Utilization jumped 10 percent while gross margins stayed 350 basis points below 2024 levels.
Thesis: Powertech is a legacy packager wearing an AI suit. They are spending NT$30 billion on capacity while customer yields remain below requirements. Operational leverage is dead. Cost inflation in gold and power is permanent. Avoid until yields hit 98 percent and margin expansion returns.
Verdict: AVOID — Conviction: MEDIUM
Catalyst: Advanced packaging revenue contribution in 2026. This requires hitting 98 percent yield targets.
Key Risk: Yield failure on top die attachment for AI chips. Customer requirements remain at 98-99 percent while Powertech is at 90 percent.
The Tell: Chairman Tsai on the Micron and PSMC collaboration: 'They would tell us, and they have not.' This confirms Powertech is a dependent vendor with zero visibility into their largest customer's strategic shifts.
Friction Level: HIGH_FRICTION — The gap between record utilization and compressed margins. One side sees operational leverage inflecting. The other sees permanent cost inflation and zero pricing power. Yield parity is the deciding factor.
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