Greater China technology hardware Report Interpretation

Overview

The report summarizes Nomura’s 18–19 August 2026 Taipei meetings with Greater China technology-hardware companies. Its central message is that AI infrastructure is broadening demand across PCB equipment, substrates, optical modules, thermal systems, connectors and server assembly, although supply constraints and platform timing remain important variables.

Core views

In PCB equipment and substrates, Ta Liang described strong positioning in precision PCB drilling, backdrilling and routing, including a leading role in optical-module PCB routing. It manages 300–400 units of monthly drilling/router capacity and expects to add 50 units per month of commodity-equipment capacity through outsourcing in 2026, with a plan to reach 100 units per month in 2027E. Premium tools represented more than 60% of 1H26 revenue, split evenly between drilling and routing. Optical-module demand supported router sales, which management expects to exceed drilling revenue in 2H26E; drilling momentum is expected to improve in 2H26E and contribute more in 1H27E because revenue recognition follows shipments by about three months. Its newly spun-off, unlisted TLSmart subsidiary targets metrology, inspection and automation for advanced packaging, with exposure split between a leading foundry and OSATs, and tools intended for SoIC, CoPoS/FOPLP and CPO. Kinsus is concentrating on ABF substrate expansion, targeting capacity growth from 40mn units per month in 2026 to 50mn in 2027E and 80mn in 2029E, roughly a 50% increase over the next few years. Rather than relying on long-term agreements, it expects customers to participate through capital injections or tool consignments; machinery capex for 2028–29E could involve TWD60–80bn of contracts. BT substrate utilization is about 75%, and management may assess expansion in mid-2027E as memory demand and optical-module opportunities develop. Kinsus has qualified hybrid T-glass/E-glass core technology to ease glass-fabric constraints and reserve T-glass for high-end AI chips, although GPUs and ASICs using passive IPDs or multilayer cores may not adopt the hybrid solution. Compeq is redirecting its mix from consumer electronics toward LEO satellites and data centers. Satellite user-terminal PCBs are expected to be the aerospace growth driver in 2026, while space-grade PCB growth could accelerate from late 2026E as v3 boards carry more area and layers, producing more than twice the dollar content of v2. The company plans TWD20bn of 2026E capex, versus TWD7bn in 2025, mainly for Taiwan and China mSAP capacity serving 800G/1.6T optical-module HDI. It also sees rising relevance for HDI in AI mainboards in 2H27–1H28E. Nomura reiterates Buy and a TWD345 target price, based on 30x 2027F EPS of TWD11.6; the report states the shares trade at 18x 2027F EPS. For thermal suppliers, AVC said standardized merchant-GPU thermal solutions contrast with more customized ASIC projects, which may offer better ASPs, gross margins and lower competition. About two-thirds of AVC revenue comes from servers; 70% of that comes from AI servers, and NVIDIA platforms account for 70% of AI-server revenue versus 25% from ASIC. AVC intends to pivot toward ASIC in 2H26E and liquid cooling. It estimates a 50% net thermal-content uplift per fully liquid-cooled Vera Rubin compute tray compared with a half-liquid-cooled Grace Blackwell tray, despite lower CPU/GPU cold-plate value from standardization. Nomura reiterates Buy and a TWD4,000 target, based on 27x 2027F EPS of TWD148, versus 21x current trading. Auras expects 2H26E momentum from GB300 and ASIC projects, with operating-margin improvement exceeding gross-margin improvement through opex control. It expects stronger GB300 demand in 3Q26E than 4Q26E, while Blackwell rush orders may persist into 1Q27E. Initial Vera Rubin revenue is expected in 4Q26E. Management estimates liquid-cooling content per tray for an upcoming ASIC project at three times GB300, with VR200 between the two. In 1H26, rack manifolds supplied 30–35% of liquid-cooling revenue, inner manifolds plus quick disconnects 55–60%, and CDUs about 5%; CDU contribution could reach 10% in 2027E. Auras targets 2–3 percentage points of annual gross-margin improvement after recording 29.0% in 1H26, versus 26.7% in 1H25 and 27.4% in 2025. Nomura reiterates Buy and a TWD1,840 target based on 23x 2027F EPS of TWD80.01; the stock trades at 12x 2027F EPS. Lotes views new server-platform ramps as critical to gross-margin improvement under new price schemes amid raw-material inflation. It expects slower AMD Venice adoption toward end-2026E and Intel Oak Stream ramping only from 1Q27E, but sees faster growth once these platforms gain traction through new sockets and share gains in PCIe 6.0 cables/connectors. Server-board production could decline slightly into 2H26E because of shortages of memory, PCBs and other components. Lotes also sees SOCAMM connector and quick-disconnect revenue in 2H26E above its initial expectations, and potential detachable CPO/NPO socket mass production for a direct customer in 2H27E. These sockets could carry ASPs 20–30% above latest-generation CPU sockets due to complexity and 224G SerDes support. Nomura reiterates Buy and a TWD2,720 target based on 24x 2027F EPS of TWD113.3; the shares trade at 14x 2027F EPS. Hon Hai expects contributions from larger neocloud customers from late 2026E, becoming more significant in 2027E. It considers neocloud products more standardized and easier to scale than customized CSP rack projects, although margins depend on the business model and whether products are consignment-based or rely on its balance sheet. For AI ASIC L6/L10 opportunities, it is preparing capacity in the US, Taiwan, Mexico or Europe and targets a 40% share through vertical integration and design capability. Hon Hai expects more than 30% year-on-year capex growth in 2026E to expand AI-server assembly capacity, particularly in the US, Mexico and Vietnam; testing machinery is a constraint because rack-level testing takes at least one week before shipment. Nomura reiterates Buy and a TWD435 target based on 17x 2027F EPS of TWD25.57, versus 10x current trading.

