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Investing.com -- Bernstein has initiated coverage of the European semiconductor sector, shifting focus from traditional lithography to advanced packaging and transistor structures as the main performance drivers going forward.
Analysts assess ASML (AS:ASML), BE Semiconductor (Besi), and Infineon (OTC:IFNNY) with diverging outlooks, citing diminishing returns from EUV lithography and upside in power and packaging technologies.
ASML, while maintaining dominance in lithography with a 90% market share and a near-monopoly in EUV, is rated "market perform" with a €700 price target, representing 5% upside.
Bernstein forecasts ASML’s revenue to grow in line with wafer fab equipment (WFE) at 7% CAGR from 2024 to 2030, reaching €45B by 2030. This is 18% below consensus and at the low end of company guidance.
The analysts cite EUV’s high capital intensity, accounting for over 30% of leading-edge logic capex, and its likely decline past the 3nm logic and D1d DRAM nodes as limiting factors. A €5B DUV overshipment to China is also expected to weigh on future sales.
In contrast, Besi is rated "outperform" with a €167 price target, offering 33% upside. The brokerage holds a dominant 91% share in hybrid bonding and is seen as well-positioned to benefit from broader adoption across logic and memory, including by TSMC (NYSE:TSM), Apple (NASDAQ:AAPL), Intel (NASDAQ:INTC), and AMD (NASDAQ:AMD).
Thermal compression bonding (TCB) is identified as a secondary growth driver, particularly as Besi enters Micron’s supply chain.
Bernstein forecasts Besi’s revenue to grow at a 24.6% CAGR and earnings per share to expand at a 41% CAGR from 2024 to 2027.
Infineon also receives an “outperform” rating, with a €45 price target, implying 27% upside. The company holds leading market shares in automotive microcontrollers (32%) and power semiconductors (29%).
Bernstein projects EPS growth of 9% CAGR between 2024 and 2027 and margin expansion from 15.9% in 2025 to 22.6% by 2027.
While near-term SiC oversupply is a risk, Infineon is seen benefiting from rising AI server power demand and structural growth in wide bandgap semiconductors, aided by its differentiated technology and absence of substrate production.