Jentech Precision Industrial Co. (3653): J.P. Morgan assumes Overweight coverage of Jentech as removable-lid adoption could arrive earlier

Overview

J.P. Morgan assumes Overweight coverage of Taiwan-listed cooling-component maker Jentech. The investment case rests on a structural increase in heat-spreader content as AI chips adopt more complex lid designs, supplemented by AMD, CPO/NPO and ASIC opportunities; the report nevertheless notes that most of the upside catalysts may already be reflected in the share price.

Core views

J.P. Morgan assumes coverage of Jentech at Overweight with a Dec-2027 price target of NT$7,500, based on 30x 2028E P/E. The report's central thesis is that Jentech, described as the world's largest packaging-level cooling-component maker, is positioned for a multi-year upgrade in heat-spreader content as AI chips require more advanced thermal structures. It forecasts roughly 80% EPS CAGR for 2024-28, supported by higher content in future-generation AI chips, a larger addressable market in products such as CPO switch ASICs, and additions including cold plates and CPU server sockets. The most immediate catalyst is the proposed three-piece or removable-lid architecture—removable lid, stiffener and multiple screws—for Nvidia Rubin Ultra. J.P. Morgan expects no delay or design change and, based on industry checks, believes Nvidia may adopt the design in small Rubin volumes from 4Q26 for trial production before potential Rubin Ultra mass production in 1Q27. Compared with the current one-piece lid, the design could increase heat-spreader/lid content by about 4-5x. The report regards this schedule as slightly ahead of market expectations and therefore a possible source of near-term revenue and earnings upside for the supplier. A second growth driver is AMD's MI450-series transition to a two-piece lid from 4Q26, which the report estimates could produce around 10x the content of MI350. J.P. Morgan estimates 3Q26 revenue of NT$9.7bn, up 33% quarter on quarter and 91% year on year, supported by the Rubin GPU ramp. It expects the existing one-piece Rubin lid to remain at high shipment volumes into 4Q26 and forecasts a further 7% quarter-on-quarter revenue increase in that quarter. The MI450 ramp and any initial removable-lid contribution from Rubin/Rubin Ultra could add to growth over the following quarters. For the longer term, the report expects specification upgrades in future GPUs and ASICs, including wider adoption of higher-spec designs, as well as more meaningful CPO/NPO ramps with greater stiffener content. J.P. Morgan forecasts revenue growth of 61%/95%/59% for 2026E/2027E/2028E. It expects gross margin to rise from 47% in 2Q26 to more than 47% in 2H26E, 50% in 2027E and 52% in 2028E, driven by QD yield improvement and a richer AI-server product mix. These margin assumptions underpin EPS growth forecasts of 89%/117%/68% for 2026E/2027E/2028E. Its EPS forecasts for those years are 1%/3%/6% above Bloomberg consensus, reflecting faster removable-lid adoption, better GPU and ASIC specifications, and CPO/NPO adoption. The report acknowledges that valuation has already re-rated substantially. Jentech traded at about 50x 12-month forward P/E, near the upper end of its historical range, although it was valued at about 25-30x on a 2028E EPS basis. J.P. Morgan applies 30x 2028E P/E, broadly in line with Jentech's three-year average multiple since the AI-server boom began, because it expects the earnings-upgrade cycle to continue. However, the share price had risen 108% over the previous three months, versus a 102% increase in the TWSE index, leaving the report's estimated target-price upside at only about 10% and less attractive than that of other cooling-component names. The principal risks are a delay in mainstream removable-lid adoption if Rubin Ultra's final specifications or thermal design improvement are more limited than expected, and market-share loss to competitors. J.P. Morgan notes that I-Chiun has secured some CPU and ASIC stiffener projects, but considers Jentech materially ahead of other suppliers in AI GPU lids and other higher-spec projects such as CPO ASIC stiffeners.

Analysis framework

J.P. Morgan combines industry and supply-chain checks on GPU-lid adoption timing with product-content comparisons, quarterly revenue estimates, multi-year earnings forecasts and valuation against Jentech's historical P/E range. It compares its forecasts with Bloomberg consensus and links projected margin expansion to yield improvement and higher-value AI-server product mix.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation

  J.P. Morgan values Jentech at 30x 2028E P/E to derive its NT$7,500 Dec-2027 price target, comparing that multiple with the company's historical valuation range.

