Global Tech: Raising 2026E on ASIC rising liquid cooling trend and rack-level AI servers ramp up; +66% TAM growth in 2026E We update Global Server Cooling TAM following recent updates of our global server estimates. We expect the adoption of liquid cooling to accelerate as computing power of AI servers increases (e.g. GB200 AI server rack TDP at ~120kw, vs. HGX at 60-80kw). The liquid cooling adoption is across GPU and ASIC AI servers, and we expect liquid cooled AI training server penetration rates to reac ...

Investment Rating - Buy: Hon Hai, Wiwynn, Wistron, Gigabyte, ASUS, AVC; Neutral: Quanta, Inventec [8] Core Insights - The average year-over-year revenue growth for ten companies in the AI servers and AI PCs supply chain is expected to be +37% in June 2025, +27% in July 2025, and +18% in August 2025, driven by the ramp-up of AI servers and new product launches [1] - Rack-level AI servers are transitioning models, which may impact revenue growth in the second half of 2025 [1] - Geopolitical uncertainties are causing changes in end market demand, leading to a slower month-over-month growth forecast of -6% in June, -8% in July, and +2% in August 2025 [1] Company Summaries Hon Hai - Expected 2Q25 revenues to grow 17% YoY to NT$1,813 billion, driven by AI server demand and tariff-related consumption pull-ins [13] - May revenues were 6% below estimates, affected by slower customer pull-in momentum and negative exchange rate impacts [13] - Maintain Buy rating with a target price of NT$242 based on a 14.9x 2026E P/E multiple [15] Quanta - Anticipated 2Q25 revenues to grow 57% YoY to NT$488 billion, supported by AI server ramp-up [20] - May revenues were 13% below estimates, with a decline in notebook shipments [20] - Maintain Neutral rating with a target price of NT$273 based on a 12.8x 2026E P/E [23] Wiwynn - Expected 2Q25 revenues to grow 161% YoY to NT$202 billion, driven by strong demand for ASIC AI servers [38] - May revenues were 34% higher than estimates, reflecting continued strong demand [39] - Maintain Buy rating with a target price of NT$3,838 based on a 20.5x 2026E P/E [42] Wistron - Expected June revenues to grow 123% YoY to NT$198 billion, driven by AI server demand [47] - Strong revenue in May, up 162% YoY, supported by new product cycles [44] - Maintain Buy rating with a target price of NT$152 based on a 14.8x 2026E P/E [49] Gigabyte - Expected 2Q25 revenues to grow 32% YoY to NT$97 billion, supported by AI servers and VGAs [50] - May revenues were 79% above estimates, reflecting tariff-related pull-ins [51] - Maintain Buy rating with a target price of NT$344 based on a 14.0x 2026E P/E [55] AVC - Expected 2Q25 revenues to grow 67% YoY to NT$27 billion, driven by liquid cooling business [27] - May revenues were higher than estimates, reflecting the rising trend in liquid cooling [27] - Maintain Buy rating with a target price of NT$878 based on a 20.0x 2026E P/E [37] ASUS - Expected 2Q25 revenues to grow 21% YoY to NT$175 billion, supported by AI and gaming PCs [57] - May revenues were up 41% YoY, exceeding estimates [62] - Maintain Buy rating with a target price of NT$849 based on a 14.6x 2026E P/E [63] Inventec - Expected June revenues to be similar to May, supported by AI server ramp-up [65] - Maintain Neutral rating with a focus on AI server revenue contribution [65]

Investment Rating - The report assigns a "Buy" rating to several companies within the Taiwan Technology sector, including Wiwynn, Wistron, Hon Hai, Gigabyte, and various AI server components [25]. Core Insights - The Taiwan Technology sector is experiencing strong growth in ASIC AI servers and related components, with notable revenue increases reported by key players such as Wiwynn (+187% YoY) and Gigabyte (+108% YoY) [1][8]. - The report highlights a transition in server models expected in 3Q25, with a cautious outlook on rack-level AI server shipments due to macro uncertainties [9]. - The demand for components like liquid cooling, silicon photonics, rail kits, and chassis is anticipated to rise, driven by specification upgrades and the increasing adoption of AI technologies [9][10]. Summary by Sections ASIC AI Servers and Components - ASIC AI servers are showing robust growth, with Wiwynn's revenues up 187% YoY, significantly exceeding estimates [1][8]. - Baseboard-based AI servers also demonstrate strong performance, with Gigabyte achieving 108% YoY revenue growth [1][8]. - Liquid cooling solutions are gaining traction, with AVC reporting 87% YoY revenue growth [1][8]. Market Outlook - The report expresses caution regarding rack-level AI server shipments in the second half of 2025, while maintaining a positive outlook for ASIC and baseboard-based AI servers [9]. - The global market for AI servers is projected to reach 19,000 racks by 2025, indicating a significant growth opportunity [9]. Non-AI Sector Insights - The smartphone supply chain is expected to strengthen in 3Q25, with new high-end models being prepared for launch [10]. - AI PCs are anticipated to see continued penetration, with brands like ASUS and Lenovo leading the charge [10]. Investment Opportunities - Recommended investments include AI server ODMs and brands such as Wiwynn, Wistron, Hon Hai, and Gigabyte, as well as components like AVC, Fositek, and LandMark [11].

9 June 2025 | 2:01AM HKT Taiwan Technology: Monthly revenues preview on Chenbro, Auras, E Ink; ASIC AI servers / e-papers to drive growth; FX affects 2Q25 We preview Chenbro, Auras, and E Ink monthly revenues in this report. Chenbro: May revenues miss on FX, while new rack products (noise-cancellation racks) to support 3Q25 revenues. Auras: May revenues declined 20% MoM due to FX impact and production sites diversification, while rising liquid cooling adoption rate and expansion from GPU AI servers to ASIC ...

9 June 2025 | 2:01AM HKT Taiwan Technology: Monthly revenues preview on Chenbro, Auras, E Ink; ASIC AI servers / e-papers to drive growth; FX affects 2Q25 Chenbro May revenues declined by 7% MoM to NT$1.8bn, or 12% behind our estimates. The sequential decline is mainly caused by high base and FX impact, while the rising AI servers (HGX, MGX, and ASIC), and general servers new product cycle continue to support the company's growth. For coming months, we expect June revenues to stay at similar level as May, a ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木Alpha J P M O R G A N Asia Vital Components Stronger demand from both GB and ASIC AI servers We increase our estimates for AVC, thanks to improved yield rates for the GB series and higher contribution from ASIC servers. We maintain our constructive view on the company, and we think the share price is yet to reflect its solid fundamentals even after the 10% share price outperformance YTD vs the Taiex. Overweight 3017.TW, 3017 TT Price (03 Jun 25):NT$659.00 ▲Price Target (Dec-25):NT$ ...