Citi Asia Pacific Morning Meeting Highlights: Taiwan AI ASIC Chain in Focus, Mediatek and GUC Lead in Momentum

Overview

This is a Citi multi-industry Asia Pacific research summary covering Taiwan's semiconductor AI ASIC chain, Indian power equipment and defense, Hong Kong-listed Kingboard Laminates, Indonesian equity strategy, Philippine FX, rates and macroeconomics, Hong Kong's Link REIT, Indian banks and non-banks, South Korea's Hugel, Taiwan's Chroma ATE, Singapore banks and Thai inflation. The overall tone is positive, but drivers differ by sector: semiconductors are driven by AI ASIC and testing demand; Kingboard Laminates by price increases and margin expansion; banks by loan growth and upward revisions to net interest margin forecasts; and the macro sections emphasize continuing inflation and policy constraints in the Philippines and Thailand.

Core views

The core view is that the investment narrative favoring AI ASICs over GPUs continues to advance, but fragmentation in the supply chain and tightness in key stages such as foundry, advanced packaging, HBM and ABF will allow Taiwanese design-service companies with stronger supply-chain management capabilities to stand out. Mediatek and GUC are considered to have the strongest AI ASIC growth momentum through next year, with Mediatek the top pick because of its greater potential for value-content expansion. Kingboard Laminates' price increases exceeded expectations, leading to higher target price and earnings forecasts, while its recent pullback is viewed as a buying opportunity. Chroma ATE reported record 2Q26 revenue, with data-center power testing and AI-chip SLT driving growth; CPO, photonics and GPU/ASIC testing could continue to support growth beyond 2027. On the macro front, the Philippine PHP has limited room to strengthen and may remain constrained by inflation and BOP pressures, while Thai core inflation is rising but the BOT may still remain on hold.

Analysis framework

The report uses a multi-asset, multi-region, bullet-point research approach, presenting company fundamental updates, earnings forecast revisions, target-price changes, macro visit feedback, policy risks and short-term catalysts side by side. The semiconductor section focuses on AI ASIC supply-chain positioning, supply constraints and revenue momentum; company research combines price adjustments, revenue releases, business updates and target-price changes; and the macro strategy section assesses inflation, FX, interest rates and fiscal paths based on discussions with policymakers and local experts.

Methodology notes

• Investment ratingCiti Research investment rating framework

  Expected total return

  Citi's equity ratings are based on expected total return and risk over the next 12 months. Buy generally corresponds to expected total return reaching the prescribed threshold, Sell to negative expected total return, and other covered stocks are generally rated Neutral.

• Short-term catalystCatalyst Watch and STV frameworks

  30-day or 90-day share-price catalyst assessment

  Catalyst Watch or short-term views express analysts' expectations that specific events will drive share prices higher or lower within 30 or 90 days, without changing the long-term fundamental rating.

• Earnings and target-price adjustmentsForecast upgrades and target-price revaluation

  Linkage among earnings forecasts, target prices and near-term catalysts

  For Kingboard Laminates, Singapore banks, Mediatek and GUC, the report reassesses target prices based on earnings forecasts, net interest margins, loan growth, the magnitude of price increases and AI demand.

Asset mapping & comparison

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

• Mediatek (2454.TW)

  Core AI ASIC beneficiary

  Strengths

  Strong AI ASIC growth momentum, with potential for higher value content from I/O, top die, and longer-term optical and memory-customized dies.

  Weaknesses

  Growth remains dependent on customer project progress and coordination of capacity across key supply-chain stages.

  Comparison

  The report prefers Mediatek most among other AI ASIC-related companies.

  Risks

  Volatility in AI demand, supply-chain tightness and delays to customer project schedules.

• GUC (3443.TW)

  AI ASIC design-service beneficiary

  Strengths

  Considered to have among the strongest AI ASIC growth momentum through 2027, with a higher target price.

  Weaknesses

  Significantly affected by the allocation of key resources including advanced packaging, foundry capacity, HBM and ABF.

  Comparison

  Alongside Mediatek, it is one of the high-momentum Taiwanese AI ASIC names emphasized in the report.

  Risks

  Capacity allocation, supply-chain fragmentation, customer concentration and project-delivery risks.

• Kingboard Laminates Holdings (1888.HK)

  Beneficiary of CCL price increases and the AI hardware materials chain

  Strengths

  Price increases in FR4 CCL, CEM CCL, prepreg and copper foil premium margins exceeded expectations, resulting in higher earnings forecasts and target price.

  Weaknesses

  The recent share price has been affected by rotation within AI hardware, NVDA-related sentiment, Meta computing-power sales and selling by major shareholders.

  Comparison

  Within the AI hardware materials chain, pricing leverage has driven a notable earnings upgrade.