• Industry AnalysisVolume-price decomposition

  Content-per-chip and product-mix analysis

  The report links revenue and earnings growth to higher lid and stiffener content per GPU or ASIC, together with the production timing and volume ramps of new chip platforms.

• Competition & strategyEconomic Moat and Competitive Advantage

  Technology and production-capability advantage

  J.P. Morgan argues that Jentech's lead in advanced AI GPU lids and CPO ASIC stiffeners supports its long-term earnings power despite competition in some CPU and ASIC stiffener projects.

Asset mapping & comparison

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

• Jentech Precision Industrial Co. (3653.TW, 3653 TT)

  Primary covered company and supplier of advanced heat spreaders, lids and stiffeners for AI-chip cooling applications.

  Strengths

  Leading packaging-level cooling production capabilities, expected exposure to higher-spec AI GPU and ASIC designs, and product expansion into cold plates and CPU server sockets.

  Weaknesses

  The stock is trading near the high end of its historical valuation range on a 12-month forward P/E basis, and most near-term catalysts may already be reflected in the share price.

  Comparison

  J.P. Morgan considers Jentech materially ahead of other suppliers in AI GPU lids and higher-spec CPO ASIC stiffener projects.

  Risks

  Potential delay in removable-lid adoption and market-share loss in advanced-spec products.

• I-Chiun (2486 TT)

  Competitor in heat-spreader and stiffener projects.

  Strengths

  Has secured some CPU and ASIC stiffener projects.

  Weaknesses

  J.P. Morgan sees a large capability gap versus Jentech in AI GPU lids and higher-spec CPO ASIC stiffeners.

  Comparison

  Compared with Jentech, the report views I-Chiun as less competitive in advanced AI GPU and CPO-related projects.

  Risks

  Its project wins illustrate the potential for competitive market-share pressure on Jentech.

Key data

• Price targetNT$7,500Dec-2027 target based on 30x 2028E P/E; prior target was NT$6,200.
• Share priceNT$6,895.00Price as of 29 Sep 2026.
• Three-piece lid content uplift~4-5xVersus the current one-piece lid design.
• AMD MI450 lid content uplift~10xVersus the MI350 series.
• 3Q26E revenueNT$9.7bn+33% QoQ and +91% YoY.
• 4Q26E revenue growth7% QoQSupported by high Rubin one-piece-lid volume and MI450 two-piece-lid mass production.
• Revenue growth forecast61% / 95% / 59%2026E / 2027E / 2028E year-on-year growth.
• EPS growth forecast89% / 117% / 68%2026E / 2027E / 2028E year-on-year growth.
• Gross margin forecast47+% / 50% / 52%2H26E / 2027E / 2028E.
• EPS versus Bloomberg consensus1% / 3% / 6% aboveJ.P. Morgan's 2026E / 2027E / 2028E EPS forecasts.

Impact & implications

The report argues that an earlier-than-expected transition to removable lids, together with AMD's two-piece lid ramp and longer-term CPO/NPO and ASIC opportunities, could extend Jentech's earnings-upgrade cycle. It also stresses that the stock's sharp recent performance means the price target implies only about 10% upside despite the favorable fundamental outlook.

Risks

• Mainstream three-piece/removable-lid adoption could be delayed if Nvidia Rubin Ultra's final specifications or thermal improvement are more limited than expected.
• Jentech could lose market share to competing suppliers in advanced-spec cooling components.

What to watch

• Whether small-volume Rubin removable-lid trial production begins in 4Q26 and Rubin Ultra mass production follows from 1Q27.
• The ramp of AMD MI450 two-piece lids from 4Q26.
• Jentech's revenue momentum through 4Q26 and the extent of incremental contribution from advanced lid designs.
• Gross-margin progression from favorable AI-server product mix and QD yield enhancement.
• Competitive project wins, including I-Chiun's activity in CPU and ASIC stiffeners.