Chinese OSAT earnings surge on AI packaging demand, but recurring profit tells a narrower story

Rising demand for AI chips has driven a surge in profits among Chinese OSAT firms, yet post-one-time-item figures reveal a fragile recovery. Technologically, the demand for AI compute is boosting orders for advanced packaging (e.g., 2.5D/3D), but supply chain bottlenecks have led to overcapacity concerns and misaligned capital returns. From a compliance standpoint, geopolitical tensions are increasing operational costs due to restrictions on key equipment and materials imports, heightening supply chain resilience demands. In competitive dynamics, leading players are expanding capacity, while smaller firms face losses, accelerating industry consolidation. Over the next 12–24 months, if AI demand slows, the sector may confront overcapacity and margin pressure, necessitating more cautious capital allocation.