In-depth Research on Tongfu Microelectronics (002156): Assessment of Earnings Growth Sustainability and Valuation Repair Potential

Based on the above in-depth analysis, I will provide you with a systematic and comprehensive research report.

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As one of the leading domestic semiconductor packaging and testing enterprises, Tongfu Microelectronics’ 2025 earnings forecast shows that its net profit is expected to reach RMB 1.1–1.35 billion, a substantial year-on-year increase of 62%–99%, driven by multiple factors including the global semiconductor industry’s structural growth, improved capacity utilization, and the volume ramp-up of mid-to-high-end products [0]. From an industry perspective, the semiconductor packaging and testing industry is in a structural growth cycle driven by AI chips and new energy vehicles. The Chinese packaging and testing market size reached RMB 386 billion in 2024, and is expected to exceed RMB 750 billion by 2031 [1]. Tongfu Microelectronics currently has a P/E ratio of approximately 78.55x, which is at a relatively high level in the industry. However, considering the company’s proposed RMB 4.4 billion private placement plan to expand advanced packaging production capacity, as well as its strategic advantage of partnering with key customers such as AMD, the company’s technological accumulation in advanced packaging is expected to support high growth over the next 2–3 years [2]. Based on a comprehensive assessment, the driving factors for the company’s earnings growth are highly sustainable, but short-term valuations have fully reflected expectations, and the valuation repair potential needs to be dynamically evaluated based on market sentiment and earnings realization.

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Tongfu Microelectronics disclosed its 2025 annual earnings forecast in January 2026, expecting to achieve a net profit attributable to shareholders of listed companies of RMB 1.1 billion to RMB 1.35 billion, representing a year-on-year growth of 62.34%–99.24% [2]. This earnings forecast significantly exceeded market expectations, with key highlights including:

Core Indicator	2025 Forecast	2024 Actual	YoY Change
Net Profit	RMB 1.1–1.35 billion	RMB 678 million	+62% ~ +99%
Revenue Scale	Approximately RMB 28 billion	Approximately RMB 24 billion	+17%
Net Profit Margin	3.9%–4.8%	2.8%	Significant Improvement

In terms of quarterly performance, the company achieved operating revenue of RMB 20.116 billion in the first three quarters of 2025, a year-on-year increase of 17.77%; net profit attributable to shareholders was RMB 860 million, a year-on-year increase of 55.74% [3]. Among them, the net profit attributable to shareholders in the third quarter alone reached RMB 448 million, with a year-on-year growth rate of 95.08% and a quarter-on-quarter growth of 13.05%, hitting a record high for a single quarter. This growth trend indicates that the company’s profitability is undergoing a systematic improvement, rather than a simple cyclical rebound.

The company achieved operating revenue of RMB 13.038 billion in the first half of 2025, a year-on-year increase of 17.67%, while operating costs increased by 16.86%. The growth rate of costs was 1.21 percentage points lower than that of revenue, indicating that economies of scale are emerging [4]. The company improved production efficiency through intelligent transformation, relying on advanced IT systems and smart equipment, and deeply integrated artificial intelligence technology to realize flexible production processes, automated operational processes, and systematic quality management. Its comprehensive digital transformation score exceeds 99.28% of enterprises nationwide. This intelligent upgrade not only reduces unit production costs but also improves capacity utilization efficiency, enabling more sufficient amortization of fixed costs.

The company’s earnings forecast clearly states that “a significant increase in operating revenue from mid-to-high-end products” is one of the main drivers of earnings growth. Tongfu Microelectronics has achieved mass production in the 5nm process packaging field, and the 3D Fanout packaging technology developed in collaboration with AMD reduces processor power consumption by 18% [5]. High-end products typically have higher gross margins, and as the proportion of mid-to-high-end products increases, the company’s overall profitability will see systematic improvement. In the first half of 2025, the company’s overseas business revenue reached RMB 8.9 billion, a year-on-year increase of 23.02%, significantly higher than the 7.36% growth rate of domestic business, indicating that the company’s penetration rate of high-end products in the international market is increasing [4].

