報告_MS_環球晶6488_20260729

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M July 29, 2026 01:22 PM GMT

GlobalWafers Co Ltd | Asia Pacific

Wafer price hike expectations overestimated; Stay EW

We believe some investor expectations for L TA price hikes into 2027 are too high, although raw wafer industry fundamentals are indeed improving. Stay EW but raise PT to NT$900.

We expect 2027 LTA prices to rise by 10-30%, lower than some bullish street expectation of >30%: Early this year, we noted ongoing raw wafer price hikes alongside demand recovery. However, this year's increase comes mostly from the spot market, while LTA pricing remains stable. Our industry checks suggest LTA pricing could start to rise in 2027 (or remove the L TA discount) by 10-30%. LTA negotiations still occur once a year and should finalize by late 3Q26 or early 4Q26. However, our findings are still below some bullish investors' expectations of 10-20% hikes per quarter in 2027 or >30% annually. We therefore maintain EW.

What could be different this time from prior up-cycle in 2021-2022 when LTAs were signed? Compared to 2018-2022, customers' raw wafer inventory remains relatively high; see Exhibit 2 . Our checks suggest Tier 2 foundry customers still hold 6-7 months of inventory, making 2027 pricing negotiations harder. In addition, with limited greenfield capacity vs. the prior cycle (aside from GlobalWafers [GWC]), industry-wide price mark-ups into 2027 also look harder, in our view.

New Micron/GWC deal marks a new milestone for GWC: In our earlier report, we noted the company was negotiating a new LTA with either US or memory customers for its new Sherman capacity, and it turns out Micron is the new LTA customer with a commitment for further US capacity expansion. We currently assume the LTA pricing between Micron/GWC could be 20-30% higher than current LTA prices (after discounts) given the higher cost in the US. We believe as the only major global player with significant new US capacity, GWC is well positioned to outperform peers in the following years.

GWC will host its 2Q26 earnings call on August 4; key questions to ask: 1. When could supply/demand reach balance or even undersupply? 2. How is pricing different between GWA new capacity and others? 3. Would new LTA terms come with flexible pricing? 4. How does China's raw wafer supply expansion impact the global market?

Why not upgrade to OW? We keep EW as we believe buyside expectations for 2027 price hikes are too high despite improving raw wafer fundamentals. However, we also note 2027e LTA wafer prices are not finalized yet; we could turn more constructive if the magnitude surpasses our expectation. The stock trades at 24x our 2027e EPS vs. the 10-year historical +1SD of 25x, which looks fair given strong AI and memory demand. Our new PT of NT$900 implies 25x 2027e EPS.

Idea

GlobalWafers Co Ltd (6488.TWO, 6488 TT)

Greater China Technology Semiconductors | Taiwan

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