Summary of Conference Call on Greater China Semiconductors Industry Overview - The conference call focused on the **Greater China Semiconductors** industry, particularly the cloud semiconductor (CSP) sector in the Asia Pacific region [1][7]. Key Points 1. **Increased Capital Expenditure (Capex) for Top CSPs**: - The top four US CSPs (Amazon, Google, Meta, and Microsoft) are projected to have a capex of **US$359 billion** in 2025 and **US$454 billion** in 2026, reflecting year-over-year growth of **57%** and **26%** respectively [4][10]. - This is an upward revision from previous forecasts of **38%** and **17%** growth [4]. 2. **Strong Demand from Non-US Markets**: - There is an underestimation of demand from non-US countries, particularly for PCIe/HGX servers, with expectations of strong demand for B200 and B300 products in late 3Q [5][10]. - The AP team noted that tier 2 CSPs are catching up on capex, with the AI server pipeline expected to be larger than that of the top CSPs [10]. 3. **Supply Chain Improvements**: - Supply chain manufacturing issues are improving, with better assembly yields for GB200 racks and no notable issues expected for GB300 sampling starting in 3Q [5][10]. - A specific datacenter project is expected to utilize **28,000 GB200 NVL72 racks** for a **4.5GW** datacenter [5]. 4. **Cloud Capex Growth**: - The cumulative capex for the top 11 cloud providers is expected to reach **US$445 billion** in 2025, an increase from prior estimates, indicating a significant rise in capital intensity [17]. - The overall capital intensity is projected to exceed **18%**, with forecasts suggesting it could surpass **20%** of revenue in 2026 [17]. 5. **Positive Outlook for Aspeed Technology**: - The company maintains an **Overweight (OW)** rating on Aspeed Technology, citing its current valuation of **40x 2026e P/E**, which is below the historical average of **47x** since 2020 [6][11]. Additional Insights - The market appears overly concerned about potential inventory corrections, which may not materialize as expected [11]. - The conference highlighted the importance of ongoing improvements in manufacturing yields and the potential for increased demand from non-US markets, which could provide significant growth opportunities for companies in the semiconductor sector [5][10]. Conclusion - The Greater China Semiconductors industry, particularly in the cloud segment, is poised for substantial growth driven by increased capex from major CSPs, improving supply chain conditions, and strong demand from non-US markets. The positive outlook for specific companies like Aspeed Technology further underscores the potential for investment opportunities in this sector [1][7].

Investment Rating - The report maintains an Overweight (OW) rating on Aspeed Technology and Montage Technology, with a price target for Aspeed raised to NT$6,100 [6][38][45]. Core Insights - The outlook for cloud semiconductors is improving, particularly with the anticipated mass production of key components for Rubin architecture starting in Q2 2026, which is expected to enhance growth in the sector [3][10]. - ASIC servers are projected to see significant growth, with estimates suggesting that ASIC BMC could account for 5-10% of global shipments in 2026, driven by lower upfront costs and increased demand from major cloud service providers [4][10]. - Demand for storage servers has strengthened since Q4 2024, particularly from top cloud service providers in the US and China, indicating a robust market environment [4][10]. Summary by Sections Market Outlook - The 2026 GPU server outlook is becoming clearer, with increased supply chain engagement for Rubin racks and a potential mix of architectures that could mitigate supply chain risks [3][10]. - The report highlights a positive near-term outlook for non-rack servers and anticipates continued growth in cloud capital expenditures, with a projected 43% year-over-year growth in 2025 [20][21]. Company Performance - Aspeed reported June revenue of NT$782 million, with Q2 revenue reaching NT$2.2 billion, exceeding company guidance by 15% [6][29]. - Earnings estimates for Aspeed have been revised upward by 6%, 6%, and 10% for 2025, 2026, and 2027, respectively, reflecting higher BMC shipment forecasts and increased demand for IO expanders [29][32]. Financial Projections - The report projects total revenues for Aspeed to reach NT$8.410 billion in 2025, NT$10.060 billion in 2026, and NT$12.983 billion in 2027, with significant year-over-year growth rates [54]. - The gross margin for Aspeed is expected to improve to 66% in 2025, with operating income projected to increase to NT$4.200 billion [54][55]. Valuation Methodology - The price target increase for Aspeed from NT$5,000 to NT$6,100 is based on higher EPS estimates and an increased growth rate assumption from 17.2% to 18.5% [32][38]. - The new price target implies a forward P/E ratio of 51x for 2026, which is considered justifiable given the improving demand dynamics in the market [32][40].