5 January 2026 Asia Tech Hardware Asia Tech Hardware 2026 Outlook: AI drives growth, but risks demand selectivity Alex Wang, CFA +852 2123 2613 alex.wang@bernsteinsg.com Shirley Yang, CFA +852 2123 2660 shirley.yang@bernsteinsg.com Ethan Xu +852 2123 2634 ethan.xu@bernsteinsg.com AI remains the key theme to play in 2026, though sentiment will stay volatile as new targets and bottlenecks emerge. We expect GPU AI server shipment to grow at a 31% CAGR in 2025-27E, driving the total server market to reach c. US ...

M Idea Morgan Stanley & Co. LLC Erik W Woodring Equity Analyst Erik.Woodring@morganstanley.com +1 212 296-8083 Dylan Liu Research Associate Dylan.Liu@morganstanley.com +1 212 761-4519 Maya C Neuman Research Associate Maya.Neuman@morganstanley.com +1 212 761-1946 IT Hardware January 6, 2026 12:06 AM GMT IT Hardware | North America Taiwan Trip — Our Key Takeaways (1) iPhone strength is sustaining into CY26, (2) HDD supply shortage is getting more severe, (3) device price hikes could drive better 1Q26 seasonal ...

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the Greater China Technology sector, focusing on trends and projections for 2026, particularly in AI and related technologies, as well as the smartphone supply chain influenced by Apple’s form factor changes [2][3]. Key Trends Identified for 2026 1. **AI Servers**: Anticipated growth in rack-level AI servers, with shipments expected to rise to 50,000 racks in 2026 from 19,000 in 2025. Major suppliers include Hon Hai and FII, with a projected ASIC penetration rate of 40% in 2026 and 45% in 2027 [1][13]. 2. **Optical Transceivers**: Growth in optical module shipments, with a forecasted increase of 253% year-over-year in 2026, driven by the demand for high-speed connections in AI data centers [1][13]. 3. **Cooling Solutions**: A shift towards liquid cooling in AI servers is expected, reflecting the rising complexity and computing power requirements [1][13]. 4. **Original Design Manufacturers (ODMs)**: Companies with strong commitments and capacity plans in the US, such as Hon Hai, Wistron, and Wiwynn, are expected to outperform in the market [1][13]. 5. **Smartphones**: Apple suppliers are projected to excel in 2026, while Android smartphone demand remains muted. The introduction of foldable iPhones may drive demand [1][2]. 6. **Printed Circuit Boards (PCBs)**: Demand is expected to remain solid despite ongoing debates about long-term supply and demand dynamics [1]. 7. **Semiconductors**: Local leaders in advanced nodes, such as SMIC and Hua Hong, are expected to drive industry growth, supported by rising local GPU suppliers [1]. 8. **L4 Chips & Robotaxi**: Continued upgrades and expansions in this area are anticipated, contributing to growth for chipset, software, and sensor suppliers [1]. 9. **LEO Satellites**: Accelerating satellite launches and reduced launch costs are expected to drive the development of constellation networking infrastructure [1]. Financial Projections - AI and AI-related technologies are expected to deliver mid-double-digit year-over-year revenue growth in 2026 [2]. - The total addressable market (TAM) for global smartphones is raised by 1% to 2% for 2026 and 2027 due to higher average selling prices (ASP) [3]. - The TAM for global PCs is projected to increase by 3% year-over-year for 2025 and 2026, with gaming PCs expected to reach a penetration rate of 11% to 13% by 2025 and 2028 [3]. Investment Recommendations - The report highlights several companies as "Buy" recommendations based on their expected performance in the evolving technology landscape, particularly in AI servers and components [14]. - Specific companies mentioned include Hon Hai, FII, Wistron, and various optical component manufacturers like Innolight and Eoptolink [14]. Additional Insights - The complexity of AI servers is expected to lead to a reliance on leading suppliers with strong designs and manufacturing capabilities, creating a stable competitive landscape [14]. - The report emphasizes the importance of R&D, vertical integration, and comprehensive chipset platform exposure for companies to succeed in the market [14]. This summary encapsulates the critical insights and projections from the conference call, providing a comprehensive overview of the anticipated trends and investment opportunities within the Greater China Technology sector for 2026.

