Core Insights - Broadcom has launched the Tomahawk Ultra Ethernet switch, designed to enhance performance for high-performance computing (HPC) and AI workloads with ultra-low latency and lossless networking capabilities [1][2][3] Product Features - Tomahawk Ultra achieves sub-400ns XPU-to-XPU communication latency, setting a new benchmark for synchronized AI compute at scale [5] - The switch reduces Ethernet header overhead from 46 bytes to 10 bytes, significantly improving network efficiency while maintaining compliance [6] - It incorporates lossless fabric technology, utilizing Link Layer Retry (LLR) and Credit-Based Flow Control (CBFC) to prevent packet loss during high-volume data transfers [7][8] - The switch supports In-Network Collectives, executing collective operations directly within the switch chip, which reduces job completion time and enhances resource utilization [8] Market Positioning - The Tomahawk Ultra is positioned as a solution for the convergence of AI and HPC workloads, meeting the demands for supercomputer-class latency and reliability [3][4] - It is designed to be endpoint-agnostic, facilitating immediate adoption across various system architectures and vendor ecosystems [9] Strategic Developments - Broadcom has introduced SUE-Lite, an optimized version of the Scale-Up Ethernet specification, tailored for power-sensitive applications while retaining low-latency and lossless characteristics [10][11] - The Tomahawk Ultra, along with the Tomahawk 6, forms a unified Ethernet architecture that supports both scale-up for AI and scale-out for HPC [12] Industry Impact - The launch of Tomahawk Ultra is seen as a significant advancement in Ethernet innovation, particularly for AI and HPC environments, with industry leaders expressing excitement about its potential to accelerate job completion times and enhance performance [19][20][21][22][23][24][25][26][27][28][29]

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 - The report maintains a "Buy" rating for WNC with a 12-month price target of NT$182, representing an upside of 48.0% from the current price of NT$123 [8]. Core Insights - WNC is diversifying its business into new regions and sectors, including automotive, LEO satellites, and 5G communication, to capture growth opportunities [2][6]. - The company has production sites in Taiwan, Mexico, Vietnam, and mainland China, and is actively planning for further diversification of its production capacity [3]. - WNC's LEO satellite user terminal solutions are expanding, with expectations for satellite revenue contribution to reach 23% by 2026, up from 20% in 2024, driven by the growing Space Economy [6]. Summary by Sections Business Diversification - WNC's revenue is primarily from the American market, but the company is expanding into European and Asian markets supported by new projects [2]. - The company is entering the automotive sector with products like Radar and DMS cameras, as well as expanding into LEO satellites and 5G communication [2]. Production Strategy - Despite tariff uncertainties, WNC has production sites across multiple regions and is planning new capacity for diversification, which typically takes 18-24 months to ramp up [3]. - Management has noted a pull-in of client demand due to tariff concerns, although this is contingent on the lead time of key materials [3]. Satellite Solutions - WNC is enhancing its offerings in LEO satellite user terminals, including power supply, antennas, and routers, and is positioned to benefit from the growth in satellite subscriber numbers [6]. - The company has accumulated experience in satellite products, which is expected to contribute significantly to its revenue growth in the coming years [6].