APAC Technology: Memory upcycle continues, while TSMC capex and the equipment chain remain key focus areas

Overview

This report is JPMorgan's daily key roundup of the APAC technology sector, covering Samsung Electronics, the TSMC-related supply chain, Kioxia, TEL, Advantest, Murata, Taiyo Yuden, TDK, Sumco, Tokyo Ohka Kogyo, and Taiwanese substrate manufacturers. Core topics include the memory price upcycle, AI inference-driven NAND/eSSD demand, TSMC advanced-node capacity expansion and semiconductor equipment orders, the MLCC supply-demand inflection point, and the industry trend of shifting from BT to ABF substrates.

Core views

The report's core conclusions are that the memory cycle remains in an upswing, with further room for upward revisions to prices and earnings expectations; AI-related demand is reflected not only in advanced logic chips but also in eSSD/NAND demand driven by KV cache offloading; TSMC customer backlogs may drive higher FY26/27 capex, supporting the semiconductor equipment chain; MLCCs may face shortages in FY27, creating upside for prices; and the industry's migration from BT to ABF substrates should help improve revenue and margins.

Analysis framework

The report primarily combines buy-side feedback, supply-chain checks, company earnings outlooks, order and pricing trends, capacity conversion, and observations of valuation and trading crowding. For high-volatility names such as SEC and Kioxia, it also discusses volatility, VAR constraints, and investors' ability to add exposure; for the TSMC chain, it focuses on capex expectations, A14 qualification, CMP tool share, and equipment orders.

Methodology notes

• Industry cycle analysisMemory pricing and earnings revision cycle

  Supplier pricing power and EPS revisions

  Assesses whether the memory upcycle will continue based on NAND/DRAM prices, CSP procurement demand, customer inventories, and changes in earnings expectations.

• Supply-chain validationSemiconductor equipment and materials chain checks

  WFE, equipment share, and process qualification

  Evaluates equipment-chain momentum using signals including TSMC capex expectations, TEL/SCREEN share, Ebara orders, and Lasertec A14 qualification.

• Supply-demand inflection analysisMLCC and substrate capacity structure changes

  Shortage expectations and BT-to-ABF transition

  Assesses profit trends in electronic components and substrates through customer negotiation windows, capacity conversion, product price differentials, and order execution risks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Samsung Electronics

  Core beneficiary of the memory cycle and AI-related NAND demand

  Strengths

  OW rating with a W480,000 target price; the report believes memory prices remain supplier-favorable and EPS still has room for upward revisions.

  Weaknesses

  Investor expectations for 2Q26 operating profit vary widely, while retail leverage and high volatility may affect trading performance.

  Comparison

  Like Kioxia, it is exposed to the NAND cycle and AI inference demand, but SEC is also driven by its large integrated semiconductor business and local-market expectations.

  Risks

  Memory prices peaking, rising volatility, deleveraging trades, and an earnings cycle below expectations.

• TSMC supply chain

  Capex and equipment orders driven by advanced-node expansion and customer backlog demand

  Strengths

  Investors expect higher FY26/27 capex; Lasertec A14 qualification, Ebara CMP tool share, and opportunities for TEL/SCREEN are potential catalysts.

  Weaknesses

  Valuations or multiples for some equipment stocks may be high, and order expectations are already partly reflected in the market.

  Comparison

  Compared with commodity-oriented technology, the TSMC chain depends more on advanced-node timing, capex assumptions, and equipment qualification.

  Risks

  Capex guidance below expectations, delays in advanced-node qualification, and equipment orders falling short.

• Kioxia

  Highly sensitive to NAND prices, LTA direction, and Super High IOPS progress

  Strengths

  Benefits from rising NAND prices and AI inference storage demand, with active market trading.

  Weaknesses

  Japanese retail leverage participation is relatively high, and 30-day and 10-day volatility remain elevated.

  Comparison

  Like SEC, it benefits from the NAND cycle, but trading crowding and volatility constraints are more pronounced for Kioxia.

  Risks

  Price declines, volatility limiting further position additions, and unwinding of retail leverage.

• TEL / SCREEN / Advantest / Disco

  Semiconductor equipment-chain beneficiaries of WFE growth and TSMC/memory capex

  Strengths

  The report expects continued WFE growth in FY26-28; TEL/SCREEN have opportunities in DRAM etcher and cleaning-equipment share, while Advantest has earnings upside from CPUs and CPO.

  Weaknesses

  If the market believes memory prices are near a peak, equipment stocks could weaken on second-derivative logic; Disco's valuation multiple is challenging.

