BESI 2Q26 Earnings: Between the Chips

AI is turning advanced packaging into part of the computer and BESI is beginning to grow before HBM reaches mass production.

TL; DR

• BESI’s earnings inflection no longer depends entirely on HBM. Logic, co-packaged optics, panel packaging, power management and even wearable devices are already driving advanced-bonding demand.

• The real opportunity is architectural, not cyclical. As performance moves from individual dies to the connections between them, bonding equipment becomes embedded earlier in product design and harder to replace.

• The process advantage is strengthening, but customers still control the clock. BESI can win qualifications, expand margins and deepen its installed base, yet semiconductor capacity cycles will continue to create sharp swings in orders and valuation.

In 1971, Intel introduced the 4004. The achievement was not the package around it. It was the fact that the processor itself fit on one piece of silicon.

That model defined the next five decades of computing. Performance came from putting more transistors onto a single die, then making those transistors smaller, faster and cheaper. Packaging protected the result, connected it to a circuit board and carried heat away. It mattered, but it came after the real work.

AI has broken that hierarchy.

The most capable systems now combine accelerators, CPUs, memory, optical links, power components, interposers and substrates across multiple dies. Their performance depends less on what any one chip can do alone and more on how closely, quickly and efficiently those chips work together.

The boundary between chips has become part of the computer.

BESI sells the machines that build that boundary.

That is the historical change behind the investment case. BESI is still an equipment supplier. Its customers still buy in waves. Capacity will still overshoot demand. Yet the role of bonding is changing. As more performance moves from inside the die to the connections between dies, bonding becomes less like a final assembly step and more like part of the product architecture itself.

The second quarter mattered because it showed this change already creating demand across several applications, before hybrid bonding reaches volume production in HBM.

BESI did not prove that memory has arrived.

It proved that the company can begin growing before memory does.

A Miss That Wasn’t

BESI reported second-quarter revenue of €249.9 million, slightly below Bloomberg consensus of €251.6 million. EPS of €1.11 also missed the €1.14 estimate.

A miss is a miss.

It just was not the right way to read the quarter.

Orders reached €292.9 million, above both the published estimate and the real bar I had set before the print. Book-to-bill held at 1.17x even though revenue grew 35% sequentially. BESI shipped far more equipment and still added backlog.

Then management guided third-quarter revenue up another 10–15% sequentially, roughly €275–287 million against a pre-print estimate near €254 million.

That changes the interpretation. Reported revenue tells me what customers ordered months ago. Orders tell me whether they are still expanding. Guidance tells me whether those orders are becoming a higher revenue base rather than one unusually strong shipment quarter.

The answer was yes.

I had been treating BESI’s near-term earnings path as a countdown to HBM hybrid bonding. The quarter showed why that framing was too narrow.

The Big Question

The single question I would use to judge BESI is this:

Can BESI turn the movement of system performance from inside chips to between chips into a self-reinforcing process advantage, or will customer-controlled capacity cycles keep revenue too uneven to justify the valuation?

The mechanism is straightforward.

As packages become harder to build, BESI becomes involved earlier in product development. Earlier involvement gives the company more chances to define the production process around its equipment. More qualified systems create more operating knowledge. That knowledge raises the odds of winning the next design.

The loop strengthens when the same underlying skill applies across several products.

Logic requires accuracy and throughput. Photonics adds alignment and new materials. Memory adds heat and density. Panel packaging changes the physical format and cost equation. The applications differ, but the core problem is the same: join more components with tighter tolerances at a yield and cost that production managers will accept.

The loop breaks if older bonding methods remain good enough, customers fund credible alternatives, or qualification takes so long that BESI’s technical position never turns into large commercial deployments.

This quarter supported the loop.

It did not prove that it is permanent.

HBM Is Still Waiting

The easiest BESI story begins with HBM.

Memory stacks become taller and hotter. Thermal compression bonding approaches its limits. Hybrid bonding creates direct copper connections, improves performance and reduces heat. BESI supplies the tools.

