Read across to Shennan Circuits: Management's positive view on the rising AI demand echoes our positive view on Shennan Circuits. Despite rising pricing pressure from CCL on higher raw material cost, we see AI products are less price sensitive compared to other end applications. Shennan Circuits is expanding to AI PCB and started the mass production of PCB for AI accelerators, 800G optical transceivers, and switches, with the ongoing global capacity to support the shipments ramp up. Read more: Shennan Circu ...

Summary of WUS Printed Circuit Conference Call Company Overview - **Company**: WUS Printed Circuit (Ticker: 002463.SZ) - **Industry**: Technology, specifically in the Printed Circuit Board (PCB) sector - **Key Customers**: Cisco, Oracle, Amazon, Huawei [12][12] Key Points and Arguments Earnings Forecast and Target Price - **Earnings Increase**: Earnings forecasts for 2025, 2026, and 2027 have been raised by 5.6%, 11%, and 8% respectively due to stronger growth outlook on AI PCBs [1][15] - **Target Price**: Target price raised to CNY 86.8, implying approximately 21% upside from the current price of CNY 71.90 [1][5] - **Valuation**: Target price based on a P/E multiple of 38x 2026F EPS of CNY 2.28, close to the high-end of its historical range [1][25] Market Dynamics - **AI PCB Demand**: Anticipated substantial upgrades in AI ASIC PCB specifications starting from 2H26, driven by new-gen ASICs catching up with competitors like nVidia [2][2] - **New Content Additions**: CSPs' ASICs will enhance scale-up connectivity, requiring more scale-up switches and new PCB content [2][2] Production and Operational Updates - **Thailand Plant**: The Thailand plant recorded losses of approximately CNY 96 million in 1H25 due to limited scale ramp-up. However, it has been qualified by two AI and switch customers, with expectations to qualify four more in 2H25 [3][3] - **Product Focus**: The plant aims to manufacture mid-to-high-end products and is expected to reach reasonable economies of scale by the end of 2025 [3][3] Financial Performance - **Revenue Growth**: Projected revenues for FY25, FY26, and FY27 are CNY 17,746 million, CNY 21,618 million, and CNY 25,307 million respectively, reflecting significant growth [4][15] - **Net Profit**: Normalized net profit forecasts for FY25, FY26, and FY27 are CNY 3,345 million, CNY 4,390 million, and CNY 5,194 million respectively [4][15] - **Margins**: Gross margin expected to stabilize around 34.6% in FY26 and FY27 [15][15] Risks and Challenges - **Market Risks**: Potential risks include slower-than-expected PCB growth from 5G basestation PCBs, weaker datacenter demand, and slower upgrades from major players like Intel and AMD [13][26] ESG Commitment - **Sustainability Efforts**: WUS is committed to recycling water, achieving a reuse rate of over 50% [14][14] Additional Important Information - **Stock Performance**: The stock has shown strong performance with a 125.7% increase over the past 12 months [8][8] - **Market Capitalization**: Approximately USD 19.43 billion [5][5] This summary encapsulates the critical insights from the conference call, highlighting the company's strategic direction, financial outlook, and market positioning within the technology sector.

