM would expand to 28.6%/32.5%, 1.5-2.1pp above our base case, resulting in an OPM of 19.3%/23.9%. Our upside valuation of NT$520.00 is based on 45x average 2027-28E EPS.

BASE (NT$340.00.00): Our base case reflects our expectations of an improving ASP for driver IC back-end from Q226, a ramp-up in outsourcing by Korean customers from H226, and a robust RF and SiPh outlook. We expect sales to grow by 18%/17% in 2026/2027E, with GM at 27.1%/30.4% versus 21.4% in 2025. This leads to OPM of 17.6%/21.6% in 2026E/2027E, up from 11.2% in 2025. Our price target of NT$340.00 is based on 35x average 2027-28E EPS versus a historical 7-52x range.

DOWNSIDE (NT$150.00): Our downside scenario factors in a weaker end-demand environment, resulting in lower utilisation and slower non-driver IC growth. We assume 2026E/2027E sales growth of 12%/13% YoY with GM only improving mildly to 25.1%/27.2% on lower utilisation. This would lead to OPM of 15.3%/18.0% in 2026E/2027E, 2.3-3.6pp below our base case due to negative operating leverage. Our downside valuation of NT$150.00 is based on 20x average 2027-28E EPS.

kevinlu@ lenovo.com

TWD 270.0

05 Jun

520.0

• 340.0

Upside to Downside

Upside:

2.1 to 1

+93%

Base:

+26%

Chipbond is trading at NT$270.00 (as of 5 June, 2026)

Chipbond Technology (6147.TWO)

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts. 1 Cash EPS (UBS, diluted) is calculated using UBS net income adding back depreciation and amortization.

kevinlu@ lenovo.com

Chipbond Technology (6147.TWO)

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.

kevinlu@ lenovo.com

Forecast returns

Company Description

Chipbond is a semiconductor back-end supplier with 75-80% of its sales from display driver IC (~40% from smartphone, and TV respectively, 15% from IT and 5% from auto) and 1015% from RF.

Valuation Method and Risk Statement

We value Chipbond based on a PE methodology.

Downside risks include but are not limited to: slower-than-expected RF business expansion and weaker-than-expected tech end-market recovery.

kevinlu@ lenovo.com

Quantitative Research Review

UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. The views for this month can be found below. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https://neo.ubs.com/quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubs-quant-answers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research Team on the email above.

Chipbond Technology

kevinlu@ lenovo.com

Required Disclosures

This document has been prepared by UBS Securities Pte. Ltd., Taipei Branch, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates, including former Credit Suisse AG and its subsidiaries, branches and affiliates are referred to herein as "UBS".

For information on the ways in which UBS manages conflicts and maintains independence of its UBS Global Research product; historical performance information; certain additional disclosures concerning UBS Global Research recommendations; and terms and conditions for certain third party data used in research report, please visit https://www.ubs.com/disclosures. Unless otherwise indicated, information and data in this report are based on company disclosures including but not limited to annual, interim, quarterly reports and other company announcements. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 05 June 2026 11:34 AM GMT. UBS has designated certain UBS Global Research department members as Derivatives Research Analysts where those department members publish research principally on the analysis of the price or market for a derivative, and provide information reasonably sufficient upon which to base a decision to enter into a derivatives transaction. Where Derivatives Research Analysts coauthor research reports with Equity Research Analysts or Economists, the Derivatives Research Analyst is responsible for the derivatives investment views, forecasts, and/or recommendations. Quantitative Research Review: UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For the latest responses, please see the Quantitative Research Review Addendum at the back of this report, where applicable. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https://neo.ubs.com/ quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubs-quantanswers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research team on the email above.

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