Summary of Greater China Technology Hardware Conference Call Industry Overview - The conference focused on the Greater China Technology Hardware sector, particularly in AI technology and hardware advancements [7][8]. Key Insights - **Opportunities in AI GPU and ASIC Servers**: There are significant opportunities in upgrading AI GPU and ASIC server designs, with major projects like GB300, Vera Rubin platform, and Kyber architecture showing promise [7][8]. - **AMD Helios Server Rack**: The AMD Helios server rack project is gaining traction, indicating a positive trend in server hardware demand [7]. - **Enhanced Computing Power**: AI ASIC servers are expected to enhance computing power and increase rack density, which is crucial for data centers [7]. - **Power Solution Upgrades**: Transitioning to 800V HVDC power architecture and the growing adoption of liquid cooling solutions are highlighted as key upgrades [7]. - **PCB/Substrate Capacity Expansion**: There is a wave of capacity expansion in PCB/substrate to support ongoing design upgrades, which is essential for meeting increased demand [7]. - **Data Network Improvements**: Upgrades in data and power interconnects are anticipated to improve data network transmission speed and capacity [7]. - **Consumer Electronics Demand**: The demand for consumer electronics is being impacted by rising memory costs, with Android smartphones being more vulnerable compared to iPhones [7]. - **Upcoming Foldable iPhone Models**: Anticipation for the release of foldable iPhone models in the second half of 2026 is noted as a potential market driver [7]. Stock Recommendations - **Key Stock Ideas**: - AI Server Hardware: Wistron, Hon Hai/FII, Wiwynn, Delta Electronics, AVC, BizLink, King Slide, Accton, Chenbro, Gold Circuits, Innolight, FIT, and Fositek [7]. - Edge AI: Xiaomi, Lenovo, Luxshare [7]. Valuation Comparison - A detailed valuation comparison of various companies within the Greater China Technology Hardware sector was provided, including metrics such as price, target price, EPS, P/E ratio, P/B ratio, and ROE [8]. - Notable companies included: - **Lite-On Tech**: Current price at 162.50, target price at 150.00, with a P/E ratio of 23.3 for 2025 [8]. - **Delta Electronics**: Current price at 922.00, target price at 1288.0, with a P/E ratio of 38.9 for 2025 [8]. - **Hon Hai**: Current price at 241.00, target price at 317.0, with a P/E ratio of 16.4 for 2025 [8]. - **Foxconn Tech**: Current price at 66.80, target price at 54.00, with a P/E ratio of 26.0 for 2025 [8]. Additional Considerations - The report emphasizes the importance of considering Morgan Stanley Research as one of several factors in investment decision-making, acknowledging potential conflicts of interest [4][5].

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Greater China Technology Semiconductors and Technology Hardware [4][8] - **Market Sentiment**: The semiconductor industry in Greater China is viewed as attractive, with potential growth opportunities driven by new policies and technological advancements [4][8] Core Insights - **Semiconductor Tariffs**: Discussion on the implications of Section 232 tariffs and how they may impact companies within the semiconductor sector [6] - **Company Exposure**: - TSMC has a 75% revenue exposure to US customers and plans a US$165 billion capital expenditure for its US operations by 2030 [7] - GlobalWafers has a 30-40% exposure and has initiated operations in Texas with an additional US$4 billion investment planned [7] - ASE and UMC have varying levels of exposure, with ASE at 50% and UMC at 20% [7] - **Investment Plans**: Companies like ASE and its subsidiary SPIL are planning investments in the US, although details are yet to be announced [7] Financial Performance Highlights - **Lenovo's Financials**: - Projected net sales for FY-1Q26E are US$18.081 billion, reflecting a 6% quarter-over-quarter increase and a 17% year-over-year increase [15] - Operating income is expected to rise significantly by 97% year-over-year to US$653 million [15] - Net income is projected to increase by 327% year-over-year to US$384 million [15] - **Margins**: Lenovo's gross margin is expected to be 16.1%, with operating margin at 3.6% [15] Emerging Trends - **AI Demand**: There is a notable increase in demand for AI-related device testers, with firms like Advantest expecting continued growth in System on Chip (SoC) tester demand [10] - **E-Paper Growth**: E Ink is projected to experience a 19% revenue CAGR from 2024 to 2026, driven by opportunities in signage and consumer electronics [18][22] Risks and Considerations - **Market Risks**: - Potential oversupply issues in mature node foundries could impact companies like UMC and Powerchip [7] - The semiconductor market faces uncertainties due to fluctuating demand and geopolitical factors [35][38] - **Investment Risks**: Risks to upside include stronger-than-expected recovery in semiconductor demand, while risks to downside involve potential market share loss and declining gross margins [37][38] Additional Insights - **Strategic Acquisitions**: Lenovo is in the process of acquiring Infinidat Ltd., indicating a strategic move to enhance its capabilities [31] - **Buyback Programs**: Companies like Ushio are implementing share buyback programs, reflecting confidence in their financial health [11] This summary encapsulates the key points discussed in the conference call, highlighting the current state and future outlook of the semiconductor and technology hardware industries in Greater China.

