Vi e w p o i n t | 25 Feb 2026 19:27:39 ET │ 10 pages Taiwan Semiconductors Nvidia result implications - Blackwell expanding strongly, entering the Rubin Cycle CITI'S TAKE Nvidia just published its Jan Q result (report) and provided a positive outlook for the upcoming Rubin product cycle. While some investors were skeptical on Rubin's schedule and initial yield rate, Nvidia reiterates that the chip already has mass volume production and system rack is to ramp up big volumes in 2H26. Yet we believe the major ...

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Technology Hardware - **Focus**: Monthly and quarterly rack shipment forecasts by Original Design Manufacturers (ODMs) for GPU AI servers Key Companies Discussed 1. **Quanta Computer Inc. (2382.TW)** - January revenue: NT$231 billion, a decrease of 15% month-over-month (m/m) but an increase of 62% year-over-year (y/y) [3] - Estimated rack shipments: ~1.4K in January, down from 1.6-1.7K in December, with a target of ~4K racks in 1Q26 [3] 2. **Wistron Corporation (3231.TW)** - January revenue: NT$228 billion, a decrease of 11% m/m but an increase of 152% y/y [4] - Notable decline in notebook (NB) shipments: 1.7 million units, down 35% m/m [4] - L10 computing tray shipments increased to 900-1,000 rack equivalents [4] 3. **Hon Hai Precision (2317.TW)** - January GB200 rack shipments: ~2.4K, down from ~2.8K in December [5] - Expected growth in rack shipments for February and March, targeting ~8.5K for 1Q26, a 9% increase quarter-over-quarter (q/q) [5] Core Insights - **Rack Shipment Forecast**: Anticipated 70-80K racks in CY26, with over 100% y/y growth expected compared to ~29K last year [2] - **Delivery Adjustments**: Actual rack deliveries to end-customers may be lower than reported due to unaccounted assembly and testing times [2] - **Monthly Output Estimates**: - Total GB200/300 rack output in January estimated at ~6.2K, with Quanta at ~1.4K, Wistron at 0.9-1.0K, and Hon Hai at ~2.4K [9] Market Dynamics - **Growth Drivers**: Strong demand for GPU AI servers and increased penetration in the AI server market are key growth factors [2][27] - **Risks**: Potential risks include geopolitical developments, slower-than-expected AI server penetration, and fierce competition in the mega data center segment [27][29] Valuation Methodology - **Hon Hai**: Residual income valuation model with a cost of equity of 8.5%, medium-term growth rate of 13%, and terminal growth rate of 3% [23] - **Quanta**: Residual income model with a cost of equity of 9.0%, medium-term growth rate of 8.5%, and terminal growth rate of 3% [24] - **Wistron**: Residual income valuation with an 8.7% cost of equity, 7.0% medium-term growth rate, and 3% terminal growth rate [25] Additional Insights - **Market Share**: In 2025, Hon Hai held 51% of the GB200/300 NVL72-equivalent rack supply, with Quanta at 21% and Wistron at 20% [18] - **Future Projections**: For 2026, projected market shares are Hon Hai at 45%, Quanta at 20%, and Wistron at 15% [21] This summary encapsulates the key points from the conference call, focusing on the performance and outlook of major players in the Greater China Technology Hardware sector, particularly in the GPU AI server market.

Summary of J.P. Morgan's PC and Server Market Analysis Industry Overview - The analysis focuses on the **PC and server markets**, highlighting trends and forecasts for shipments and demand in the coming years. Key Points on PC Market - **Shipment Growth Forecasts**: - Adjusted global PC shipment growth forecast for 2025 is **+8%**, while a decline of **-9%** is expected in 2026 [1] - **Demand Trends**: - Anticipated downside in PC unit demand due to **memory-driven product price hikes** [1][4] - A significant **20%+ increase** in product prices has been noted recently, impacting consumer PC demand [4] - Forecasts indicate **10%** decline in consumer PC shipments and **7%** decline in commercial PC shipments for 2026 [11] - **Commercial PC Demand**: - Muted refresh demand is expected this year, with a potential pause in demand from **2Q26** onwards [1][11] - **Competition**: - Increased competition in mainstream PCs due to new model launches from major players like **Dell** and **Apple** [4] Key Points on Server Market - **General Server Demand**: - Strong demand from **US Cloud Service Providers (CSPs)** is expected to continue into 2026, particularly for storage servers driven by AI inference activities [4] - Forecasted **30%+ growth** in CSP server shipments, offset by a single-digit decline in enterprise server demand [11] - **AI Server Growth**: - Notable ramp-up in **GB300 server shipments** is expected, with estimates of **50-70k NVL72 rack shipments** this year, driven by strong AI server demand [4] - Anticipated growth in **ASIC server demand**, particularly for TPU servers [4] - **Overall Server Shipment Growth**: - Total server shipment growth forecast for 2026 is **14.6%**, up from previous estimates of **+4.6%** [11] Key Companies Mentioned - **Positive Outlook**: - Companies such as **Wiwynn**, **Hon Hai**, and **Quanta** are favored in the server ODM space [1] - For server components, **ASPEED**, **Delta**, **Jentech**, and **Lotes** are highlighted [1] - **Cautious Outlook**: - Companies like **ASUSTek**, **Micro-Star**, and **Compal** are viewed with caution due to expected challenges in the PC segment [1] Additional Insights - **Memory Component Costs**: - A significant increase in memory component costs is expected, leading to at least **double YoY memory costs** in the upcoming quarters [4] - **Market Dynamics**: - The report indicates a prolonged supercycle in general servers driven by AI demand, with potential risks from component supply constraints [4] This summary encapsulates the critical insights from the J.P. Morgan analysis on the PC and server markets, providing a comprehensive overview of expected trends, challenges, and opportunities within the industry.