That story may still be right. It is just early.

When Needham’s Charles Shi asked what was holding back qualification at the three major memory producers, CEO Richard Blickman gave a direct answer:

“The major hurdles are simply cost and yield.”

That sentence separates a working technology from a working factory.

The bonding step may perform better, but materials, surface preparation, throughput and process integration all have to work together. Development teams can prove the physics. Operations teams must prove that millions of devices can be produced at acceptable yield and cost.

Blickman pointed to the leading Taiwanese logic customer, where qualification took more than three years before hybrid bonding became a mainstream production process. The large US logic customer followed a similar path. Memory is now passing through the same uncomfortable middle stage: the technical case is strong, while the factory economics are still being proven.

All three major memory companies have BESI systems. One is moving faster than the others and Blickman told us how close the decision is:

“We will shortly find out, do we pass the test for full production at this moment, or does it take a bit more time?”

That is not a man holding a signed purchase order. That is a man waiting for a verdict. Management expects clarity in the second half of 2026 on whether hybrid bonding enters HBM4E, HBM3 or another early application. The October call is the natural disclosure point.

Still, no volume-production decision.

I do not see that as a thesis break. I see it as a timetable reminder.

The Glasses

The more revealing part of the quarter was that BESI’s latest hybrid-bonding orders did not depend on HBM at all.

Three orders. Three different end markets. A repeat logic customer. A repeat co-packaged-optics customer. And a new hyperscaler that, per Blickman, is “probably for wearables... the next step in wearables is those glasses.”

Read that again. A hyperscaler ordered the most advanced chip-packaging equipment in the world to make glasses.

Nobody was modeling AR wearables as a 2026 hybrid bonding application. Not the sell side, not the delay-narrative bears, not me. And the order arrived as a purchase order, not a roadmap slide, which means someone has a product far enough along that they need production-grade packaging tools now. That is not speculative demand. That is a bill of materials.

This is the strongest single piece of evidence for the loop. The market spent July pricing BESI as a binary bet on memory timing. The stock fell 23% from its June peak on reports that Samsung and SK Hynix were pushing out hybrid bonding decisions. Then the quarter delivered new hybrid bonding demand from a direction no one was watching.

BESI added customers and orders before memory arrived.

Many Versions of the Same Change

BESI ended 2025 with 15 hybrid-bonding customers. It had 21 by the end of the second quarter.

The number matters. The spread matters more.

Hybrid bonding is now being worked on across logic, memory development, co-packaged optics, consumer devices and other chiplet designs. BESI is also benefiting from the same architectural shift through products that are not hybrid bonders.

Management said CoWoS-like equipment is already a meaningful part of orders. Demand began in the fourth quarter, continued through the first and second quarters, and should expand further. BESI has orders for panel-level packaging using the 310-by-310 millimetre format selected in Taiwan. Those production flows can require flip-chip, thermal compression and hybrid systems at different stages.

Then there is AI power management.

Management called out new orders from several customers for power-related applications used in datacenter compute modules. These rely on more conventional products, including flip-chip and multi-module attach.

ING’s Marc Hesselink observed that BESI tends to name a new category only when it expects the contribution to become material. Blickman agreed:

“We only mention when we feel with high certainty that that could be a meaningful mainstream contribution.”

This is less exciting than HBM.

It may be more useful over the next two years.

An AI system needs accelerators, but it also needs memory, power delivery, optical links, substrates, chiplets and packaging capacity. BESI can earn revenue at several of those boundaries.

These are not separate growth stories. They are different expressions of the same architectural change.

System performance is being created through assembly.

Becoming Part of the Architecture

The strongest BESI thesis is not that advanced packaging grows.

Many companies benefit when a market grows.

The stronger claim is that bonding becomes part of the architecture itself.

That changes when the customer chooses the equipment. A conventional assembly tool can be selected late in the manufacturing flow. A process that affects interconnect pitch, thermal behaviour, package thickness and yield must be considered much earlier.

