Alchip Technologies: A Semiconductor Leader Poised for AI-Driven Growth

Alchip Technologies (TWSE: 3661), a global leader in advanced semiconductor design and AI ASIC solutions, is strategically positioned to capitalize on the explosive demand for high-performance computing (HPC) and artificial intelligence (AI) infrastructure. With record financials, cutting-edge 2nm/3nm capabilities, and a distributed engineering model, Alchip is emerging as a top-tier player in the semiconductor industry. This article explores why its stock is a compelling buy amid the AI revolution.

Ask Aime: Why is Alchip Technologies a top buy in the AI semiconductor sector?

Financial Resilience: Strong Results Fuel Growth Ambitions

Alchip's 2024 financials underscore its robust position. Revenue surged 65% year-over-year to $1.62 billion, while net profit more than doubled to $200.8 million—both record highs. The company's earnings per share (EPS) reached NT$81.3, a 78% increase from 2023. This performance is driven by strong demand for its advanced 7nm AI chips, which contributed 86% of 2024 revenue, up from 63% in 2023.

The company's focus on high-margin AI/ASIC design services is paying off. Advanced packaging—such as TSMC's CoWoS (Chip-on-Wafer-on-Substrate)—has become a key revenue driver. Alchip completed 18 CoWoS designs in . 2024, the most among ASIC partners per TSMC, enabling complex multi-die systems for AI workloads. This expertise positions Alchip to benefit from the $60–$90 billion AI ASIC market expected by 2028.

Ask Aime: Alchip Technologies Stock Surge Amid AI Revolution

Technical Leadership: Pioneering 2nm/GAA and 3DIC Innovation

Alchip is at the forefront of next-generation semiconductor technology. Its 2nm design enablement, the first to use gate-all-around (GAA) transistors, offers superior power, performance, and area (PPA) benefits over 3nm. A 2nm test chip was taped out in late 2024, with silicon results expected by early 2025. This node is critical for AI systems requiring extreme compute density.

Hybrid designs combining 2nm compute logic with 3nm chiplets are already in use, addressing the complexity of advanced-node design. One major customer, reportedly Amazon Web Services, plans to launch 2nm product chips in 2025. Meanwhile, 3nm remains dominant in 2025, with small-volume production already underway and volume ramp-up expected this year.

Alchip's 3DIC (3D Integrated Circuit) design flow, finalized in 2025, addresses thermal and power challenges in multi-die systems. This capability is vital for AI chips requiring high bandwidth and low latency, such as those used in data centers and autonomous vehicles.

Global Expansion: A Distributed Engineering Model for Resilience

Alchip's distributed R&D strategy ensures proximity to customers, foundries, and talent while mitigating geopolitical risks. Key moves include:

• Vietnam: Engineering teams are expanding from 30 to 70–80 engineers by 2025, leveraging the country's growing tech ecosystem and cost-effective talent pool.
• Japan: A second office in Shin-Yokohama boosts backend design and testing capacity, reinforcing Japan as a core engineering hub.
• Malaysia: Teams are growing from 20 to ~50 engineers, supporting regional production needs.

Over half of Alchip's engineering workforce will be outside China by year-end 2025. This model ensures compliance with global regulations and proximity to foundries like TSMC, which is crucial for advanced-node production.

Strategic Partnerships and Ecosystem Strength

Alchip's alignment with TSMC is foundational. As a founding member of TSMC's 3DFabric Alliance, it leverages cutting-edge 3nm and upcoming 2nm nodes. The partnership ensures access to CoWoS packaging capacity, a critical bottleneck in AI chip production.

While the FPT-AICHIP partnership (a separate entity) is boosting Vietnam's semiconductor ecosystem, Alchip's own growth in Vietnam positions it to benefit from regional talent and infrastructure investments. FPT's advancements in AI and semiconductor training, such as the Vietnam Semiconductor Training Center, indirectly support Alchip's talent pipeline.

Investment Case: Buy on Strong Fundamentals and AI Tailwinds

Alchip's stock (TWSE: 3661) is undervalued relative to its growth trajectory. With 30%+ annual revenue growth expected through 2026, driven by 2nm/3nm AI chips and CoWoS designs, the company is well-positioned to outperform peers.

The stock's P/E ratio of 15x (vs. TSMC's 18x) reflects its undervaluation, while its strong cash flow (NT$200.8M net income) supports dividends and reinvestment. Risks include design complexity for 2nm and competition from foundry-owned design houses, but Alchip's distributed model and R&D focus mitigate these.

Conclusion

Alchip Technologies combines financial strength, technical leadership in advanced nodes, and a globalized engineering strategy to dominate the AI/ASIC market. As demand for high-performance compute infrastructure skyrockets, Alchip's stock presents a compelling buy at current levels. Investors should monitor its 2nm silicon results and new design wins in 2025 for further upside.

Recommendation: Buy TWSE:3661 for exposure to the AI revolution, with a price target of NT$XXX (based on 20x 2025E EPS).