This brings us to the second reason why Nebius appears to be a risky investment at present. The company was sitting on $4.8 billion in cash at the end of the previous quarter, while its debt stood at $4.6 billion. To support its data center buildout plans, it's going to need considerably more money. Constructing a 1 GW data center costs an estimated $10 billion, plus another $20 billion to $30 billion for the chips to power it.First, it's trading at an expensive premium of 64 times sales. For comparison, th ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Global Semiconductors, Hardware, Internet & Software** industry, particularly the **AI server market** and the **AI supply chain** dynamics [1][2]. Core Insights and Arguments 1. **Investment in Data Centers**: Total investment in upcoming and under-construction data centers is approximately **US$840 billion**. Major projects include OpenAI's agreements with semiconductor and cloud service providers (CSPs) [3][38]. 2. **AI Capital Expenditure (Capex)**: Following 3Q25 earnings, consensus estimates for 2026 capex for major CSPs have been raised by nearly **20%**, projecting total capex to grow at a **36% CAGR** to around **US$630 billion** from 2024 to 2027 [3][37]. 3. **Server Shipment Growth**: Global server and high-end GPU AI server shipments are expected to grow at **3%** and **31% CAGR**, respectively, from 2025 to 2027. High-end GPU server shipments are projected to increase by **46%** in 2026 [4][58]. 4. **ASIC and GPU Demand**: ASIC adoption is increasing, with projections indicating that ASICs will comprise **47%** of total CoWoS-based AI chip shipments in 2026. The demand for TPUs is also expected to grow by approximately **75% YoY** [4][5]. 5. **Financial Performance of Suppliers**: ASIC supply chain stocks have recently outperformed GPU supply chains, driven by significant orders from Broadcom and successful product launches from OpenAI and Google [6][34]. Additional Important Insights 1. **Circular Financing Concerns**: There are concerns regarding "circular financing" among AI giants, particularly with OpenAI's substantial commitments to various suppliers, which may lead to a "too big to fail" scenario [34][35]. 2. **OpenAI's Revenue Projections**: OpenAI's revenue for 1H25 was reported at **US$4.3 billion**, with a target of **US$13 billion** for the full year. However, the company has significant purchase commitments exceeding **US$1 trillion** over the next 5-7 years [35][36]. 3. **Major CSPs' Capex Guidance**: Companies like Microsoft, Amazon, and Google have increased their capex guidance significantly for 2025, indicating a strong focus on AI infrastructure [57]. 4. **Emerging Neoclouds**: Neoclouds are gaining traction with flexible "build-to-order" models, showcasing a growing revenue backlog and partnerships with major tech firms [43]. Investment Ratings and Price Targets - **Chroma**: Rated Outperform, Price Target (PT) = NT$830 [11] - **Delta**: Rated Outperform, PT = NT$1190 [12] - **Unimicron**: Rated Outperform, PT = NT$220 [13] - **Quanta**: Rated Underperform, PT = NT$250 [14] - **Google**: Rated Market-Perform, PT = $305 [15] - **Meta**: Rated Outperform, PT = $870 [16] - **Amazon**: Rated Outperform, PT = $300 [17] - **Microsoft**: Rated Outperform, PT = $645 [18] - **AMD**: Rated Market-Perform, PT = $200 [19] - **NVIDIA**: Rated Outperform, PT = $275 [21] - **TSMC**: Rated Outperform, PT = NT$1,444 [25] This summary encapsulates the key points discussed in the conference call, highlighting the significant trends, financial projections, and investment opportunities within the AI server and semiconductor industries.

