Supply constraints have not changed the upward business trend; Maintain Buy

Overview

Nomura maintained its Buy rating and TWD 8,000 target price following MPI's earnings call. The company's 2Q26 gross margin was 58%, slightly above expectations, benefiting from a less severe-than-expected unfavorable product-mix impact and prudent expense control. The report believes that short-term supply constraints and the pace of capacity expansion may lower some market expectations for second-half revenue, but do not alter the core growth thesis driven by AI chips, ASICs, and test-interface demand.

Core views

Nomura is positive on MPI's in-house MEMS capabilities, broad customer base, and key position in the CPO value chain. The company's probe-card capacity is reportedly fully utilized, and expansion will support gradual revenue growth; a higher MEMS product mix and greater in-house production ratio are expected to improve margins. Nomura forecasts approximately 60% YoY revenue growth in 2026, above the approximately 55% implied by the upper end of management guidance, but below Bloomberg consensus of 65%.

Analysis framework

The report combines quarterly results with management's second-half guidance to assess the impact of revenue, product mix, expenses, and capacity expansion on earnings; it also validates the medium- to long-term investment thesis through the development pace of AI/HPC, ASICs, test interfaces, MEMS, and CPO.

Methodology notes

• Valuation methodsP/E multiple method

  Applies a 45x P/E multiple to the average forecast EPS for 2027-28

  The TWD 8,000 target price is based on 45x average forecast EPS for 2027-28, placing the valuation at the high end of its historical range.

• FundamentalsSupply-demand and capacity analysis

  Assesses revenue and margins using capacity utilization, expansion progress, and product mix

  Nomura believes order demand remains robust and that short-term guidance is primarily constrained by the pace of capacity expansion; a higher MEMS mix and in-house production ratio are viewed as margin-expansion drivers.

Asset mapping & comparison

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

• MPI Corporation (6223.TWO)

  Directly covered company

  Strengths

  In-house MEMS capabilities, a diversified customer base, fully utilized probe-card capacity, a key role in the CPO value chain, and benefits from growing AI chip and ASIC demand.

  Weaknesses

  Revenue growth realization is constrained by the pace of capacity expansion; CPO revenue contribution is limited in the near term.

  Comparison

  Nomura forecasts approximately 60% YoY revenue growth in 2026, above the approximately 55% implied by the upper end of management guidance, but below Bloomberg consensus of 65%.

  Risks

  Weaker-than-expected AI/HPC demand or slower AI adoption, intensified competition in the test-interface market and market-share losses, and slower-than-expected CPO progress.

Key data

• 2Q26 gross margin58%Above Nomura's and Bloomberg consensus expectations of 57%, but 1 percentage point below 1Q26.
• 3Q26 revenue guidance0%-5% QoQ growthManagement guidance.
• 4Q26 revenue guidance5%-10% QoQ growthManagement guidance.
• 2026 revenue growth expectationNomura approximately 60% YoY; upper end of guidance approximately 55% YoY; market consensus 65% YoYGuidance may fall below some optimistic expectations.
• Expected probe-card pin capacity5.5 million pins per month by end-2026; 10 million pins per month by end-2027Nomura's end-2027 expectation is above management's guidance of 8-9 million pins per month.
• CPO revenue contributionExpected to begin in 2H27 and represent a single-digit percentage in 2028Equipment shipments for R&D purposes may occur first in 2026, with a mass-production ramp expected in 2027.
• Target price and closing priceTWD 8,000; TWD 6,440The closing-price date is 2026-08-14, implying upside of approximately 24.2%.

Impact & implications

If AI/HPC demand continues to expand, ASIC customers accelerate mass production, and capacity expansion progresses as planned, MPI's test-interface and probe-card businesses are expected to benefit from order spillover, price increases, and specification upgrades. In the near term, revenue guidance below market consensus may cause a share-price pullback; Nomura views this as an opportunity to build positions gradually while the fundamental thesis remains unchanged.

Risks

• AI/HPC market demand is weaker than expected, or AI application adoption slows.
• Competition in the test-interface market intensifies, leading to market-share losses or greater pricing pressure.
• CPO equipment R&D, shipments, or mass-production ramp progress more slowly than expected.
• Capacity expansion progresses more slowly than expected, limiting revenue-growth realization.
• Second-half revenue guidance below market consensus may trigger valuation and share-price volatility.

What to watch

• Whether 3Q26 and 4Q26 revenue reaches the respective guidance ranges of 0%-5% and 5%-10% QoQ growth.
• VPC/MEMS probe-card capacity expansion progress and changes in capacity utilization.
• MEMS product mix, in-house production ratio, and gross-margin improvement.
• Order momentum from AI/HPC and ASIC customers and potential spillover orders.
• CPO equipment R&D shipments in 2026, mass-production ramp in 2027, and revenue contribution after 2H27.