ANCHOR REPORT Global Markets Research 13 August 2025 Asia AI Semi & Server Stay positive on AI, but also monitor risk factors In late 2024, our tech team published multiple reports flagging our contrarian cautious view on the AI semi and server supply chain given the overly-optimistic Street sentiment and the widening gap between upstream CoWoS and downstream GB rack shipments. That said, in April/May 2025, we started calling for "revisit AI" following market expectation reset, given our view that AI could ...

Group 1 - TSMC reported a record revenue of $30.07 billion in the second quarter, with AI-related revenue exceeding $10 billion for the first time in a single quarter, indicating strong growth potential for the year [1] - The company expects AI accelerator contributions to revenue to double compared to last year, projecting AI-related revenue to reach approximately NT$434.1 billion in 2024 and NT$868.3 billion in 2025 [1] - In the second quarter, revenue from A-chip manufacturing and advanced packaging was approximately $8.78 billion, a year-on-year increase of 3.67 times, while high-performance computing (HPC) chip revenue was $9.26 billion, a year-on-year increase of 9.8% [1] Group 2 - TSMC's chairman emphasized that despite external factors like tariffs and currency fluctuations, there has been no change in customer behavior, with continued strong demand for AI [2] - The company raised its revenue growth forecast for the year to approximately 30% due to strong demand for advanced processes and growth in HPC platforms [2] - The rapid development of AI applications is expected to drive long-term demand, with significant growth in the processing of text tokens for large language models and sovereign AI needs [2]

Group 1: ASIC Chip Market Outlook - Bank of America reports strong and sustained growth in the ASIC chip supply chain due to widespread adoption of AI ASICs by CSPs [1] - Despite extended project cycles, the demand for current generation products has created a historical super demand cycle for the global ASIC supply chain [1] - Google and Amazon are expected to maintain annual ASIC chip production above 1 million units, with Meta and Microsoft gradually catching up [1] Group 2: MPl's Growth and Market Position - MPl, a key supplier of probe cards for ASIC chips, is benefiting from strong customer demand, with MEMS probe card capacity expected to expand from 600,000 units per month to nearly 1 million by Q3 2025 [1][2] - The target price for MPl has been raised to NT$1050 based on a projected P/E ratio of 28 times for 2026 [2] Group 3: Aspeed's Business Performance - Aspeed is showing strong performance in its BMC business, with the AST2700 expected to be adopted by the Rubin platform, leading to reduced competitive pressure [2] - Earnings per share estimates for 2026 and 2027 have been raised by 5% and 12% respectively, with the target price increased to NT$6250 [2][3] - Aspeed's revenue is projected to reach NT$2.2 billion in Q3 2025, with a gross margin of 66% [3] Group 4: Alchip's Opportunities and Risks - Alchip is seeing increased collaboration opportunities with key customers as CSP projects advance, with a higher likelihood of mass production for Trainium 3 [4] - The target price for Alchip has been raised to NT$3900 based on a rolling valuation period extending to mid-2027 [4] - Upward risks for Alchip include faster mass production of non-AWS projects and improved profit margins due to relaxed restrictions on China [4]