Core Viewpoint - Hewlett Packard Enterprise (HPE) shares fell over 9% intra-day following a weaker-than-expected revenue forecast, attributed to softness in AI server and hybrid cloud businesses as customers delayed orders until the latter half of next year [1] Financial Performance - In the fiscal fourth quarter, HPE reported adjusted earnings of $0.62 per share, slightly above the prior-year period and exceeding its guidance range of $0.56 to $0.60 [2] - Revenue increased by 14% year-over-year to $9.7 billion, but fell short of analyst expectations of $9.9 billion [2] - Server sales decreased by 5% to $4.46 billion, while hybrid cloud revenue declined by 12% to $1.41 billion [2] Business Segments - The AI server business, reliant on advanced Nvidia chips, experienced delays as customers postponed deployments [3] - Networking revenue surged by 150% to $2.8 billion, driven by HPE's recent acquisition of Juniper Networks [3] Future Outlook - For the fiscal first quarter, HPE projected adjusted EPS of $0.57 to $0.61 on revenue of $9.0 billion to $9.4 billion, below Wall Street estimates of $9.91 billion in sales but slightly above expectations for EPS of $0.54 [4] - HPE raised its full-year fiscal 2026 outlook, guiding adjusted diluted EPS between $2.25 and $2.45, and increasing the midpoint of its free cash flow forecast to $1.7 billion to $2.0 billion [4]

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Group 1: AI Computing Power - Global infrastructure investment is experiencing rapid growth, benefiting all segments of the core industry chain [1] - The demand for AI computing power is driving a new capital expenditure expansion cycle among global Cloud Service Providers (CSPs), with expected capital spending to exceed $600 billion by 2026, a 40% year-on-year increase [1] - The AI server demand is expected to rise significantly, leading to structural growth in the AI hardware ecosystem, including components like GPU/ASIC, memory, and cooling systems [1] Group 2: AI Storage - The storage market is witnessing a recovery due to manufacturers' production cuts, leading to an upward trend in DRAM and NAND Flash prices [2] - The demand for high-capacity storage solutions, particularly in AI applications, is increasing, with expectations for QLC SSD shipments to see significant growth by 2026 [2] - The server market is shifting towards higher capacity memory modules, driven by the needs of AI servers [2] Group 3: End-Side AI - The penetration rate of AI smartphones is expected to rise dramatically, from approximately 18% in 2024 to 45% in 2026, and nearly 60% by 2029 [3] - AI glasses are emerging as a new product category, with significant market potential as demonstrated by successful products like Ray-Ban Meta glasses [3] - The humanoid robot sector is advancing rapidly, with traditional electronics manufacturers entering the robotics supply chain, driven by the integration of AI technologies [4] Group 4: Investment Recommendations - Recommended companies in the AI computing power sector include Industrial Fulian, Huadian Technology, and Shenghong Technology [5] - In the AI storage sector, companies like Demingli and Jiangbolong are highlighted for their potential [5] - For end-side AI, companies such as Rockchip and Lens Technology are suggested for investment [5]

Core Insights - The article presents the "Top 10 Technology Market Trends Forecast for 2026" by TrendForce, highlighting significant advancements in various technology sectors, particularly in display technology, AI, and energy storage systems. Group 1: Display Technology - The acceleration of high-end laptop displays is marked by the mainstream adoption of OLED technology, with Apple expected to introduce OLED panels in MacBook Pro by 2026, leading to an anticipated penetration rate of 5% for OLED laptops by 2025 and 9-12% by 2027-2028 [4][5]. - The introduction of foldable smartphones by Apple is projected to redefine the market, with global shipments expected to exceed 30 million units by 2027, overcoming current challenges related to hinge reliability and flexible panel packaging [5]. Group 2: AI and Chip Technology - The AI chip market is experiencing intensified competition, with a projected annual growth of over 20% in global AI server shipments due to increased capital expenditure from North American CSPs and the rise of sovereign clouds [7]. - The demand for liquid cooling systems in AI data centers is expected to reach a penetration rate of 47% by 2026, driven by the increasing thermal design power (TDP) of AI chips [8]. Group 3: Data Transmission and Storage - HBM and optical communication technologies are becoming critical for overcoming bandwidth limitations in AI computing, with HBM4 expected to enhance I/O bandwidth significantly [9][10]. - NAND Flash suppliers are advancing specialized solutions to meet the demands of AI workloads, with QLC SSDs projected to achieve a 30% market penetration in enterprise SSDs by 2026 [12]. Group 4: Energy Storage and Data Centers - AI data centers are transitioning energy storage systems from emergency backup to core energy solutions, with global AI data center storage capacity expected to surge from 15.7 GWh in 2024 to 216.8 GWh by 2030, reflecting a compound annual growth rate of 46.1% [13]. - The shift to 800V HVDC architecture in data centers is anticipated to increase the penetration of third-generation semiconductors (SiC/GaN) to 17% by 2026 and over 30% by 2030 [15]. Group 5: Robotics and Autonomous Driving - The global shipment of humanoid robots is expected to grow over sevenfold in 2026, focusing on AI adaptability and application-specific designs [17]. - The penetration rate of Level 2 and above advanced driver-assistance systems (ADAS) is projected to exceed 40% by 2026, with Robotaxi services expanding globally [19].