Tongfu Microelectronics has established a deep cooperative relationship with AMD, which has become the company’s largest customer source. In the first half of 2025, AMD’s gaming business revenue reached USD 1.1 billion, a year-on-year increase of 73%, mainly driven by the new Zen5 architecture processors and data center GPU products [6]. The company’s packaging and testing business for AMD’s EPYC CPUs and data center GPUs continues to grow, with revenue from AMD-related business reaching RMB 2.5 billion in the second quarter, a year-on-year increase of 67%. In addition, the company is actively expanding other key customer resources, further consolidating its market position in high-end packaging through resource integration and capacity optimization.

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The sales volume of generative AI chips is expected to exceed USD 150 billion in 2025, and the HBM+CoWoS combination has become the standard configuration for AI servers [5]. As one of the few domestic enterprises with advanced packaging capabilities, Tongfu Microelectronics will directly benefit from the explosive demand for AI chip packaging and testing. In the company’s proposed RMB 4.4 billion private placement plan, the “Capacity Expansion Project for Packaging and Testing in High-Performance Computing and Communication Fields” is clearly identified as a key investment direction, targeting high-value-added product markets such as AI servers and high-end GPUs [2]. With the continuous advancement of global computing infrastructure construction, the demand for advanced packaging for AI chips will maintain double-digit growth over the next 3–5 years.

The number of chips per intelligent vehicle has exceeded 3,000, a 4-fold increase compared to traditional fuel vehicles. Global new energy vehicle sales reached 16.03 million units in 2024, with a penetration rate of 18% [5]. Tongfu Microelectronics has actively deployed in the automotive electronics field, with its 2024 in-vehicle product performance surging by over 200% year-on-year, covering in-vehicle power devices, MCUs, and intelligent cockpits [7]. The company expanded its automotive-grade packaging and testing capacity in 2025 to meet the massive demand for high-reliability chips driven by automotive intelligence and electrification. The sustained growth of the new energy vehicle market will provide the company with a stable source of orders, and automotive-grade packaging products have high technical barriers and customer stickiness, which is conducive to maintaining a high level of profitability.

The market share of advanced packaging reached 35% in 2024, and is expected to exceed 60% by 2031 [1]. Tongfu Microelectronics has established strong technical reserves in advanced packaging technologies such as Chiplet, SiP, and 2.5D/3D packaging. The company’s Jiangyin Wafer-Level Microsystem Integration Base, with an investment of RMB 15 billion, plans to achieve a monthly capacity of 120,000 12-inch wafers for system-level packaging in 2025. As advanced packaging technology becomes the industry mainstream, Tongfu Microelectronics’ technological accumulation will be converted into significant competitive advantages.

On January 9, 2026, Tongfu Microelectronics disclosed a private placement plan, proposing to raise no more than RMB 4.4 billion for projects including storage chip packaging and testing capacity expansion, packaging and testing capacity expansion in emerging application fields such as automotive, wafer-level packaging and testing capacity expansion, packaging and testing capacity expansion in high-performance computing and communication fields, as well as supplementing working capital and repaying bank loans [2]. This private placement reflects the company’s firm confidence in the industry’s development prospects, and also provides financial support for its continuous layout in the advanced packaging field.

The company is deploying overseas packaging and testing bases in Southeast Asia, Europe, and other regions to avoid trade barriers and serve global customers [1]. This global layout can not only diversify geopolitical risks but also be closer to downstream customers, improving service response speed and customer stickiness.

Tongfu Microelectronics has a high degree of dependence on AMD. If AMD’s own business fluctuates or adjusts its supply chain strategy, it will have a significant impact on the company’s performance. Although the company is actively expanding other customers, the risk of high customer concentration still needs attention in the short term.

