Why Nvidia, Delta, and TSMC All Need Chroma: An Exclusive Interview with CEO I-Shih Tseng

Hello everyone,

“We’re like a temple, with many monks chanting different scriptures, patiently studying the classics. Then one day, when your expertise is needed, you come down from the mountain,” Chroma ATE（致茂電子） CEO Dr. I-Shih Tseng（曾一士） told me, using this analogy to explain the multi-technology strategy of Taiwan’s largest test-equipment maker.

Among the AI supply-chain sectors that have surged during this wave of the AI revolution, memory has delivered the most dramatic rally.

But Taiwan’s semiconductor testing industry is not far behind. Test equipment, probe cards and even dedicated testing houses have all seen demand soar because of the complex and sophisticated CoWoS packaging used in AI chips. Their share prices, too, have routinely risen tenfold, twentyfold or more over the past few years.

Since ChatGPT was launched at the end of 2022, Chroma’s share price has risen more than tenfold, while its market capitalization has topped NT$1 trillion several times this year.

Yet the sudden emergence late last year of Hon Precision（鴻勁）, a peer that overtook Chroma immediately after going public to become Taiwan’s most valuable semiconductor-equipment company, has clearly caught the attention of Chroma executives.

Although Chroma’s revenue in the first half of this year was still slightly higher than Hon Precision’s, and its 61% gross margin was also better than Hon Precision’s 56.2%, its net profit after tax came in at NT$8.99 billion, below Hon Precision’s NT$10.1 billion.

The key difference is that Chroma spends more on R&D. Its R&D expenses account for as much as 6.87% of revenue, twice Hon Precision’s level.

Why is there such a difference between these two testing heavyweights?

Read on in this issue of the newsletter.