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Technology Hardware - **Focus**: Monthly and quarterly rack shipment forecasts for GPU AI server ODMs in 2025 Key Company Insights Quanta Computer Inc. (2382.TW) - **December Revenue**: NT$272 billion, representing a **41% month-over-month (m/m)** increase and a **95% year-over-year (y/y)** increase - **Rack Shipments**: Estimated **1.6-1.7k racks** shipped in December, up from **1.0-1.1k racks** in November - **4Q Total Rack Shipments**: Reached **3.5-3.6k**, significantly higher than the previous estimate of **2.5k** - **2026 Forecast**: Expected to deliver **14-15k racks** [4][10] Wistron Corporation (3231.TW) - **December Revenue**: NT$255 billion, a **9% m/m** decline but a **142% y/y** increase - **Rack Shipments**: Estimated **0.8-0.9k racks** in December, down from **1.2-1.3k racks** in November - **Normal Fluctuation**: The decline attributed to typical month-end fluctuations after a strong November - **Notebook Shipments**: Increased to **2.6 million**, a **18% m/m** rise [5][10] Hon Hai Precision Industry Co. (2317.TW) - **December Rack Shipments**: Estimated at **~2.8k racks**, slightly up from **~2.5k racks** in November - **4Q Total Rack Estimates**: Adjusted to **7.8k racks**, reflecting a **63% quarter-over-quarter (q/q)** increase [6][10] Overall Market Insights - **Total GB200/300 Racks for 2025**: Estimated to reach **~29k**, exceeding the previous forecast of **27.3k** - **2026 Projections**: Anticipated strong demand with **70-80k racks** expected to be built and delivered to data centers [3][11] Additional Insights - **Rack Output in December**: Estimated at **~5.9k**, an **8% m/m** increase - **Quanta's Total for CY25**: Approximately **6.1k racks** shipped - **Wistron Group Total**: Including Wiwynn, approximately **6.3k racks**, slightly higher than Quanta's total [10][12] Risks and Considerations - **Upside Risks**: Better-than-expected demand for iPhones, AI servers, and potential M&A activities - **Downside Risks**: Slower-than-expected AI server penetration, geopolitical developments, and margin contraction due to competition [24][26] Conclusion - The Greater China Technology Hardware sector, particularly in GPU AI server racks, shows promising growth for 2026, with key players like Quanta, Wistron, and Hon Hai demonstrating significant revenue and shipment increases. The market outlook remains positive, but potential risks must be monitored closely.