Analysis framework

Nomura uses management meetings to trace AI-infrastructure demand through the hardware supply chain, comparing capacity plans, product mix, technology adoption, customer demand and margin drivers. For its covered companies, it also presents target prices using forward EPS valuation multiples and compares those multiples with current trading valuations.

Methodology notes

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  AI-infrastructure supply-chain analysis

  The report links demand for AI servers, optical modules and advanced packaging to equipment, substrates, PCBs, thermal systems, connectors and ODM capacity.

• Industry AnalysisSupply-demand framework

  Capacity, utilization and component-constraint analysis

  Management capacity additions, substrate utilization, outsourcing plans and shortages of memory, PCBs and testing equipment are used to assess timing and growth constraints.

• Valuation methodsP/E and PEG Valuation

  Forward P/E target-price valuation

  Nomura derives target prices for covered companies by applying stated multiples to 2027F EPS and compares those targets with current trading P/E multiples.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Compeq (2313 TT)

  Covered PCB supplier benefiting from LEO-satellite and data-center optical-module expansion.

  Strengths

  mSAP capability and planned capacity investment for optical modules.

  Weaknesses

  Legacy consumer-electronics exposure is being transformed.

  Comparison

  Space-grade v3 boards are expected to have more than twice the dollar content of v2.

  Risks

  Timing of satellite, optical-module and AI-mainboard ramps.

• Asia Vital Components / AVC (3017 TT)

  Covered thermal-solution supplier exposed to AI-server, ASIC and liquid-cooling demand.

  Strengths

  Customized ASIC solutions may offer better ASP and gross-margin profiles.

  Weaknesses

  Automation benefits may be offset by new-design tooling costs.

  Comparison

  Vera Rubin tray thermal content is estimated 50% above half-liquid-cooled Grace Blackwell.

  Risks

  Customer design transitions and the pace of ASIC and liquid-cooling adoption.

• Auras (3324 TT)

  Covered liquid-cooling supplier positioned for GB300, ASIC and Vera Rubin programs.

  Strengths

  Expected rising liquid-cooling content and targeted annual gross-margin improvement.

  Weaknesses

  Demand visibility is stronger for 3Q26E than 4Q26E.

  Comparison

  Upcoming ASIC liquid-cooling content per tray is estimated at three times GB300.

  Risks

  Platform demand timing and execution on new projects.

• Lotes (3533 TT)

  Covered connector and socket supplier linked to new server platforms and CPO/NPO opportunities.

  Strengths

  Potential socket, PCIe 6.0, SOCAMM and quick-disconnect growth.

  Weaknesses

  Near-term server-platform adoption is expected to be gradual.

  Comparison

  NPO sockets could carry ASPs 20–30% above latest-generation CPU sockets.

  Risks

  Component shortages and delayed AMD Venice or Intel Oak Stream ramps.

• Hon Hai (2317 TT)

  Covered ODM and AI-server assembler expanding neocloud and AI ASIC capacity.

  Strengths

  Vertical integration, design capabilities and planned geographic capacity expansion.

  Weaknesses

  Neocloud margins depend on the business model and balance-sheet involvement.

  Comparison

  Neocloud projects are viewed as more standardized than customized CSP projects.

  Risks

  Testing-machinery constraints and the timing of customer engagement.

Key data

• Kinsus ABF capacity40mn units/month in 2026; 50mn in 2027E; 80mn in 2029EManagement’s planned ABF substrate capacity expansion.
• Compeq 2026E capexTWD20bnVersus TWD7bn in 2025, mainly for mSAP capacity in Taiwan and China.
• AVC AI-server revenue mix70% NVIDIA platforms; 25% ASICWithin AVC’s AI-server revenue.
• Auras 1H26 gross margin29.0%Versus 26.7% in 1H25 and 27.4% in 2025.
• Hon Hai 2026E capex growth>30% year-on-yearTo build AI-server assembly capacity.

Impact & implications

The report indicates that AI demand is extending beyond chips into hardware content, manufacturing capacity and system integration. Optical modules, liquid cooling, advanced packaging, new sockets and standardized neocloud products are presented as potential growth vectors, with the pace dependent on customer ramps and supply availability.

Risks

• Memory, PCB and other server-component shortages could restrain server-board production in 2H26E.
• Testing-machinery constraints may limit the pace of AI-server assembly expansion.
• New server-platform, satellite, optical-module, CPO/NPO and liquid-cooling ramps may occur later than expected.
• Raw-material cost inflation and production-tuning costs may pressure margins.

What to watch

• Ta Liang’s outsourced commodity-equipment capacity additions and the mix shift between router and drilling revenue.
• Kinsus’s ABF expansion financing structure, BT utilization and potential mid-2027E capacity decision.
• Compeq’s mSAP capacity build-out and acceleration of space-grade PCB demand from late 2026E.
• GB300, Blackwell, Vera Rubin and ASIC demand timing for AVC and Auras.
• AMD Venice, Intel Oak Stream, CPO/NPO socket and neocloud production ramps.
• Hon Hai’s AI-server capacity expansion and testing-equipment availability.