Summary of Key Points from the Conference Call Industry Overview - **Industry**: Greater China Technology Hardware - **Region**: Asia Pacific - **Industry View**: In-Line [4][6] Core Insights - **Voltronics**: - Plans to extend EV charging facilities expertise to offer HVDC (800V) power solutions for data centers [6] - Anticipates strong demand for HVDC power architecture to support AI computing, particularly for NVDA Rubin Ultra platform starting in 2H27 [6] - Power Supply Units (PSUs) will be upgraded to 18-30kW with three-phase AC input and outputs of +800V DC (NVDA) and ±400V DC (non-NVDA) [6] - **TECO**: - Collaborating with Hon Hai to provide new power solutions for data centers, aiming to expand into the US and Middle East markets [6] - Expects an 8-10% price increase for power products due to tariffs, with ~50% of the tariff costs passed to customers [6] - Emphasizes the need for US production of certain power products, including busways and junction boxes [6] - **Delta Electronics**: - Expected to benefit from upgrades in power solutions and data center infrastructure development [6] Market Demand and Trends - **UPS Demand**: - Significant demand for large-scale, online UPS systems exceeding 20kW, with leading vendors like Schneider and Eaton experiencing two-year order backlogs [6] - This backlog suggests potential business overflow to outsourcing partners and tier-two vendors [6] - **Cost Structure**: - Data center white space (IT equipment) constitutes ~60% of total construction costs, while power facilities in gray space account for an additional 25-30% [6] - Proven delivery capabilities and multiple production bases globally (US, China, Southeast Asia) could lead to a 30% savings in time to market for data center infrastructure projects [6] Risks and Considerations - **Upside Risks**: - Faster-than-expected global economic growth and falling raw material prices could improve margins [9] - **Downside Risks**: - Global economic slowdown, ongoing component supply tightness, rising raw material prices, and potential margin contraction due to higher operating expenses or faster average selling price (ASP) erosion [9] Valuation Methodology - **Delta Electronics Inc.**: - Base case valuation using residual income methodology with key assumptions including a cost of equity of 8%, medium-term growth rate of 14%, and terminal growth rate of 3% [7] Additional Insights - **Production and Tariffs**: - TECO's strategy includes producing certain power products in the US to mitigate tariff impacts [6] - **Investment Banking Relationships**: - Morgan Stanley has investment banking relationships with several companies in the technology hardware sector, which may influence research objectivity [4][16][18] This summary encapsulates the critical insights and data from the conference call, highlighting the strategic directions of key players in the Greater China Technology Hardware industry and the associated market dynamics.