Summary of Datacenter Market Insights - ODM Direct Industry Overview - The report focuses on the **Datacenter Market** within the **Hardware Technology** sector, specifically analyzing **ODM (Original Design Manufacturer) direct server shipments** in the Asia Pacific region. Key Insights 1. **ODM Shipments and Value Growth** - ODM shipments declined by **4% quarter-over-quarter (q/q)** but the shipment value increased by **2% q/q** due to growth in both general and AI servers [1][2] - The expected shipments for **GB200/300 racks** are projected to reach approximately **27.3k** in **CY25** and **70k+** in **CY26** [1][5] 2. **Global ODM Direct Server Shipments** - Total global ODM direct server shipments were **1.83 million** units in **3Q25**, reflecting a **4% decline q/q** but a **37% increase year-over-year (y/y)** [2] - This accounted for **43.5%** of global server shipments, which remained flat at **4.2 million** units q/q but increased by **14% y/y** [2] 3. **Market Share Dynamics** - **Inventec** became the top ODM with a **24.6%** market share, gaining **480 basis points (bps)** q/q, while **Wiwynn** dropped to **20.4%** [2][12] - **Intel** and **AMD** both lost unit share, with Intel at **35.1%** (-300 bps q/q) and AMD at **40.3%** (-390 bps q/q) [3][12] 4. **Regional Performance** - **Central & Eastern Europe** exhibited the highest growth in shipment units at **449% y/y**, followed by the **US** at **50% y/y** [4][12] - The US accounted for **75%** of aggregate ODM direct shipments, with other regions like **APxJC** at **13%** and **Western Europe** at **6%** [4] 5. **AI Server Contribution** - AI servers were the main contributors to the increase in shipment value, with the average selling price (ASP) of ODM servers increasing by **7% q/q** and **54% y/y** [5] Additional Insights - **ODM Shipment Value** reached **US$66.8 billion** in **3Q25**, marking a **2% increase q/q** and a **111% increase y/y** [2] - The report highlights potential investment opportunities in ODMs such as **Wistron**, **Wiwynn**, **Hon Hai**, **FII**, and **Quanta** [5] Conclusion - The ODM direct server market is experiencing a complex landscape with declining unit shipments but increasing value, driven primarily by the growth of AI servers. The competitive dynamics are shifting, with new leaders emerging in market share and significant regional disparities in growth rates.

Summary of Hon Hai Precision (2317.TW) Conference Call Company Overview - **Company**: Hon Hai Precision (also known as Foxconn) - **Ticker**: 2317.TW - **Date of Report**: January 5, 2026 Key Financial Highlights - **December 2025 Revenues**: NT$862.9 billion, representing a **2% month-over-month** and **32% year-over-year** increase - **4Q25 Revenues**: NT$2.6 trillion, showing a **26% quarter-over-quarter** and **22% year-over-year** growth, exceeding consensus by approximately **8%** and management's guidance from November 2025 [1] - **1Q26 Revenue Forecast**: Expected to decline by **23% quarter-over-quarter** but still show a **22% year-over-year** increase, aligning with consensus expectations due to seasonal softness in consumer electronics [1] Growth Drivers - **Key Growth Segment**: Cloud and networking products accounted for over **40%** of total revenues in 4Q25, driven by the ramp-up of GB200/300 rack production [1] - **iPhone 17 Sales**: Stronger-than-expected sell-through of iPhone 17 contributed positively to revenue growth [1] - **AI Servers**: Management indicates that revenues from AI servers are on a sequential uptrend and are expected to be a significant growth driver in 2026 [1] Market Position and Valuation - **Industry Leadership**: Hon Hai is well-positioned to capitalize on AI server product cycles across multiple platforms, supported by its scale, logistics capabilities, and vertical integration [1] - **Valuation**: Current valuation is considered attractive, with a target price set at NT$320, based on an **18x** 2026E EPS, reflecting a strong sales growth and profit margin outlook [2][13] Investment Ratings - **Current Rating**: Buy - **Expected Total Return**: **39.8%**, including a **3.3%** expected dividend yield [2] Risks - **Downside Risks**: Potential risks that could hinder stock performance include: 1. Slower-than-expected demand for iPhones 2. Increased competition from peers 3. Weaker execution on new business initiatives 4. Adverse impacts from COVID-19 or other macroeconomic factors [14] Additional Insights - **Market Capitalization**: NT$3,274.61 billion (approximately US$104.37 billion) [2] - **Earnings Summary**: - 2023A Net Profit: NT$142.1 billion, EPS: NT$10.25 - 2024A Net Profit: NT$152.7 billion, EPS: NT$11.01 - 2025E Net Profit: NT$205.2 billion, EPS: NT$14.77 - 2026E Net Profit: NT$247.3 billion, EPS: NT$17.80 - 2027E Net Profit: NT$284.1 billion, EPS: NT$20.46 [4] This summary encapsulates the key points from the conference call regarding Hon Hai Precision, highlighting its financial performance, growth drivers, market position, investment outlook, and associated risks.