Summary of Shennan Circuits Earnings Call Company Overview - **Company**: Shennan Circuits - **Industry**: PCB (Printed Circuit Board) and IC (Integrated Circuit) substrates manufacturing - **Market Position**: Fourth-largest PCB manufacturer globally as of 2024 [16] Key Financial Results - **Q2 2025 Revenue**: Rmb 5.7 billion, representing an increase of 18.6% QoQ and 30.1% YoY, exceeding consensus estimates by 4% and 6% [2][9] - **Net Profit**: Rmb 869 million, up 77% QoQ and 43% YoY; adjusted net profit (after non-recurring items) was Rmb 780 million, reflecting a 61% QoQ and 37% YoY increase [2][9] - **Gross Profit Margin (GPM)**: Improved to 27.6%, a record high since Q3 2020, up 2.9 percentage points QoQ and 0.5 percentage points YoY [3][9] Revenue Growth Drivers - **PCB Sales Growth**: Increased by 29% YoY, driven by robust demand in data centers, wired communications, and automotive sectors [3] - **Data Center PCB**: Significant growth attributed to global AI capital expenditure upcycle, with revenue mix exceeding 25% compared to 20% in FY24 [3] - **IC Package Substrate Sales**: Rose by 9% YoY, supported by better BT substrate orders due to tight raw material supply [3] Operational Insights - **Utilization Rates**: High utilization rates for both PCB and BT substrates, with ongoing efforts to ramp up production capacity at new plants in Thailand and Nantong [4] - **Future GPM Expectations**: Anticipated recovery of GPM by 4-5 percentage points in H2 2025 [4] Market Outlook - **AI-Related Orders**: Management maintains a positive outlook for AI-related orders, particularly from North American customers, expecting data center revenue to lead growth in 2025 [4] - **Supply Constraints**: The company is currently supply-constrained for high-end PCBs, indicating potential for future growth as capacity expands [4] Investor Sentiment - **Expected Market Reaction**: Anticipated positive reaction from investors due to the earnings beat and favorable outlook for the second half of the year, following significant stock price increases since April [5] Valuation Metrics - **Market Capitalization**: Rmb 86.9 billion (approximately US$12.1 billion) [6] - **12-Month Price Target**: Rmb 171.00, with a current price of Rmb 169.50 [6][31] - **P/E Ratio (2025E)**: 34.3x, with projected EPS of Rmb 4.94 [8] Risks and Considerations - **Downside Risks**: Include slower-than-expected server demand, pricing pressure from clients, and longer breakeven times for new business segments [17] Conclusion Shennan Circuits demonstrated strong financial performance in Q2 2025, driven by robust demand in key sectors, particularly data centers and AI-related applications. The company is well-positioned for future growth, although it faces supply constraints and market risks that could impact its performance.

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses advancements in the semiconductor packaging industry, particularly focusing on the evolution of packaging technologies such as CoWoS (Chip-on-Wafer-on-Substrate), CoPoS (Chip-on-Panel-on-Substrate), and CoWoP (Chip-on-Wafer-on-PCB) [9][18][24]. Core Concepts and Technologies - **CCL (Copper Clad Laminate)** is identified as a core material for the electronics industry, essential for high-frequency and high-speed circuits, with major suppliers including TUC, EMC, Unimicron, Resonac, MGC, and Panasonic [5][6]. - **CoWoP** aims to eliminate the traditional ABF (Ajinomoto Build-up Film) package substrate, allowing direct mounting of chip and silicon interposer modules onto high-precision PCBs, theoretically offering shorter signal paths and improved thermal management [10][25][30]. - **Technical Challenges**: CoWoP faces significant challenges, including the need for PCB precision below 10 μm, thermo-mechanical reliability issues, and manufacturing yield challenges [12][29][30]. Market Dynamics - The demand for high-end CCL and PCB materials is rising sharply due to the expansion of AI accelerators and data center computing needs, with a notable shift from M7-grade to M8 and M9-grade materials [74][76][81]. - NVIDIA's next-generation Rubin platform and Google's chip are expected to adopt M9-grade CCL, indicating a significant increase in material costs associated with advanced AI computing platforms [77][80]. Future Outlook - CoWoP is not expected to enter mass production in the near term, with industry consensus suggesting that NVIDIA will continue to rely on a mix of CoWoS and CoPoS solutions for product reliability and supply stability [13][26][37]. - The transition to CoWoP may require one to two more product generations before it can reshape the packaging models and supply chain ecosystem for high-performance computing and AI servers [14][28]. Key Suppliers and Innovations - **Mitsui Mining** is highlighted as a dominant supplier of ultra-thin copper foil, critical for SLP and CoWoP applications, with the market entering a high-growth phase due to increasing demand from AI and HPC sectors [41][55]. - **Shin-Etsu Chemical** has developed innovative equipment and methods for advanced packaging substrates, aiming to enhance production capabilities for next-generation chiplet and high-frequency packaging [66][70]. Material Specifications - The specifications for high-speed PCB materials are becoming increasingly stringent, with targets for dielectric constant (Dk) ≤ 3.3 and dissipation factor (Df) ≤ 0.005 to minimize signal loss and ensure impedance stability [48][49]. - Electronic-grade glass fiber fabric is emphasized as a critical reinforcement material for CCL, playing a vital role in ensuring signal integrity and power integrity in high-performance applications [82][86]. Conclusion - The semiconductor packaging industry is undergoing significant transformations driven by advancements in technologies like CoWoP, with increasing demands for high-performance materials and innovative manufacturing processes shaping the future landscape of AI and HPC systems [22][73].