Summary of Key Points from J.P. Morgan's Research on PCB, CCL, and Substrates Industry Overview - The report focuses on the PCB (Printed Circuit Board), CCL (Copper Clad Laminate), and substrates markets, particularly in the context of AI applications and supply chain dynamics [1][3]. Core Insights 1. **Tight Supply Chain for PCBs**: The PCB supply chain is expected to remain tight or face shortages due to rising specifications and modest capacity additions, particularly in Southeast Asia, which is not yet equipped to produce AI PCBs [3][8]. 2. **New Entrants in AI PCB Market**: There is potential for new suppliers to enter the AI supply chain, especially for major ASIC projects that require high layer count PCBs. Current leading GPU servers utilize HDIs but may revert to multi-layer PCB designs by 2026, which could exacerbate supply tightness [3][8]. 3. **Cooling Methods for ASICs**: Shipments for major ASIC servers are expected to rise in the second half of the year. Liquid-cooled motherboards are anticipated to start shipping in Q3, while air-cooled boards will remain dominant. This dual approach may mitigate the impact of design changes on CCL/PCB suppliers [3][8]. 4. **BT Substrate Price Trends**: The utilization rate (UTR) of BT substrates has increased to 80-90%, contrasting with sluggish performance in previous years. Price hikes are likely due to rising gold prices, although widespread price increases for BT substrates have not yet been observed [3][4][8]. 5. **Impact of Midplane PCB**: The introduction of midplane PCBs in future AI GPU servers is seen as a significant opportunity for the PCB/CCL industry, potentially creating a USD 1 billion annual market. However, the high capacity required for ultra-high layer count designs poses challenges [3][8]. 6. **Capex Expansion Expectations**: PCB and CCL manufacturers are expected to announce further capital expenditure expansions in the next six months due to sustainable supply tightness. China may become a focal point for these expansions, moving away from Southeast Asia [3][8]. Additional Considerations - **Substrate Expansion Outlook**: Substrate expansions are expected to be more subdued due to uncertainties in T-glass supply and modest UTR. The growth rate for ABF supply may fall below the current expectation of 7-8% per annum as some tier-2 suppliers consider suspending or disposing of tools [3][8]. - **Market Dynamics**: The report emphasizes the structural nature of the current supply shortages, driven by increasing board design complexity and the need for advanced materials [3][8]. This summary encapsulates the critical insights and projections regarding the PCB, CCL, and substrates markets as discussed in the J.P. Morgan research report.

Investment Rating - The report assigns a "Buy" rating to several companies within the Taiwan Technology sector, including Wiwynn, Wistron, Hon Hai, Gigabyte, and various AI server components [25]. Core Insights - The Taiwan Technology sector is experiencing strong growth in ASIC AI servers and related components, with notable revenue increases reported by key players such as Wiwynn (+187% YoY) and Gigabyte (+108% YoY) [1][8]. - The report highlights a transition in server models expected in 3Q25, with a cautious outlook on rack-level AI server shipments due to macro uncertainties [9]. - The demand for components like liquid cooling, silicon photonics, rail kits, and chassis is anticipated to rise, driven by specification upgrades and the increasing adoption of AI technologies [9][10]. Summary by Sections ASIC AI Servers and Components - ASIC AI servers are showing robust growth, with Wiwynn's revenues up 187% YoY, significantly exceeding estimates [1][8]. - Baseboard-based AI servers also demonstrate strong performance, with Gigabyte achieving 108% YoY revenue growth [1][8]. - Liquid cooling solutions are gaining traction, with AVC reporting 87% YoY revenue growth [1][8]. Market Outlook - The report expresses caution regarding rack-level AI server shipments in the second half of 2025, while maintaining a positive outlook for ASIC and baseboard-based AI servers [9]. - The global market for AI servers is projected to reach 19,000 racks by 2025, indicating a significant growth opportunity [9]. Non-AI Sector Insights - The smartphone supply chain is expected to strengthen in 3Q25, with new high-end models being prepared for launch [10]. - AI PCs are anticipated to see continued penetration, with brands like ASUS and Lenovo leading the charge [10]. Investment Opportunities - Recommended investments include AI server ODMs and brands such as Wiwynn, Wistron, Hon Hai, and Gigabyte, as well as components like AVC, Fositek, and LandMark [11].