The company’s capital expenditure/depreciation and amortization ratio has remained in the high range of 150%–400%, reflecting the common choice of actively expanding production capacity and upgrading technology during the industry’s upward cycle [8]. High capital expenditure means greater cash consumption pressure. If market demand falls short of expectations or there are problems with capacity absorption, it will affect the company’s financial health. As of the end of the third quarter of 2025, the company’s asset-liability ratio was approximately 63%, and the debt risk was assessed as “high risk” [0].

Advanced packaging technology iterates rapidly. If the company fails to keep up with the development direction of new technologies, it may face the risk of technological backwardness. In addition, high-end packaging equipment still relies on imports, leading to the risk of being “bottlenecked” [1].

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According to data from market research firm Yole, the global advanced packaging market reached a total revenue of USD 51.9 billion in 2024, a year-on-year increase of 10.9%; it is expected to reach USD 56.9 billion in 2025, a year-on-year increase of 9.6%; the market is expected to reach USD 78.6 billion by 2028, with a compound annual growth rate of 10.05% from 2022 to 2028 [7]. Advanced packaging technology is gradually becoming an important driver of growth in the packaging market.

The market size of China’s semiconductor packaging and testing industry reached RMB 386 billion in 2024, a year-on-year increase of 8.2% [1]. Benefiting from the expansion of domestic chip production capacity and downstream demand, the market size is expected to exceed RMB 420 billion in 2025 and reach RMB 750 billion by 2031, with a compound annual growth rate of approximately 10.1% from 2025 to 2031. The share of domestic packaging and testing enterprises in the global market continues to increase. In 2024, local enterprises such as Changdian Technology, Tongfu Microelectronics, Huatian Technology, and Jingfang Technology accounted for more than 60% of the total market share.

From the end of 2025 to the beginning of 2026, leading enterprises in the A-share packaging and testing sector have taken frequent actions: Changdian Technology announced in December 2025 that its automotive-grade chip packaging and testing factory (JSAC) was put into operation; Jinglong Technology’s high-end semiconductor testing project new factory was put into production in January 2026, with a total investment of RMB 4 billion; Yongxi Electronics announced in January 2026 that it plans to invest no more than RMB 2.1 billion to build a packaging and testing base in Malaysia; SK Hynix announced in January 2026 that it will invest 19 trillion KRW (approximately RMB 91 billion) to build the P&T7 advanced packaging factory in Cheongju [5]. Tongfu Microelectronics’ RMB 4.4 billion private placement plan is also an important part of this capacity expansion wave.

According to the Commercial Times, ASE is expected to raise prices by 5%–20% due to growing AI chip demand and rising raw material costs. Taiwanese packaging and testing manufacturers such as Powertech and Nexperia have full order books, with capacity close to full load, and have launched the first round of price hikes, with an increase of up to 30% [5]. The prices of raw materials such as gold, silver, and copper have risen sharply, directly pushing up packaging costs, and the industry-wide price hike trend is clear. Under high industry boom, packaging and testing enterprises have the conditions to pass on cost pressure through price adjustments and improve profitability.

The domestic packaging and testing industry presents a pattern of “one superpower and multiple strong players”:

Enterprise	Market Position	Core Advantages	H1 2025 Performance
Changdian Technology	3rd globally, 1st domestically	Leading HBM technology, 98.5% yield for 8-layer stacking, customers cover 85% of global leading semiconductor enterprises	Revenue +20.1%, net profit +52.4%
Tongfu Microelectronics	2nd domestically	Partnered with AMD, mass production of 5nm packaging, leading 3D Fanout technology	Revenue +17.67%, net profit +55.74%
Huatian Technology	3rd domestically	Solid customer base, potential in automotive electronics, mass production of DDR5 packaging	Revenue +15.8%, net profit +1.7%
Kaifa Technology	Storage Packaging & Testing Dark Horse	98.2% HBM yield, orders scheduled until 2026	Storage business +25%

From the perspective of capital expenditure intensity, Yongxi Electronics (594.71%) and Jingfang Technology (571.15%) are in the first echelon, rapidly catching up in market share through high-intensity capital expenditure; Tongfu Microelectronics, Huatian Technology, and Kaifa Technology remain in the 150%–400% range, reflecting the common choice of actively expanding production capacity and upgrading technology during the industry’s upward cycle [8].