Earlier involvement creates a deeper relationship.

Once a production line has been qualified around a specific machine, replacement becomes expensive. A customer can choose another supplier for the next programme, but changing an existing process means taking on new yield risk, retraining operations teams and reworking parts of the production flow.

That does not make BESI impossible to displace.

It makes displacement costly.

The quarter offered some evidence of that mechanism: repeat orders from logic and co-packaged-optics customers, a wider customer base, and strong orders even as shipments accelerated.

The missing disclosure is scale.

BESI does not tell us how many hybrid bonders it shipped, the order value by application, or how many of the 21 customers are building production capacity rather than running evaluation systems. Deutsche Bank’s Robert Sanders asked for unit numbers. Management declined.

That gap matters.

Twenty-one customers may represent the start of a broad production standard. It may also represent many experiments and a few large commercial programmes.

I do not know yet.

The most useful metric is not customer count.

It is production systems per customer.

The Margin Before the Standard

BESI’s second-quarter economics give the company time.

Gross margin reached 65.7%. Operating margin reached 43.5%. Net margin reached 35.6%. Revenue increased by €65 million from the prior quarter while operating expenses rose by less than €2 million.

The operating leverage is already visible.

BESI does not need HBM production to earn exceptional margins. Logic, photonics, advanced assembly and conventional systems are already producing an attractive mix.

The third-quarter gross-margin guide falls to 63–65% because revenue will contain a less favourable product mix. I do not see evidence of pricing pressure. The business is broadening into more mainstream equipment.

I would take that trade.

A lower-margin system can deepen a customer relationship, expand the installed base and place BESI inside another AI production flow. The immediate gross margin may be lower while the long-run commercial position improves.

The margin ceiling may also be higher than I first assumed.

Management’s long-term operating-margin range is 45–55%. BESI reached 43.5% at roughly €250 million of quarterly revenue, below the level implied by its third-quarter guide. If annual revenue moves above €2 billion and hybrid bonding becomes a larger part of sales, a peak operating margin in the high 50s is possible.

Peak is the key word.

A larger company will need more engineers, service capacity, spare parts and supply-chain redundancy. Customers will push on price. Competitors will spend more.

I would model high-50s margins in an unusually strong year, not as a permanent state.

Process Without Schedule

BESI’s advantage and its weakness come from the same place.

The company may become more deeply embedded in customer production. It still does not control when customers add capacity.

Robert Sanders asked Blickman about the danger of overinvestment in advanced packaging. The CEO did not pretend AI had repealed semiconductor history.

“In this cyclical world, it remains cyclical.”

Blickman said prior upcycles often lasted six to eight quarters. New fabs, packaging plants and OSAT capacity eventually create excess supply. High returns invite more investment. AI may extend the current cycle, but management does not claim to know by how much.

That answer captures the stock better than any total-addressable-market slide. The current upturn began in the third quarter of 2025. We are in quarter four.

BESI can control part of the process.

It cannot control the schedule.

The positive loop is:

Harder packages → earlier involvement → more qualification wins → more installed equipment → better process knowledge.

The negative loop is:

High packaging returns → more capacity spending → equipment orders surge → capacity catches demand → orders fall before revenue → estimates and valuation reset.

Those loops can operate at the same time.

BESI may enter the next downturn with a stronger position than it had entering the last one. The shares can still fall sharply when orders turn.

That is not a contradiction.

It is the investment case.

Variant Perception

The common view is that BESI is the leading supplier of hybrid-bonding equipment and will benefit when HBM adoption accelerates.

I think that view is too narrow in the near term and too relaxed about cyclicality in the long term.

The near-term earnings path is less dependent on HBM than it appears. Logic, co-packaged optics, CoWoS-like assembly, panel packaging, power management and mobile can carry revenue higher before memory reaches production.

The long-term value is more dependent on the duration and repetition of customer capacity waves than the bull case admits. Several applications do not automatically create recurring demand. They could all be different expressions of one large AI packaging expansion.