Investment Rating - Maintain Buy on Chenbro, Auras, and E Ink [2] Core Insights - Chenbro's May revenues declined by 7% MoM to NT$1.8 billion, primarily due to FX impact and a high base, but new rack products are expected to support growth in 3Q25 [4][10] - Auras experienced a 20% MoM revenue decline in May due to FX impact and diversification of production sites, but is expected to see growth from liquid cooling adoption and AI server expansion [23][26] - E Ink's April revenues exceeded expectations, with a 50% YoY increase, driven by rising demand for e-readers and e-labels, although FX impacts may affect future growth [42][43] Summary by Company Chenbro - May revenues were NT$1.8 billion, 12% below estimates, with expectations for June revenues to remain stable [4][10] - 3Q25 revenues are anticipated to be supported by new noise-cancellation rack products and increasing market share in ASIC AI servers [4][10] - Earnings revisions reflect a 3% reduction in net income estimates for 2025-27E due to lower revenues and higher operating expenses [11][14] Auras - May revenues fell to NT$1.62 billion, with expectations for June revenues to remain at similar levels [29][30] - The company is projected to see a 19% QoQ revenue growth in 2Q25, driven by liquid cooling components and AI server expansion [23][26] - Earnings revisions indicate a slight increase in revenue estimates for 2025-27E, with a target price raised to NT$825 based on a P/E multiple of 19.9x [41][30] E Ink - April revenues were NT$3.31 billion, 14% above estimates, with a 50% YoY growth attributed to increased demand for e-readers and e-labels [42][43] - Future revenues are expected to be stable, with a projected 15% QoQ growth in 2Q25 [47] - Earnings revisions show a reduction in net income estimates for 2025-27E by 19% due to lower revenue expectations and higher operating expenses [49][51]

Investment Rating - Maintain Buy on Chenbro, Auras, and E Ink [2] Core Insights - Chenbro's May revenues declined by 7% MoM to NT$1.8 billion, primarily due to FX impact and a high base, but new rack products are expected to support growth in 3Q25 [5][10] - Auras experienced a 20% MoM revenue decline in May due to FX impact and diversification of production sites, but is expected to benefit from rising liquid cooling adoption and expansion into ASIC AI servers [21][23] - E Ink's April revenues exceeded expectations, with a 50% YoY increase, driven by strong demand for e-readers and e-labels, although FX impact may affect future growth [38][39] Chenbro Summary - May revenues were NT$1.8 billion, 12% below estimates, with expectations for June revenues to remain stable [5][10] - 3Q25 revenues are anticipated to be supported by new noise-cancellation rack products and increased market share in ASIC AI servers [5][10] - Earnings revisions reflect a 3% reduction in net income estimates for 2025-27E due to lower revenues and higher operating expenses [11][12] Auras Summary - May revenues fell to NT$1.62 billion, with expectations for June revenues to remain at similar levels [21][26] - The company is projected to see a 19% QoQ revenue growth in 2Q25, driven by liquid cooling components and AI server expansion [21][23] - Earnings revisions indicate a slight increase in revenue estimates for 2025-27E, reflecting higher growth expectations in liquid cooling [27][28] E Ink Summary - April revenues were NT$3.31 billion, 14% above estimates, with a strong YoY growth of 50% [39][42] - The company expects revenues to stabilize in May and June, with 2Q25 revenues projected at NT$9.26 billion [42] - Earnings revisions show a reduction in net income estimates for 2025-27E due to macro uncertainties, but a positive outlook on e-paper adoption remains [44][45]

Core Insights - E Ink and MediaTek have collaborated to donate 58 Amazon Kindle Kids eReaders to the Boys and Girls Clubs of Metro Louisiana as part of the eRead for the Future initiative, aimed at promoting reading among children [1][4] - The donation is intended to support a Summer Reading program designed to combat reading skill loss during the summer months [2] - E Ink's ePaper technology is highlighted for its health benefits, being up to three times healthier for eyes compared to traditional LCD screens, thus providing a better reading experience [3] Company Initiatives - The eRead for the Future program reflects E Ink and MediaTek's commitment to enhancing educational opportunities for children through technology [4] - In 2024, E Ink engaged over 22 partners in the ePaper ecosystem, donating 1,024 color eReaders to benefit over 15,000 students, with a total donation value of nearly USD 1 million [5] - The previous year's initiative saved 777 metric tons of carbon emissions, emphasizing the environmental benefits of digital reading [5] Technology and Sustainability - E Ink's ePaper displays are designed to be low power and sustainable, with a pledge to use 100% renewable energy by 2030 and achieve net zero carbon emissions by 2040 [6] - The company has been recognized for its sustainability efforts, receiving validation from Science-Based Targets (SBTi) and being listed in the DJSI World and DJSI Emerging Indexes [6][7] - E Ink is the world's largest supplier of ePaper displays, enabling various applications across multiple industries [6][7]