Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Greater China Technology Hardware [2][5] - **Key Companies Mentioned**: Microsoft, AVC, Auras, Fositek, Delta Electronics Inc., Asia Vital Components Co. Ltd., Auras Technology Co Ltd, Fositek Corp [2][7][8][9][10] Core Insights and Arguments - **Microfluidics Technology**: Microsoft has developed a new in-chip microfluidics cooling system that outperforms traditional cold plates by up to three times in lab tests, depending on specific workloads and configurations [2][3] - **Adoption Timeline**: Despite promising lab results, widespread adoption of in-chip microfluidics is expected to take time due to several challenges [3][4] - **Reliability Concerns**: Liquid leakage remains a significant issue for liquid cooling solutions, with reliability being more critical than performance for server operations [3] - **Design Integration**: Successful integration of microfluidic designs with server architecture is essential for effective implementation [4] - **Serviceability**: The ease of maintenance will be crucial for adoption by hyperscalers and data center operators [4] Market Sentiment and Recommendations - **Market Sentiment**: The announcement of microfluidics technology may negatively impact market sentiment towards the thermal supply chain, particularly affecting companies like AVC, Auras, Fositek, and Delta [7] - **Investment Recommendations**: There is a bullish outlook on AVC, Fositek, and Delta, suggesting that these stocks could be good buys on any pullbacks, as the adoption of microfluidics is anticipated to take time [7] Valuation Methodology and Risks - **Delta Electronics Inc.**: Valuation based on a residual income model with key assumptions including a cost of equity of 8%, a medium-term growth rate of 14%, and a terminal growth rate of 3% [8] - **Asia Vital Components Co. Ltd.**: Valuation assumptions include a cost of equity of 10%, a medium-term growth rate of 13%, and a terminal growth rate of 3% [9] - **Auras Technology Co Ltd**: Similar valuation model with a cost of equity of 10%, a medium-term growth rate of 12.5%, and a terminal growth rate of 3% [10] - **Risks Identified**: - Upside risks include faster-than-expected global economic growth and thermal upgrade trends for data centers [12][13][14] - Downside risks include ongoing component supply tightness, rising raw material prices, and intensified industry competition [12][13][17] Additional Important Insights - **Thermal Design Upgrades**: The trend towards thermal design upgrades in data centers is critical for the industry, with potential impacts on server and switch designs [13][14] - **Market Dynamics**: The competition within the technology hardware sector is intensifying, which could affect pricing and margins [12][17] This summary encapsulates the essential insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the Greater China Technology Hardware industry.