Summary of Conference Call Notes Industry Overview - The conference call focuses on the Taiwan PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) industry, particularly companies TUC, EMC, GCE, and ZDT - There is a notable acceleration in capital expenditures (CAPEX) due to increasing demand for AI infrastructure investments Key Points and Arguments Capacity Expansion and Demand - TUC, EMC, GCE, and ZDT have announced new capacity expansion plans to meet the rising demand for AI infrastructure [1][4] - TUC's Thailand plant will see a capacity increase of 300k sheets per month by May/June 2026, with potential for further expansion of 1.0-1.2 million sheets per month [6][10] - ZDT plans to invest NT$30 billion annually in CAPEX for 2025/26, focusing on AI HDI products [10] - Overall capacity for the industry is expected to increase by 15% in both 2025 and 2026 [10] Profitability and ASP Trends - High-quality AI server PCB/CCL suppliers are expected to maintain good profitability due to high average selling prices (ASP) and increasing demand [2] - The gross margin for high-end CCL is projected to rise from 20-25% in M6 grade to 40-50% in M7/8 generation [2] - GCE's July financial performance showed a pre-tax margin of 23.25% and a net margin of 15.3%, exceeding both Goldman Sachs estimates and Bloomberg consensus [8][9] Earnings Revisions and Target Price Adjustments - Target prices for EMC, TUC, and GCE have been revised upwards to NT$1,400, NT$375, and NT$550 respectively, reflecting improved industry ASP and profitability outlook [3][22][27] - EMC's earnings estimates for 2025/26/27 have been increased by 1/4/4% due to better demand outlook and ASP growth [13] - TUC's earnings estimates for 2025 have been revised down by 4% due to unfavorable FX impacts, but 2026/27 estimates have been increased by 1% [19][20] - GCE's earnings estimates for 2025/26/27 have been revised up by 3/3/2% based on proactive industry demand and ASP growth [25][26] Financial Performance Highlights - GCE's July revenue was NT$5.646 billion, which is 33% of Goldman Sachs' estimate for Q3, indicating strong performance [9] - TUC's 2Q25 results showed a net income of NT$652 million, which was 15% lower than estimates due to FX impacts [11][12] Valuation Metrics - The target PE multiple for EMC has been increased to 22x for 4Q25-3Q26E, aligning with the AI component industry upcycle average valuation [15][16] - TUC's target PE multiple has been adjusted to 18x for 4Q25-3Q26E, reflecting a higher valuation compared to the past three years [22] - GCE's target PE multiple has been revised to 19x for 4Q25-3Q26E, indicating a strong valuation relative to its historical performance [27] Additional Important Insights - The industry is experiencing a significant shift towards higher quality and more complex PCB/CCL products, driven by advancements in AI technology [2] - The overall sentiment in the industry remains positive, with expectations of continued growth and profitability in the coming years [4][10]