Summary of Asia Tech Hardware Conference Call Industry Overview - The report focuses on the Asia Tech Hardware industry, particularly in the context of AI server growth and supply chain dynamics related to major players like Nvidia and Apple. Key Points and Arguments 1. **GB200 Rack Performance**: The ramp-up of the GB200 rack was slower than Nvidia's initial expectations, raising concerns about AI sentiment in the second half of 2025. The sentiment shift occurred earlier than anticipated due to factors like Deepseek and tariff concerns, which reversed in subsequent months. CSPs (Cloud Service Providers) are increasing capital expenditures (capex) each quarter, indicating strong growth potential for AI servers in 2026 [1][2][3]. 2. **AI Sentiment Fluctuations**: Since 2023, AI sentiment has experienced corrections one to two times per year. Concerns about an AI bubble, capex adjustments, and delayed product launches have pressured stock prices. However, the ongoing penetration of AI into daily life supports multi-year growth in the AI server and edge AI supply chain [2][3]. 3. **Thermal and Power Management**: The importance of thermal and power management in the AI value chain was validated, leading to strong performance from companies like Delta and Chroma. In contrast, Quanta underperformed due to a less attractive business model and intense competition [3][4]. 4. **Challenges for New Racks**: The deployment of new racks like Vera Rubin and Rubin Ultra may face challenges similar to those encountered with the GB200 in early 2025. The cyclical nature of AI sentiment corrections may create better entry points for select stocks [2][4]. 5. **Chip Demand and Hardware Components**: The demand for increasingly powerful chips necessitates advanced hardware components. Companies that provide limited integration windows for suppliers, like Nvidia, highlight the value of R&D and product reliability over cost for critical components [4][5]. 6. **Unimicron's Market Position**: Unimicron's market share trajectory in Nvidia's ABF was in line with projections, but challenges in its HDI business, including yield issues and competition from VGT, delayed margin recovery by about a year [5][6]. 7. **Apple's Supply Chain Movement**: Apple's supply chain shift to India has progressed faster than expected, negatively impacting Luxshare. However, Luxshare's AI narratives have been favorable. On the Android side, Sunny's margin recovery is on track, aided by smartphone camera upgrades and ADAS penetration in China [8][9]. 8. **China's Component Supply**: The trade war has not hindered China's ability to supply components for AI servers, particularly in areas where it excels technologically. The saturated smartphone market favors consumer electronics companies that diversify into new growth areas [9][10]. Additional Important Insights - **Stock Ratings and Price Targets**: - Delta Electronics: Outperform, PT = NT$1190 - Chroma ATE: Outperform, PT = NT$830 - Quanta Computer: Underperform, PT = NT$250 - Unimicron Technology: Outperform, PT = NT$220 - Luxshare Precision: Outperform, PT = RMB74 - Sunny Optical: Outperform, PT = HK$110 - Largan Precision: Market-Perform, PT = NT$2400 [10][11][12][13][14][15][16][17]. - **Market Performance**: Stocks rated as Outperform have generally outperformed the Taiwan Index in 2025, while Quanta and Largan have underperformed [20][24]. - **Investment Implications**: The report emphasizes the importance of selecting stocks based on their ability to navigate the cyclical nature of AI sentiment and the ongoing demand for advanced hardware components [11][12][13][14][15][16][17]. This summary encapsulates the critical insights and trends discussed in the conference call, providing a comprehensive overview of the Asia Tech Hardware industry and its key players.

Investment Rating - The report maintains an "Overweight" rating for NVIDIA Corp. and identifies it as a "Top Pick" in the semiconductor sector with a price target raised to $170.00 from $160.00 [2][8][22]. Core Insights - NVIDIA is demonstrating strong business acceleration outside of China, alleviating previous concerns about supply chain issues. The company is expected to continue improving its performance, with durable growth drivers in place [2][5][11]. - The report highlights a significant increase in demand for inference-related applications and investments in training models for robotics, indicating a robust market environment for NVIDIA's products [4][11]. - The financial results for the quarter exceeded expectations, with total revenue of $44.062 billion, representing a 12.0% quarter-over-quarter increase and a 69.2% year-over-year increase [18][43]. Summary by Sections Financial Performance - NVIDIA's revenue for the quarter was $44.062 billion, surpassing both street expectations and internal estimates. Data Center revenue was particularly strong at $39.112 billion, up 9.9% quarter-over-quarter and 73.3% year-over-year [18][43]. - The company reported a gross margin of 60.5%, which was below expectations but improved when excluding the impact of H20 inventory charges [18][19]. - Non-GAAP EPS was reported at $0.81, slightly below street expectations but above internal estimates [18][43]. Growth Drivers - The report emphasizes that NVIDIA's Data Center business is expected to drive significant growth over the next five years, fueled by increasing demand for AI and machine learning hardware solutions [31][41]. - The anticipated broader availability of the Blackwell architecture later in 2025 is expected to further strengthen NVIDIA's competitive position [31]. Market Outlook - The report indicates that NVIDIA's supply chain issues are resolving, with increasing orders from multiple customers. The company is expected to benefit from a strong demand environment, particularly in the AI and data center segments [16][21]. - The guidance for future revenue growth remains optimistic, with expectations of continued upward revisions to estimates based on strong demand and supply constraints [20][21].