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call focuses on the **Asia Strategy Baskets** provided by Goldman Sachs, which aim to offer investors a platform for generating ideas and tracking Asian equities through various macroeconomic and thematic lenses [1][40]. Core Themes and Insights Value Cyclicals and GARP - The strategy favors **Growth at a Reasonable Price (GARP)** and **Value Cyclicals** due to uncertainty around market pricing of Federal Reserve cuts, resilient emerging market growth, and above-average equity valuations. GARP has delivered an **8%** and **18%** excess return over the past **3** and **6 months** respectively [4][7]. Macro Divergence - The strategic competition between the **US** and **China** is driving **US reindustrialization**, which is expected to create investment opportunities for Asian companies in the US supply chain. This theme is preferred over European and Chinese sales exposure due to growth headwinds in Europe and China's shift towards targeted stimulus [8][15]. Shareholder Yield - Policy-driven improvements in dividends, buybacks, return on equity (ROE), and governance in **China**, **Korea**, and **Japan** support the recommendation for **High Dividend Yield with Growth**. Key themes include **China Shareholder Return Portfolio**, **Korea Dividend Tax Reform**, and **Japan Buyback Momentum** [9][17]. Earnings Momentum - Dynamic earnings revision factors have consistently delivered alpha across market cycles, with **Consensus Revision Winners vs. Losers** showing a **31 percentage point** year-to-date (YTD) performance and **Strong vs. Weak Earnings Revisions** showing a **43 percentage point** YTD performance [10][23]. Regional Structural Themes AI Beneficiaries - The call highlights the importance of **AI infrastructure** and applications, recommending investments in **AIGC Hardware**, **Semiconductors**, and **Internet/Software** due to strong fundamentals and accelerated adoption [12][27]. Power Up Asia - The strategy emphasizes investments in **Nuclear** for clean baseload power, **Renewables** supported by China's policies, and core holdings in **Power & Electricity** for stable earnings and attractive valuations [12][33]. Defense Spending - Rising geopolitical risks are expected to benefit **Aerospace & Defense** and **Non-Core Defense Suppliers**, making them a hedge against geopolitical uncertainties [12][29]. Market-Specific Themes China - Targeted policies continue to support strategic areas, including the **China 15th Five-Year Plan Portfolio** and **Prominent 10** [11][35]. Korea - Governance reforms and value-up programs support dividend tax reform and treasury share cancellations [14][31]. India - The focus is on domestic themes such as self-sufficiency, mass-consumption revival, and new economy sectors, with an upgrade to **Overweight** for India in November [14][37]. Additional Insights - The call emphasizes the importance of monitoring macroeconomic conditions, liquidity, and borrowing constraints when trading the discussed baskets, as past performance is not indicative of future results [41]. This summary encapsulates the key themes and insights from the conference call, providing a comprehensive overview of the investment strategies and market dynamics discussed.

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Technology Hardware - **Focus**: Monthly and quarterly rack shipment forecasts for 2025, specifically for GPU AI server ODMs Key Companies Discussed 1. **Quanta Computer Inc. (2382.TW)** - November revenue: ~NT$193 billion (+11% month-over-month, +36% year-over-year) [4] - Estimated GB200/300 rack shipments in November: 1.0-1.1k racks (up from 850-900 racks in October) [4] - Expected slight decline in December shipments, with a total of ~2.6k racks in 4Q25 [4] 2. **Wistron Corporation (3231.TW)** - November revenue: Record high at NT$281 billion (+52% month-over-month, +195% year-over-year) [5] - Higher L10 computing trays shipments: 1.2-1.3k rack equivalents (up from 300-350 in October) [5] - Notebook shipments: 2.2 million (+5% month-over-month) [5] 3. **Hon Hai Precision (2317.TW)** - November GB200 rack shipments: ~2.6k racks (flat month-over-month) [6] - Expected lower server rack shipments in December due to year-end holidays [6] Core Insights and Forecasts - **Rack Shipment Forecasts**: - Total GB200/300 racks forecast for 2025: 27.3k (revised down from 28k) [3] - 4Q25 rack builds expected to grow materially quarter-over-quarter to 13.5-14k racks, up from 8-8.5k in 3Q [3] - 4Q25 rack builds for Quanta adjusted to 2.5k (down from ~3.5k) due to conservative management outlook [3] - **Market Dynamics**: - Wistron’s stronger momentum led to an increase in rack builds by ~300 racks in 4Q [3] - Anticipated growth in AI revenue for Quanta in 1Q26, indicating a positive outlook for the sector [3] Additional Insights - **Future Projections**: - Initial thoughts for 2026 suggest potential for 70-80k racks, up from previous estimates of 60-70k, based on inventory assumptions of ~2 million Blackwell chips [11] - **Market Share**: - Rack supply share for 2025: Hon Hai (52%), Wistron (21%), Quanta (19%), Wiwynn (2%), Others (7%) [20] - **Revenue Trends**: - Quanta and Wistron showing significant year-over-year revenue growth, indicating strong demand in the technology hardware sector [4][5] Risks and Considerations - **Upside Risks**: - Better-than-expected demand in AI server business and potential M&A activities [28] - **Downside Risks**: - Slower-than-expected AI server penetration and geopolitical developments affecting foreign investment [30] This summary encapsulates the key points from the conference call, focusing on the performance and outlook of major players in the Greater China Technology Hardware industry, particularly in the context of GPU AI server rack shipments.