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As of January 20, 2026, Tongfu Microelectronics’ closing price was USD 51.01, with a market capitalization of USD 77.41 billion. The main valuation indicators are as follows [0][9]:

Indicator	Tongfu Microelectronics	Industry Average	Evaluation
P/E (TTM)	78.55x	Approximately 60x	Relatively High
P/B	5.10x	Approximately 3.5x	Relatively High
P/S	2.88x	Approximately 2.0x	Relatively High
Beta	0.42	1.0	Low Correlation with Market

From a valuation perspective, Tongfu Microelectronics’ P/E, P/B, and P/S indicators are significantly higher than the industry average, reflecting the market’s expectations for the company’s future high growth. The current valuation has partially priced in the 2025 earnings growth. To achieve valuation repair, sustained earnings exceeding expectations or an increase in market risk appetite is required.

Tongfu Microelectronics’ 52-week trading range is USD 21.50–52.80, and the current price of USD 52.80 is at a historical high [9]. From a technical analysis perspective, the company’s stock is in an uptrend, but the KDJ indicator (K:85.9, D:81.0, J:95.6) shows that it has entered the overbought zone, with potential for a short-term correction [9]. The trend score is 7.5 out of 10, indicating that the mid-term upward momentum remains strong, but attention should be paid to the resistance level around USD 52.80.

Based on historical data, Tongfu Microelectronics’ P/E ratio was approximately 40–50x in early 2024. With the substantial earnings growth and the market’s optimistic expectations for the prospects of AI chip packaging and testing, the valuation central tendency has significantly shifted upward. If the company’s net profit reaches the forecast median of RMB 1.225 billion in 2025, the P/E ratio will drop to approximately 63x based on the current market capitalization, which is still higher than the historical central tendency. If the market gives the company a 50x P/E valuation for 2026, the corresponding stock price will be approximately USD 59, representing an upside of about 15% from the current level.

Compared with domestic packaging and testing peers, Tongfu Microelectronics’ P/E (78.55x) is higher than that of Changdian Technology (45.23x) and Kaifa Technology (52.18x), and is close to that of Huatian Technology (68.41x) [10]. Considering Tongfu Microelectronics’ leading position in AMD’s high-end packaging field and the positive impact of the RMB 4.4 billion private placement, the current valuation has a certain degree of rationality, but the room for further expansion is limited.

1. Sustained Earnings Exceeding Expectations
   : If the performance in the first quarter and full year of 2026 continues to grow significantly, it is expected to drive an upward adjustment in valuation
2. HBM Technological Breakthrough
   : If the company successfully breaks through HBM packaging technology and obtains orders from mainstream storage manufacturers, it will significantly boost valuation
3. Sustained Industry Price Hikes
   : Widespread price hikes in the packaging and testing industry will improve the overall profitability of the industry and enhance market expectations
4. Resolution of Institutional Divergences
   : Currently, Stock Connect continues to buy while the National Integrated Circuit Industry Investment Fund continues to sell. If institutional divergences are resolved, it will bring incremental capital

Considering the following risk factors, an appropriate risk premium should be granted to the company:

• High customer concentration risk (approximately 60% dependence on AMD)
• Financial pressure caused by high capital expenditure
• Uncertainty in advanced packaging technology iteration
• Supply chain disruptions that may be caused by geopolitical factors

Based on a comprehensive assessment, under a neutral scenario, the company’s reasonable P/E range is 50–65x, corresponding to a stock price range of USD 42–54. The current stock price is at the upper end of the range, and the valuation repair potential is limited. It is more likely that the valuation will be digested through earnings growth.

