We are upgrading Purui-KY to an Overweight rating, as we are optimistic about its market share expansion and new growth drivers.

Overview

This report primarily examines the current state and outlook of the PC semiconductor industry in Greater China. While the sector as a whole is expected to face headwinds over the next few quarters—particularly desktop‑PC semiconductors, which are heavily impacted by rising memory prices—our firm believes that notebook (NB) semiconductor demand may outpace market concerns in the second half of 2026. The key recommendation is to upgrade Parade Technologies’ rating from “Neutral” to “Overweight,” accompanied by a substantial revision upward of its price target. The rationale hinges on the company’s potential to capture market share in the chipset segment through its superior power‑efficiency and performance advantages, while also benefiting from the resilience of Apple’s supply chain. By contrast, ASMedia remains under our original estimates due to pressures stemming from business diversification, with its valuation still below the market consensus.

Core views

The industry as a whole remains under pressure, yet structural opportunities are emerging. According to the research report, PC‑related semiconductor companies will continue to face significant challenges over the next few quarters. Rising memory prices have weighed on desktop (DT) semiconductor firms such as ASMedia, while notebook (NB) semiconductor customers, though reluctant to adjust orders at present, may see demand in the second half of 2026 exceed market expectations. Moreover, due to ongoing CPU supply constraints, market dynamics in 2027 could prove even more complex. Against this backdrop, companies with exposure to iOS (Apple) demonstrate greater resilience. ASUS‑KY is poised for new growth momentum. Institutions believe that ASUS‑KY is diversifying its business portfolio and stands to capture market share in chipsets similar to ASICs. This outlook is anchored in the company’s superior power‑efficiency performance, which is viewed as a key driver of future growth. Accordingly, analysts have raised their 2027 and 2028 EPS estimates for ASUS‑KY by 34% and 46%, respectively, positioning them 16% and 17% above the market consensus. Consequently, the target price has been significantly increased from NT$530 to NT$1,000. ASMedia faces mounting competitive pressures. For ASMedia, institutions have maintained their financial forecasts to reflect the company’s ongoing efforts to diversify beyond its PC‑centric business. However, its 2027 and 2028 EPS estimates remain 22% and 30% below the market consensus, underscoring a cautious stance on near-term growth prospects. While earlier conclusions regarding a potential battle for market share between the two companies were premature, it now appears that shifts in market positioning are inevitable.

Analysis framework

The institutional research framework begins with an analysis of the industry’s macroeconomic environment, distinguishing between different sub‑segments—such as desktops versus laptops—and among various end‑user groups—like Apple‑based devices versus non‑Apple devices—to assess varying levels of market momentum. This approach then informs the valuation and investment rationale for individual stocks. First, by monitoring guidance from upstream suppliers—such as Realtek, Elan, and Novatek—and downstream ODM shipment forecasts, the research team gauges near‑term supply‑demand dynamics. For instance, citing Novatek’s Q2 revenue guidance, which implies a 21% quarter‑over‑quarter increase, alongside peer‑level estimates projecting a 4% sequential rise in NB ODM shipments, the team underscores the resilience of demand. Second, employing a competitive‑advantage analysis, the focus shifts to “power‑efficiency performance”—a key technical metric—to evaluate Spectrum‑KY’s ability to capture market share relative to rivals such as ASMedia. The firm contends that this technological edge is pivotal in reshaping the competitive landscape and unlocking incremental growth. Finally, at the valuation stage, the residual income model is applied for absolute valuation, complemented by a comparative analysis against historical P/E ranges. To reflect the growth premium associated with new business lines, the mid‑term growth rate assumption has been revised upward, from 9.0% to 11.9%.

Methodology notes

• Valuation MethodologyRIM Residual Income Model

  Residual Income Model

  An absolute valuation approach that determines equity value by discounting the present value of a company’s future excess earnings—exceeding its cost of capital. This research report employs this model as the cornerstone for setting the target price for Purui‑KY, underscoring both long-term profitability and capital efficiency.