  Risks

  AI hardware valuation rotation, raw-material price changes, demand sustainability and pressure from shareholder selling.

• Chroma ATE (2360.TW)

  Beneficiary of AI-chip testing and data-center power testing

  Strengths

  2Q26 revenue reached a quarterly record, supported by data-center power testing, SLT, CPO and photonics businesses.

  Weaknesses

  The recent share price has been affected by concerns over the sustainability of AI demand and softer CPO expectations.

  Comparison

  Revenue exceeded both market and Citi expectations, demonstrating strong execution.

  Risks

  Cooling AI demand, changes in CPO customer schedules and slower-than-expected new-customer expansion.

• Link REIT (0823.HK)

  Hong Kong REIT corporate-event name

  Strengths

  The new CEO will take office in March 2027, and the market is focused on the potential for share buybacks.

  Weaknesses

  The management transition still requires time to validate.

  Comparison

  Compared with macro-driven assets, its primary catalysts come from governance and capital management.

  Risks

  Hong Kong property and interest-rate conditions, asset operations and management-transition risks.

• Singapore Banks

  Sector benefiting from interest rates, loan growth and improved net interest margins

  Strengths

  Citi raised target prices and expects approximately 10% FY27e/28e earnings growth, supported by higher loan-growth and NIM forecasts.

  Weaknesses

  Earnings were broadly flat in 2024-26e, affected by lower interest rates and offsetting wealth-related income.

  Comparison

  The preference order is DBS over OCBC, with UOB rated Neutral.

  Risks

  Weaker SORA, changes in CASA ratios, slower-than-expected loan growth and volatility in wealth-management businesses.

Key data

• Kingboard Laminates target priceHK$130, previous HK$1202026-28E earnings forecasts were raised by 11%-12% due to better-than-expected price increases in CCL, prepreg and copper foil premium margins.
• Kingboard Laminates 1H26E revenueHK$18,160mnThe table shows 1H26E revenue growth of 89.4% year on year and profit attributable to shareholders of HK$4,023mn.
• Chroma ATE 2Q26 revenueNT$13,529mnUp 110% year on year and 14% quarter on quarter, exceeding market and Citi expectations by 6% and 7%, respectively.
• Mediatek target priceNT$6,055, previous NT$5,950The Buy rating was maintained; the report says it has greater potential for AI ASIC value-content expansion.
• GUC target priceNT$6,000, previous NT$5,550Rated Buy/H, with a favorable view of its AI ASIC growth momentum.
• Singapore bank loans and depositsMay-26 total resident loans S$917,737mn, total deposits S$2,099,037mnLoan growth is faster than deposit growth, raising the LDR and potentially supporting SORA and bank net interest margins.
• Philippine growth and policy2Q26 growth trough of 2.4%, rebounding to 3.7% in 2HCiti still considers an August BSP rate hike highly likely, with a first pause possible in October.

Impact & implications

For investors, the report reinforces structural opportunities in Taiwanese design services, testing equipment and high-end materials companies within the AI ASIC chain, while noting that a short-term pullback does not necessarily signal fundamental deterioration. Kingboard Laminates and Chroma ATE's revenue and earnings upside provide tangible evidence of demand in the AI hardware chain; the target-price increases for Mediatek and GUC reflect a market reassessment of the contribution from custom-chip revenue. Meanwhile, markets such as the Philippines, Thailand and Indonesia remain constrained by policy credibility, inflation, FX and capital flows, making it appropriate to combine fundamental stock selection with macro risk controls.

Risks

• AI ASIC demand or customer project progress may fall short of expectations.
• Key supply-chain resources, including foundry capacity, advanced packaging, HBM and ABF, may remain tight.
• Valuation rotation or weakening market sentiment in the AI hardware sector.
• Inflationary pressure, rising wages and electricity prices, and El Niño risks in the Philippines and Thailand may increase policy uncertainty.
• Indonesian policy communication and policy reversals may continue to affect investor confidence.
• The banking sector is sensitive to loan growth, deposit composition and the interest-rate path.

What to watch

• Comments from TSMC's 2Q26 earnings call on 16 July 2026 regarding AI demand, CPO and the semiconductor supply chain.
• The pace of subsequent AI ASIC shipments and revenue recognition at Mediatek and GUC.
• Kingboard Laminates' 1H26E earnings preview and whether e-glass fabric prices continue to exceed expectations.
• The sustainability of Chroma ATE's new-customer, CPO and SLT orders.
• Whether the Philippine BSP raises rates in August and whether October becomes a pause window.
• Whether Singapore bank loan growth continues to outpace deposit growth and support SORA and NIM.
• Whether execution of Indian T&D projects improves following limited access for Chinese OEMs.