China Advanced Packaging: Favor Capex Beneficiaries & Share Gainers

China advanced packaging: Structural AI growth, but value capture should favor equipment vendors and OSAT share gainers. China's advanced packaging industry remains a secular AI-driven growth story, but we see a growing divergence between industry TAM growth and earnings capture across the value chain. We expect China's advanced packaging TAM to reach approximately Rmb100bn by 2029, implying a roughly 13% CAGR over 2025-29, while the chiplet / 2.5D segment should grow substantially faster, reaching Rmb17.7bn by 2029 at a 40% CAGR. However, we are more cautious than consensus on how this growth translates into OSAT earnings. China's 2.5D annual capacity is expected to expand from around 120k wafers in 2025 to 436k wafers in 2027, while effective demand is constrained by advanced-node yields, HBM availability and customer qualification. We therefore estimate industry utilization at only around 63% in 2027, suggesting moderate overcapacity could pressure pricing and limit margin upside ev