• Competitive and Strategic FrameworkMoat / competitive advantage

  Market share acquisition driven by technological performance advantages

  The research report, by analyzing Novatek‑KY’s technological edge in power‑consumption control, concludes that the company can gain market share in the highly competitive chipset sector. This exemplifies a typical line of reasoning that assesses a firm’s competitive advantages through product differentiation and technological barriers.

• Industry/Industrial Analysis FrameworkSupply-and-Demand Framework

  Segmented market demand is diverging (DT vs. NB)

  The research report does not take a broad-brush approach to the PC market; instead, it disaggregates desktops (DT) and notebooks (NB), noting that memory price hikes have a more pronounced impact on DTs, while NB demand exhibits greater resilience. This granular analysis helps to more precisely identify which stocks stand to benefit or be adversely affected.

Asset mapping & comparison

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

• Parade Technologies Ltd (4966.TWO)

  Benefits: Leveraging its power-efficiency advantages, the company is poised to capture market share in the ASIC-like chipset segment; it also stands to benefit from resilient demand for Apple’s notebooks.

  Strengths

  Technological advantages (low power consumption), exposure to Apple’s supply chain, and potential for new business growth.

  Weaknesses

  PC revenue accounts for as much as 90%, reflecting a highly concentrated industry; meanwhile, the DisplayPort segment faces intense price competition at the low-end panel level.

  Comparison

  Compared with Xiangshuo, Pore has stronger capabilities in capturing market share in specific chipset segments and enjoys higher growth prospects.

  Risks

  Risks associated with Apple’s in-house T-Con chip; slower-than-expected launch of high-end server platforms; intensifying competition in the high-speed interface segment.

• ASMedia Technology Inc. (ASMedia)

  Neutral/Bearish: The company faces negative headwinds from rising memory prices on its DT business, and the progress of its business diversification remains to be seen.

  Weaknesses

  Earnings per share (EPS) estimates are below market consensus, and the company is highly sensitive to fluctuations in memory chip prices.

  Comparison

  It may be on the defensive in the battle for chipset market share, with weaker growth momentum compared to Sitronix.

  Risks

  The PC market remains sluggish overall, and the company’s business transformation has fallen short of expectations.

Key data

• PSMC‑KY’s 2027E EPS revision upward+34%Reflects growth expectations driven by the acquisition of market share in the chipset business.
• PSMC‑KY’s 2028E EPS revision upward+46%Strengthened Long-Term Growth Momentum
• Sparrow-KY Target PriceNT$1,000This represents a substantial upward revision from the previous NT$530, implying significant upside potential.
• Novatek’s Q2 revenue guidance midpoint+21% Q/QIndications suggest that demand for NB‑driven ICs remains on the rise.
• Spectrum-KY PC revenue proportion90%The company is highly dependent on the PC market, and investors should remain vigilant about industry volatility risks.

Impact & implications

For Proton‑KY, the upgrade in its credit rating and the substantial increase in its price target reflect market recognition of its “second growth curve.” If the company succeeds in expanding its market share in the chipset segment, it will effectively offset potential headwinds from the traditional T‑Con business and bolster its overall gross margin profile—projected to rise from 40% to above 42–43%. For investors, the focus should shift from a narrow reliance on the PC cycle’s recovery to the company’s ability to monetize its competitive edge at specific technology nodes, particularly in low‑power applications. At the same time, this development underscores a reshaping of the competitive landscape within the PC semiconductor sector, with firms that can differentiate through advanced technologies poised to command valuation premiums.

Risks

• Apple’s product shipments and specification upgrades have been slower than expected.
• The next-generation server platform is being rolled out more slowly than expected.
• Competition in the high-speed interface segment (including converters, switches, etc.) is intensifying.
• Changes in U.S. Tariff Policy
• DisplayPort’s low-end panel price competition has deteriorated.

What to watch

• Spectrum’s actual market share in the chipset segment
• Apple’s shipment data for MacBook, iPad, and iMac
• Progress in shipments of USB-C DP/HDMI and HDMI jitter-removal chips
• The actual demand performance of NB semiconductors in the second half of 2026