ASML Holding NV ADR (ASML.US) may enter the hybrid bonding market, challenging the leading position of BE Semiconductor Industries (BESIY.US); Bank of America downgrades the latter to "Neutral," with its price target nearly halved.

Bank of America Corp believes that the current share price of Dutch semiconductor equipment maker BE Semiconductor Industries (BESIY.US) does not fully reflect the potential competitive threat from ASML Holding NV ADR (ASML.US). The bank downgraded BE Semiconductor Industries from "Buy" to "Neutral" and nearly halved its price target. As a result, the stock fell more than 6% at one point on Tuesday. BE Semiconductor Industries currently holds a leading position in the hybrid bonding equipment market. Hybrid bonding is an emerging advanced packaging technology that directly connects two chip surfaces, eliminating traditional metal bumps, thereby increasing chip interconnect density and thermal efficiency. As demand for advanced packaging technology continues to rise for products such as AI chips and high-bandwidth memory, this technology has become an important pillar of the company's future growth prospects. Bernstein analysts expect that by 2028, about three-quarters of globally shipped hybrid bonding equipment may come from BE Semiconductor Industries. The company itself also has high expectations for this market. Under an optimistic scenario, the company expects hybrid bonding equipment shipments to exceed 2,000 units by 2030, while as of the end of 2025, its cumulative orders were only just over 150 units. However, analysts led by Didier Scemama at Bank of America pointed out that BE Semiconductor Industries' leading advantage is facing new uncertainties, the most notable of which is that ASML Holding NV ADR has publicly expressed its intention to enter the hybrid bonding market. Bank of America said that the possible entry of a company like ASML Holding NV ADR into BE Semiconductor Industries' most important growth market, combined with the possibility that BE Semiconductor Industries may need to increase R&D investment in the future, means these risks are not yet fully reflected in the share price. Until ASML Holding NV ADR's specific plans become clearer, this factor may continue to weigh on BE Semiconductor Industries' valuation. Nevertheless, Bank of America currently does not assume that ASML Holding NV ADR will ultimately capture a large market share. ASML Holding NV ADR delivered its first advanced packaging product last year. In April this year, ASML Holding NV ADR CEO Christophe Fouquet said on an earnings call that the company will continue to study how to use hybrid bonding technology to support customers. Bank of America believes that ASML Holding NV ADR's potential advantage is related to the current technical bottlenecks facing hybrid bonding. An important issue currently hindering the large-scale application of this technology is low production yield, as manufacturers still find it difficult to consistently and stably produce enough qualified chips. As multiple logic chips or memory chips are stacked, the requirements for equipment precision also increase, and the technical capabilities ASML Holding NV ADR has accumulated in high-precision, high-speed lithography may create opportunities for it to enter this market. BE Semiconductor Industries' share price has recently come under significant pressure. Due to factors such as investor concerns that memory chip manufacturers may delay the adoption of hybrid bonding technology, the stock fell by about one-third cumulatively in the third quarter, making it the worst performer in the Europe Stoxx 600 Index during the same period. However, even after a sharp pullback, BE Semiconductor Industries is still up about 45% year to date.