  Comparison

  TEL/SCREEN are more focused on process-equipment share, Advantest is more exposed to testing demand, and Disco benefits from long-term consensus preference but faces more pronounced valuation pressure.

  Risks

  WFE growth below expectations, a memory-price inflection point, and orders or gross margin below expectations.

• Murata / Taiyo Yuden / TDK

  Key names to monitor for improving MLCC and electronic-component supply-demand conditions

  Strengths

  MLCC shortages are expected from FY27; Murata's F1Q profit could exceed expectations, while TDK operating profit above Y70bn would constitute a positive surprise.

  Weaknesses

  Taiyo Yuden's earnings face downside risk due to the strike at its South Korean MLCC factory.

  Comparison

  Murata is more likely to exceed expectations in the current earnings season, Taiyo Yuden has greater execution uncertainty, and TDK needs to be monitored for whether it surpasses Y70bn.

  Risks

  Customer demand below expectations, production capacity affected by the strike, and price negotiations failing to trigger price increases.

• Taiwanese substrate manufacturers

  Structural beneficiaries of the BT-to-ABF capacity transition

  Strengths

  Supply-chain checks indicate that several Asian suppliers plan to reduce BT exposure and shift toward ABF. The report views the net impact on revenue and margins as positive.

  Weaknesses

  The transition will take time, and some manufacturers may face production-line adjustment and customer-qualification uncertainty.

  Comparison

  ABF has higher value content than BT, offering greater leverage to structural upgrades.

  Risks

  ABF demand below expectations, delays in capacity conversion, and intensified price competition.

Key data

• SEC labor cost provisionW15trn+Covers two quarters in 1H26; the report believes the market is more focused on the durability of the subsequent earnings cycle.
• Investor expectations for NAND prices20% q-q increaseThe report believes NAND prices could rise further relative to this expectation because CSPs are purchasing eSSDs for KV cache offloading.
• FY26-28 WFE growth forecasts+28% / +29% / +16%Supports views on Kioxia, TEL, Advantest, Nittobo, and other semiconductor equipment and materials names.
• Murata F1Q operating profit forecastY86.5bn, with potential to reach Y90bn or aboveSupported by the yen and strong market conditions, with the report seeing potential for an upside surprise.
• Taiyo Yuden F1Q operating profit forecastY5bnThe timing of the end of the strike at the South Korean MLCC production facility could affect profit performance.
• TDK F1Q operating profit forecastY67.4bn; exceeding Y70bn would constitute a positive surpriseUsed for the earnings outlook for electronic components.
• AP Memory target priceNT$1,350Qualification of UMC, the second foundry partner, for interposers is viewed as an incremental positive catalyst.
• Samsung Electronics target priceW480,000Rated OW, with focus on the durability of the earnings cycle after 2H26.

Impact & implications

For portfolios, the report supports continued focus on memory, advanced-node equipment, AI-related NAND/eSSD, MLCCs, and ABF substrates. Positive implications include upward earnings revisions, higher capex, and improved supply-demand conditions. However, in the near-term trading environment, high volatility, retail leverage, and second-derivative trading in some memory and equipment stocks may limit institutional re-entry. Equipment stocks could also come under pressure if the market begins to worry that memory prices have peaked.

Risks

• If memory prices peak or turn down, valuations of SEC, Kioxia, and the equipment chain could be pressured.
• Elevated volatility in SEC and Kioxia, together with VAR constraints, could limit institutional investors' ability to rebuild positions.
• If TSMC FY26/27 capex falls below market expectations, equipment-chain order and valuation catalysts would weaken.
• If the Taiyo Yuden South Korean MLCC factory strike continues, F1Q profit could fall below expectations.
• The BT/ABF substrate transition entails execution, qualification, and demand-realization risks.
• Some content is sourced from Sales and Trading materials rather than independent research reports from the J.P. Morgan Research Department; users should note the nature of the materials.

What to watch

• Samsung Electronics' detailed results and guidance on the earnings cycle after 2H26, to be disclosed in the Asian morning on July 30.
• Whether NAND prices, CSP eSSD procurement, and KV cache offloading demand continue to exceed expectations.
• TSMC's forward comments on FY26/27 capex, customer backlog demand, and advanced-node capacity.
• The timing of Lasertec's qualification for TSMC A14 mass production, potentially from the end of FY26 to early FY27.
• Ebara's F1Q orders, changes in TEL/SCREEN share, and Advantest's earnings upside from CPUs and CPO.
• Whether MLCC shortages are confirmed by customers during the Oct-Dec customer negotiation window and lead to price increases.
• The pace of BT capacity exits and ABF conversion at Taiwanese substrate manufacturers, particularly Unimicron's related plans.