My variant view is:

BESI can begin its earnings inflection before HBM, but it can sustain a premium valuation only if the shift from monolithic chips to assembled systems creates repeated production cycles rather than one front-loaded capacity build.

The quarter strengthened the first half.

The second half remains open.

What Could It Be Worth?

The key assumptions should move together.

If hybrid bonding becomes a standard production process, revenue grows faster, margins rise and the stock may retain a high multiple because the opportunity still looks early.

If the current order strength reflects capacity pulled forward, revenue slows, margins fall and the multiple contracts at the same time.

I use roughly €1.02 billion of 2026 revenue as the starting point. I stress-tested these assumptions through an adversarial review arguing each variable from both sides, twice and the framework below reflects where the numbers settled.

Bear: The Capacity Cycle Wins

Logic and CoWoS-like spending peak before HBM reaches volume. Customers digest equipment, thermal compression remains adequate for longer, and hybrid bonding stays weighted toward development systems.

Revenue reaches about €1.25 billion by 2029, but the path includes a downturn. Operating margin remains better than in past cycles, though far below the current bull expectation. The multiple falls because earnings are judged as cyclical.

Value: about €125.

A deeper interim trough could take the shares below €80 even if the long-run process position remains intact. BESI’s stock has halved twice in the past four years. It can do so again.

Base: Several Bridges to Memory

Logic hybrid bonding grows. CoWoS-like, photonics, power management and panel packaging expand. HBM begins to contribute in 2028 or 2029, but does not dominate the model.

Revenue reaches around €1.75 billion. Operating margin approaches 49%. EPS reaches roughly €9. The market keeps a premium multiple because growth remains healthy and the next trough appears structurally higher than the last.

Value: about €320.

This is my central case.

Bull: Bonding Becomes Part of the Standard

One memory producer moves into volume production and another follows. Orders shift from individual machines to lines. Logic, CPO and panel packaging continue growing alongside memory.

Revenue reaches about €2.25 billion. Operating margin rises into the mid-50s. EPS reaches €13–14. The stock retains a low-to-mid-40s multiple because adoption still looks early.

Value: about €590.

A true high case could exceed €700 if revenue passes €2.5 billion, margins reach the high 50s and growth remains above 20% in 2029.

We are not there yet.

What I Am Watching

I would raise my assumptions if a memory producer completes volume qualification, orders move from individual systems to full-line purchases, repeat orders broaden across logic and CPO, and CoWoS-like demand remains strong without HBM.

I would also want to see book-to-bill remain above 1.0x, gross margin hold in the mid-60s as revenue scales, and operating expenses continue to rise far more slowly than sales.

I would cut the numbers if hybrid bonding remains concentrated in development through 2028, AP7 or other capacity plans are delayed, CoWoS-like customers pause after the current build, or a credible rival wins a major production qualification.

The earliest warning would be orders falling below revenue for several quarters.

That is when process strength starts losing the argument to schedule.

Between the Chips

The 4004 mattered because it put the computer on one chip.

AI is creating the opposite problem. The computer is once again spread across many components, and the hard part is making them behave like one.

That is BESI’s opportunity.

The second quarter did not prove that hybrid bonding has become a mass-production standard. It showed that the same architectural change is already producing orders across logic, optics, power and advanced assembly, including, remarkably, a pair of glasses.

I entered the quarter thinking BESI needed HBM to validate the earnings ramp.

I was wrong.

It needs HBM to reach the most ambitious outcomes. It does not need HBM to begin growing.

At €232, the market is paying for the base case and getting the memory decision as an option. I would take that trade, the distributed demand evidence from this quarter makes the option worth more than the market is pricing, and the SK Hynix verdict lands within two quarters. But I would size the position for the cycle, not the thesis. The interim path in the bear case runs through €150 or lower, and no qualification flywheel spins fast enough to outrun an order downturn.

BESI may be gaining control over the process.

Its customers still control the clock.

$BESI

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