Core Insights - The global AI server shipments are expected to grow by over 20% year-on-year in 2026, driven by increased capital expenditure from North American CSPs and the rise of sovereign cloud initiatives [1][2] - The competition in the AI chip market is intensifying, with companies like AMD and various Chinese firms enhancing their self-developed ASIC capabilities, challenging NVIDIA's dominance [1][2] Group 1: AI Chip and Cooling Technologies - The thermal design power (TDP) of AI chips is projected to rise from 700W for NVIDIA's H100 and H200 to over 1,000W for upcoming models, necessitating liquid cooling systems in server cabinets, with a forecasted penetration rate of 47% for liquid cooling in AI chips by 2026 [2] - Microsoft is introducing new microfluidic cooling technologies for next-generation chip packaging, while the market is expected to transition from liquid-to-air (L2A) to liquid-to-liquid (L2L) cooling designs [2] Group 2: Memory and Data Transfer Innovations - HBM and optical communication technologies are becoming critical for overcoming bandwidth limitations in AI computing, with HBM4 expected to enhance I/O bandwidth and local bandwidth for AI chips [3][4] - The introduction of 800G/1.6T pluggable optical modules is underway, with expectations for higher bandwidth SiPh/CPO platforms to be integrated into AI switches starting in 2026 [4] Group 3: NAND Flash and Storage Solutions - NAND Flash suppliers are accelerating the development of specialized solutions to address the performance gap in AI training and inference workloads, including storage-class memory (SCM) SSDs and Nearline QLC SSDs [5][6] - QLC technology is anticipated to achieve a 30% market penetration in enterprise SSDs by 2026, significantly reducing the cost of storing large AI datasets [6] Group 4: Energy Storage Systems - AI data centers are evolving towards large-scale clusters, with energy storage systems transitioning from emergency backup to core energy solutions, expected to grow from 15.7 GWh in 2024 to 216.8 GWh by 2030, reflecting a CAGR of 46.1% [7] - North America is projected to become the largest market for AI data center energy storage, driven by major cloud providers [7] Group 5: Power Infrastructure and Semiconductor Demand - Data centers are shifting to 800V HVDC architectures to enhance efficiency and reliability, with third-generation semiconductors (SiC/GaN) expected to penetrate 17% of data center power supply by 2026 [8] Group 6: Advanced Semiconductor Technologies - The transition to 2nm GAAFET technology is underway, emphasizing higher transistor density and heterogeneous integration to meet the demands of AI applications [9] Group 7: Humanoid Robots and Market Growth - The global shipment of humanoid robots is projected to increase by over 700% in 2026, focusing on AI adaptability and application-specific designs [10][11] Group 8: Display Technology Advancements - OLED technology is set to accelerate in laptops, with Apple expected to introduce OLED panels in MacBook Pro by 2026, leading to a significant increase in OLED penetration in the laptop market [12][13] Group 9: Autonomous Driving and Robotaxi Expansion - The penetration rate of L2 and above advanced driver-assistance systems is expected to exceed 40% by 2026, with Robotaxi services expanding globally beyond just China and the US [15]