Core Insights - Robotics stocks experienced significant gains following reports that President Trump is considering an executive order to accelerate robot development in the U.S. [1][2] Company Performance - Richtech Robotics saw a stock price increase of 18.54%, with a market cap of $837 million and a year-to-date return of 56.3% [4] - Serve Robotics' stock rose by 18.74%, with a market cap of $879 million, but has a year-to-date return of -12.6% [4][5] - Oceaneering International's stock increased by 5.93%, with a market cap of $2.6 billion and a three-year return of 69.8% [4][6] - Tesla's stock rose by 4.08%, with a market cap of $1.4 trillion and a three-year return of 129% [4][8] - Teradyne's stock increased by 2.71%, with a market cap of $30.6 billion and a three-year return of 113% [4][9] Industry Context - The S&P 500 index gained 0.30% and the Nasdaq Composite index increased by 0.17% on the same day [3] - The potential executive order is part of a broader strategy by the Trump administration to maintain U.S. leadership in artificial intelligence and robotics [2]

Summary of Key Takeaways from Taiwan Corporate Day – AI Demand Strength Continues to Build Industry Overview - **Industry**: Taiwan Electronic Components & Equipment - **Event**: Taiwan Corporate Day held on November 24-25, 2025 - **Focus**: AI-server demand outlook, supply chain bottlenecks, margin trajectory, capacity expansion plans, and competitive dynamics Core Insights - **Positive Outlook for 2026**: Most companies expressed a constructive outlook for 2026, driven by GB300 ramp, ASIC servers, and AMD-based server solutions, while considering datacenter readiness [1][1] - **Impact of Memory Supply**: Memory supply tightness and pricing volatility are expected to persist, but the impact on servers is anticipated to be milder compared to PCs and smartphones [1][1] - **Earnings Momentum**: Companies expect dollar-profit growth to counterbalance margin-rate dilution, contributing to earnings momentum [1][1] - **US Capacity Expansion**: Efforts for capacity expansion in the US are progressing, with AI-driven secular tailwinds expected to be key catalysts for the sector [1][1] Company-Specific Highlights Hon Hai - **AI Server Growth**: Management is confident in strong AI server growth through Q4 2025 and 2026, with expected high double-digit growth (30%+ quarter-over-quarter) in AI server rack shipments as GB300 ramps [2][2] - **Market Share Target**: Hon Hai aims for a market share of approximately 40% in the AI server segment, with expectations of strengthening leadership as CSPs consolidate volumes [2][2] - **Improved Output**: Output has improved since Q3 2025 due to expanded testing capacity, with industry-wide AI rack shipments projected to reach 50-60k in 2026, with potential upside to 100k [2][2] Quanta - **AI Server Revenue**: AI servers are expected to exceed 80% of total server revenues in 2026, with triple-digit growth anticipated from new customer acquisitions [5][5] - **Capacity Doubling**: Management expects AI capacity to double by the end of 2026, supported by a solid demand outlook extending beyond 2027 [5][5] - **Customer-Driven Strategy**: Quanta remains customer-driven and platform-neutral, well-positioned as AI racks become more complex [5][5] Wistron - **Solid Q4 2025 Results**: Wistron anticipates strong results in Q4 2025 as AI systems ramp up, with growth driven by AI components and diversified AI system customers [6][6] - **Component Shipments**: AI component shipments to Nvidia are expected to increase sequentially from Q1 2026, with demand tracking ahead of GB300 [6][6] - **Margin Improvement**: Margins are expected to improve due to better yields and stable foreign exchange rates [6][6] Acer - **Memory Shortage Management**: Acer is managing a global memory shortage with inventory cover through Q1 2026, passing higher input costs to end prices [7][7] - **PC Demand**: PC demand remains steady, but growth in 2026 may moderate due to ongoing memory and CPU constraints [7][7] Additional Insights - **Nvidia's Standardization Efforts**: Nvidia's initiative to standardize L10 of AI-server manufacturing remains a focal point, although the timeline is currently undefined [1][1] - **General Market Sentiment**: Overall management commentary across companies was positive, indicating a strong belief in the growth potential driven by AI technologies [1][1]