WinWay Technology: Fundamental Thesis Intact as Socket Capacity Ramps; Pullback Offers Entry at 38% Upside

Core Conclusion

WinWay Technology’s (6515.TW) 8.5% share price decline on May 22, 2026 reflects misplaced fears of Vera CPU probe card market share loss and capacity delays. Channel checks indicate no material shift in the Vera probe card competitive landscape vs. MPI, and the socket capacity ramp began in 1Q as planned. 2Q revenue remains on track for 15–20% sequential growth—back-end loaded into June—and the upcoming earnings call (next Tuesday) is a near-term catalyst. At NT$8,700, the stock offers 38% upside to our NT$12,000 target price, supported by long-term tailwinds from longer testing times, larger package sizes, and hypersocket adoption.

What the Market is Underpricing

Investors are discounting three items: (1) the stability of WinWay’s Vera CPU market share—our checks show no meaningful change versus MPI despite the noise; (2) the fact that capacity ramp is already underway (1Q), not delayed—April sales weakness (-19% M/M) is a timing issue, not a demand signal; and (3) the high visibility into 2Q revenue acceleration, with growth concentrated in June. The earnings call will provide management guidance on future capacity and a CPO revenue update, which should reset expectations. The market is effectively pricing in a worst-case scenario that the evidence does not support.

Evidence Chain

1. Vera CPU probe card market share is stable

• Channel checks confirm WinWay’s share of Vera CPU probe cards has not changed materially vs. MPI. No major loss or gain has occurred.
• The capacity ramp for these sockets began in 1Q—consistent with prior guidance. No delay in commissioning has been identified.
• Investment implication: Competitive dynamics in WinWay’s highest-growth product line are stable, removing the primary catalyst for the recent sell-off. Revenue visibility from Vera remains intact.

2. 2Q revenue guidance unchanged at +15–20% Q/Q

• April sales fell 19% month-over-month, but the full-quarter outlook is unchanged. The timing of revenue recognition shifts toward June, reflecting customer order patterns rather than demand deterioration.
• The 2Q growth rate implies meaningful acceleration from April’s depressed level, which is achievable given the order book and socket ramp.
• Investment implication: The 15–20% sequential increase represents a de-risked near-term catalyst. If June orders materialize as expected, the stock should re-rate upward following the earnings call.

3. Long-term structural drivers remain intact

• WinWay benefits from longer testing times and larger package size upgrades—both secular trends tied to advanced processor architectures (CPU/GPU/AI accelerators).
• Hypersocket and MEMS probe card adoption provides multi-year volume growth. The company is positioned to capture share as test complexity rises.
• Investment implication: The medium-term growth algorithm (FY26e EPS NT$94.5, FY27e NT$181) is anchored to these structural trends, not to quarterly order variability. The current price implies a FY27 P/E of 48x—justified by ~90% EPS growth in FY27 if the ramp continues.

4. Upcoming earnings call as a catalyst

• Management will provide updates on future capacity plans and CPO revenue contribution next Tuesday. Any reaffirmation of near-term guidance or expansion of capacity targets would directly refute market fears.
• Investment implication: The call is a binary risk-reduction event. If guidance is maintained or raised, the stock should recover the lost ground and potentially exceed prior highs.

Key Disagreements and Risks

The downside risks are manageable because the core Vera CPU and hypersocket ramp are already contracted. A failure in edge AI adoption alone would not break the FY26–FY27 earnings trajectory.

Valuation and Trading Implication

We value 6515.TW using a residual income model with the following parameters: cost of equity 9.14% (risk-free rate 2.0% + equity risk premium 5.5%), payout ratio 80%, medium-term growth 16.4%, terminal growth 4.5%. The implied target price is NT$12,000, representing 38% upside from the current NT$8,700.

At the current price, the stock trades at 92x FY26e EPS and 48x FY27e EPS—a forward P/E that does not price in the >90% EPS growth in FY27. If the ramp continues as planned, FY27e EPS of NT$181 implies a 48x multiple that could compress to ~25x by FY28e as the base expands. The risk/reward is skewed strongly to the upside.

Trading strategy: Use the pullback to build positions ahead of the earnings call. The stock may remain volatile until next Tuesday, but we view the fundamental thesis as unchanged. Any further weakness should be accretive to long-duration investors.

Appendix: Fiscal Year Projections (Morgan Stanley Estimates)