Advanced Packaging And Hybrid Bonding Will Expand Semiconductor Markets

Key Takeaways

• Technology leadership in advanced packaging and hybrid bonding platforms positions BESI for outperformance in high-growth AI, memory, and edge computing markets.
  
• Product innovation and operational strength enable BESI to expand margins, gain market share, and benefit from future cyclical upturns in semiconductor demand.
  
• Weak demand, customer concentration, adverse currency shifts, and mounting R&D costs threaten profitability, while sluggish recovery in core segments raises concerns over sustained earnings stagnation.

Catalysts

Develops, manufactures, markets, sells, and services semiconductor assembly equipment for the semiconductor and electronics industries in the Netherlands, Switzerland, Austria, Singapore, Malaysia, and internationally.

• The accelerated adoption of advanced packaging for AI, data center, and memory applications-driven by higher CapEx from leading global semiconductor players and confirmed ramp-ups in hybrid bonding and 2.5D systems-positions BESI to outgrow the overall market, supporting stronger future revenue growth from these long-term technology upgrades.
  
• Expanding customer commitments to next-generation memory (HBM4) and logic driven by the transition to more sophisticated AI and edge computing devices is expected to materially boost orders and shipments of BESI's hybrid bonding and TCB Next platforms, increasing both top-line revenue and gross margins through premium solutions.
  
• A major wave of new product introductions from 2026 to 2028 in consumer electronics, edge AI devices, and high-performance computing is expected to trigger catch-up investments in semiconductor assembly capacity, indicating potential for a cyclical upturn and rapid recovery in BESI's mainstream and high-margin product segments, with positive implications for revenue and net income.
  
• The upcoming launch of BESI's new high-accuracy flip chip system and second-generation hybrid bonding tools (with tighter specs and broader device compatibility) is likely to drive further market share gains and penetration into emerging applications (such as chiplet architectures and silicon photonics), supporting longer-term earnings growth and margin expansion.
  
• BESI's strong liquidity, active share repurchases, and continued investments in operational efficiency set a robust foundation to capitalize on secular growth in semiconductor content from electric vehicles, high-speed connectivity, and cloud infrastructure, positioning the company for improved net margins and sustainable EPS growth as these trends materialize.

BE Semiconductor Industries Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming BE Semiconductor Industries's revenue will grow by 24.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 28.2% today to 34.8% in 3 years time.
• Analysts expect earnings to reach €406.7 million (and earnings per share of €5.07) by about August 2028, up from €169.6 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €249.8 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.6x on those 2028 earnings, down from 57.6x today. This future PE is lower than the current PE for the GB Semiconductor industry at 39.8x.
• Analysts expect the number of shares outstanding to decline by 0.74% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.22%, as per the Simply Wall St company report.

BE Semiconductor Industries Future Earnings Per Share Growth

Risks

• BESI's revenue and income are currently experiencing pressure from weak demand in mainstream assembly, mobile, and automotive markets, with first half 2025 results showing revenue down 1.8% and net income down 16.2% year-over-year-raising concerns about recovery speed and the risk of prolonged downcycles impacting both top and bottom line.
  
• Order volatility and heavy dependence on large, cyclical customers (notably two major U.S. clients in computing and mobile) create significant exposure to swings in customer CapEx, as highlighted by markedly lower order intake from Europe and the U.S. and customer-specific uncertainties, increasing the likelihood of revenue instability and margin swings.
  
• Gross margins are being negatively impacted by adverse currency movements (notably a 12% decline of the U.S. dollar vs. euro), compounded by a less favorable product mix and persistent pricing pressures-factors that could further erode profitability if not managed through cost reductions or value-added differentiation.
  
• Mainstream business segments-especially conventional mobile and automotive-have declined to 2019 levels (~20% year-over-year fall), while the pace of recovery in these segments remains uncertain and cycles appear elongated, risking periods of underutilization and stagnating or declining earnings if new product launches or technology cycles fail to materialize as anticipated.
  
• Increased R&D spending required to maintain technological leadership in hybrid bonding and advanced packaging, coupled with the need for continued product innovation and potential delays in new system adoption or pilot-to-production transitions, may place sustained pressure on cost structure and limit earnings growth if return on these investments is slower than expected.

Valuation

• The analysts have a consensus price target of €136.0 for BE Semiconductor Industries based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €170.0, and the most bearish reporting a price target of just €100.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €1.2 billion, earnings will come to €406.7 million, and it would be trading on a PE ratio of 32.6x, assuming you use a discount rate of 8.2%.
• Given the current share price of €123.5, the analyst price target of €136.0 is 9.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.