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Based on the above analysis, we give Tongfu Microelectronics an

rating, and recommend buying on dips during corrections. The main logic is as follows:

• Demand for AI chips and new energy vehicles remains strong, supporting high industry boom in packaging and testing
• The company has profound technological accumulation in advanced packaging, with mass production of 5nm packaging
• The RMB 4.4 billion private placement will strengthen the company’s capacity layout in high-growth fields such as storage chips, automotive electronics, and high-performance computing

• Compared with global packaging and testing leaders such as ASE and Amkor, domestic enterprises still have room for valuation improvement
• Against the background of domestic substitution, local packaging and testing enterprises are expected to obtain higher market premiums

• The stock price is in an uptrend, and the 52-week high indicates strong market momentum
• A Beta value of 0.42 shows low correlation with the broader market, providing a certain defensive attribute during market fluctuations

Item	Value
Reasonable Valuation Range	50–65x P/E
Corresponding Stock Price Range	USD 42–54
Short-Term Target Price	USD 54.81 (Technical Resistance Level)
Mid-Term Target Price	USD 59 (Based on 2026 50x P/E)
Stop-Loss Level	USD 43.41 (Technical Support Level)

: The current stock price is at a historical high and technical indicators are overbought. It is recommended that investors wait for a correction to the USD 45–48 range to buy on dips, and hold mid-term until the second half of 2026, with a target price of USD 55–60. If the stock price breaks through USD 52.80 and stabilizes, investors can add positions accordingly.

: If the company’s earnings growth slows down in the fourth quarter of 2025 or 2026, it may lead to a valuation correction.

: The semiconductor industry has strong cyclicality. If downstream demand weakens, the boom in the packaging and testing industry will decline.

: If the development of advanced packaging technologies such as Chiplet and SiP falls short of expectations, or is replaced by new technologies, it may affect the company’s competitiveness.

: The company’s overseas revenue accounts for approximately 69% of total revenue, and fluctuations in the RMB exchange rate may affect its profitability.

: The semiconductor industry is greatly affected by international trade policies, and changes in geopolitics may bring supply chain disruptions.

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The driving factors for Tongfu Microelectronics’ 62%–99% net profit growth forecast in 2025 are highly sustainable, mainly based on the following judgments: First, the structural demand growth brought by AI chips and new energy vehicles will continue to provide order support for the company over the next 3–5 years; second, the company’s technological accumulation and capacity layout in advanced packaging are at the leading level in the industry. The mass production of 5nm packaging and the development of 3D Fanout technology have built a high competitive barrier for the company; third, the company’s RMB 4.4 billion private placement plan will further strengthen its market position in high-growth fields such as storage chips, automotive electronics, and high-performance computing.

However, the current valuation level has fully reflected the market’s expectations for the company’s future growth, with a P/E ratio of 78.55x significantly higher than the industry average. Obtaining excess returns further will depend on sustained earnings exceeding expectations or a further rise in valuation sentiment. From the perspective of valuation repair potential, under a neutral scenario, the company’s stock price has a mid-term upside of approximately 15%–20%, and it is more likely that the valuation will be digested through earnings growth rather than valuation expansion.

In conclusion, Tongfu Microelectronics is a semiconductor packaging and testing leading target with good growth potential. It is recommended that investors buy on dips during corrections and hold mid-term to share the dividends of industry structural growth.

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[0] Jinling API - Tongfu Microelectronics Financial Analysis Data

[1] Jiepei Research Institute - 2025-2031 China Semiconductor Packaging and Testing Industry Development Report (https://www.jiepei.com/design/6128.html)

[2] AiJiWei - A-Share Packaging and Testing Industry Launches Capacity Race, Betting Heavily on AI, Automotive, and Domestic Substitution New Era (https://news.qq.com/rain/a/20260114A0657L00)

[3] Yicai - Record High Earnings Cannot Mask Institutional Divergences, Can Tongfu Microelectronics Maintain High Growth in Q4? (https://www.yicai.com/news/102884314.html)

[4] Tongfu Microelectronics 2025 Semi-Annual Report - CNinfo (http://static.cninfo.com.cn/finalpage/2025