Investment Rating - The report maintains an investment rating of "Recommended" for the industry [1] Core Insights - Demand for AI hardware remains strong, while consumer electronics are experiencing a cooling trend [1][5] - The semiconductor sector is seeing cautious ordering behavior from customers in consumer products [15][20] - The PCB manufacturing sector is benefiting from increased demand for ASIC AI servers [22][24] - Optical components are experiencing a boost due to new iPhone launches [25] - The storage sector may face structural shortages in DDR4 and LPDDR4 in the second half of 2025, leading to rising contract prices [26][27] Summary by Sections Semiconductor - IC design companies in Taiwan are showing signs of revenue fatigue, with MediaTek's July revenue at 432 billion NTD, down 23.4% month-over-month and 5.2% year-over-year [15][16] - TSMC's July revenue reached 3,232 billion NTD, up 22.5% month-over-month and 25.8% year-over-year, with a 37.6% increase in cumulative revenue for the first seven months [16][17] PC/Server - July revenues for PC manufacturers declined after a peak in Q2, with Hon Hai's revenue at 6,139 billion NTD, up 13.6% year-over-year [20][21] - AI server demand is expected to grow significantly, with Hon Hai projecting a 170% year-over-year increase in related revenue [21] PCB - Overall revenue for PCB manufacturers in Taiwan increased by 6.6% month-over-month and 9.3% year-over-year in July [22] - Companies like Zhen Ding are seeing a significant portion of their revenue coming from AI applications, with expectations to exceed 70% in 2025 [24] Optical Components - Largan Precision's July revenue was 54 billion NTD, up 30.6% month-over-month, driven by new product launches [25] Storage - Most storage supply chain companies in Taiwan reported varying degrees of year-over-year revenue growth in July, with a potential structural shortage in DDR4 expected in the second half of 2025 [26][27]

Investment Rating - The report upgrades the industry investment rating to "Recommended" [1] Core Insights - The semiconductor industry faces reduced visibility in the second half of 2025 due to tariff uncertainties, while the storage market shows positive trends in Q2 [1][3] - AI hardware demand remains strong, driven by cloud service providers and government sectors, suggesting a focus on leading companies in the AI hardware segment such as NVIDIA and TSMC [1][3] Semiconductor Sector - IC Design: In April 2025, MediaTek reported revenue of NT$48.8 billion, a month-on-month decrease of 12.9% but a year-on-year increase of 16.0%. The company noted uncertainty due to tariffs [3][11] - IC Manufacturing: TSMC achieved record revenue of NT$349.6 billion in April 2025, with a month-on-month increase of 22.2% and a year-on-year increase of 48.1% [3][14] - IC Testing: ASE Technology's revenue in April 2025 was NT$52.2 billion, a month-on-month decrease of 2.9% but a year-on-year increase of 13.9% [3][22] PC/Server Sector - The PC market is affected by tariff uncertainties, with companies like Hon Hai reporting April revenue of NT$641.4 billion, a month-on-month increase of 16.2% and a year-on-year increase of 25.5% [3][25] - Quanta's April revenue was NT$154 billion, a month-on-month decrease of 20.0% but a year-on-year increase of 58.2% [3][25] PCB Sector - The PCB manufacturing sector saw overall revenue increase by 5.6% month-on-month and 18.6% year-on-year in April 2025, driven by demand for AI servers and high-end networking [3][27] - Zhen Ding's revenue reached NT$13.6 billion in April, a year-on-year increase of 22.9% [3][27] Optical Components Sector - The optical components sector is experiencing a traditional off-season, with Largan Precision reporting April revenue of NT$4.4 billion, a month-on-month decrease of 10.6% but a year-on-year increase of 26.5% [3][28] Storage Sector - The storage market is showing positive signs, with companies like Nanya Technology reporting a month-on-month revenue increase of 13.3% in April 2025 [3][4] - DRAM prices are expected to rise, with TrendForce adjusting its Q2 price forecast from -5% to +8% [3][4]