Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Technology Hardware - **Focus**: Monthly and quarterly rack shipment forecasts for GPU AI server ODMs in 2025 Key Company Insights Quanta Computer Inc. (2382.TW) - **December Revenue**: NT$272 billion, representing a **41% month-over-month (m/m)** increase and a **95% year-over-year (y/y)** increase - **Rack Shipments**: Estimated **1.6-1.7k racks** shipped in December, up from **1.0-1.1k racks** in November - **4Q Total Rack Shipments**: Reached **3.5-3.6k**, significantly higher than the previous estimate of **2.5k** - **2026 Forecast**: Expected to deliver **14-15k racks** [4][10] Wistron Corporation (3231.TW) - **December Revenue**: NT$255 billion, a **9% m/m** decline but a **142% y/y** increase - **Rack Shipments**: Estimated **0.8-0.9k racks** in December, down from **1.2-1.3k racks** in November - **Normal Fluctuation**: The decline attributed to typical month-end fluctuations after a strong November - **Notebook Shipments**: Increased to **2.6 million**, a **18% m/m** rise [5][10] Hon Hai Precision Industry Co. (2317.TW) - **December Rack Shipments**: Estimated at **~2.8k racks**, slightly up from **~2.5k racks** in November - **4Q Total Rack Estimates**: Adjusted to **7.8k racks**, reflecting a **63% quarter-over-quarter (q/q)** increase [6][10] Overall Market Insights - **Total GB200/300 Racks for 2025**: Estimated to reach **~29k**, exceeding the previous forecast of **27.3k** - **2026 Projections**: Anticipated strong demand with **70-80k racks** expected to be built and delivered to data centers [3][11] Additional Insights - **Rack Output in December**: Estimated at **~5.9k**, an **8% m/m** increase - **Quanta's Total for CY25**: Approximately **6.1k racks** shipped - **Wistron Group Total**: Including Wiwynn, approximately **6.3k racks**, slightly higher than Quanta's total [10][12] Risks and Considerations - **Upside Risks**: Better-than-expected demand for iPhones, AI servers, and potential M&A activities - **Downside Risks**: Slower-than-expected AI server penetration, geopolitical developments, and margin contraction due to competition [24][26] Conclusion - The Greater China Technology Hardware sector, particularly in GPU AI server racks, shows promising growth for 2026, with key players like Quanta, Wistron, and Hon Hai demonstrating significant revenue and shipment increases. The market outlook remains positive, but potential risks must be monitored closely.

Investment Rating - The report maintains an Overweight (O/W) rating for Taiwan, Neutral/Weight (N/W) for Korea, and moves Japan to Neutral/Weight from Underweight (U/W), while China is rated Underweight (U/W) from Neutral/Weight [4]. Core Insights - The smartphone industry unit Sell In forecasts have been raised to +3% YoY for 2025 and +1% YoY for 2026, with PC forecasts increased to +4% YoY for 2025 and +3% YoY for 2026, and server forecasts to +6% YoY for 2025 and +4% YoY for 2026 [1][9]. - AI demand remains robust, with expectations for Nvidia's GB200/300 NVL72 racks in 2025 at 28-29k and initial conservative estimates for 2026 at around 50-60k [1]. - The foundry outlook for 3nm and 2nm is strong, driven by AI accelerator projects, while DDR and NAND supply is tightening, with DDR potentially "sold out" until 2027 [2]. - Wafer Fab Equipment (WFE) spending is trending upwards, with forecasts for 2025 at US$109 billion (+12% YoY) and 2026 at US$118 billion (+8% YoY) [3]. Summary by Sections Smartphones - The smartphone market is expected to see unit Sell In of 1.26 billion in 2025 (+3% YoY) and 1.27 billion in 2026 (+1% YoY), with Apple’s iPhone 17 builds projected to increase [9][11]. - Component upgrades in the iPhone 17 series include significant camera enhancements, indicating ongoing technological advancements despite cost pressures [12]. PCs - Global PC unit shipments are forecasted to grow by +4.4% YoY in 2025 and +3.4% YoY in 2026, with commercial segments showing resilient momentum due to the Windows 10 EOL replacement cycle [16][19]. - The report highlights a modestly positive outlook for PC shipments, with consumer PCs expected to grow 0.5% YoY in 2025, while commercial PCs are forecasted to grow by +6.6% YoY [19]. Memory and Foundry - The report indicates a tightening supply for DDR and NAND, with long-term agreements being established by major customers, particularly US hyperscalers [2]. - The outlook for 3nm and 2nm foundries is robust, with expectations for multi-year growth driven by AI projects [2]. Wafer Fab Equipment - WFE spending is expected to increase, particularly from Korean memory makers, with forecasts for domestic China WFE at US$37 billion in 2025 (+3% YoY) [3].