Maintain Buy: CCL price hikes and demand from AI servers/high-speed switches support TUC

Overview

This report is a summary of Goldman Sachs' discussion with Taiwan Union Technology Corp. during the Asia Communacopia + Technology conference in Hong Kong. The report focuses on tight CCL supply and demand, rising prices, demand for AI servers and high-speed switches, heavy copper opportunities in EV/HVDC, and expansion plans in Thailand and Taiwan, and on this basis maintains a Buy rating.

Core views

The report believes TUC is a global high-end CCL supplier focused on M7+ grade high-speed CCL, benefiting from supply bottlenecks caused by an approximately 1.5-year capacity expansion cycle. Low-end M2 product prices have risen by about 40%, M6 by 15%-20%, and M7 has started pricing independently from peers; meanwhile, applications in AI servers, 800G/1.6T switches, and heavy copper CCL provide medium- to long-term growth drivers.

Analysis framework

The analysis mainly comes from feedback from company management meetings, combined with judgments based on supply expansion cycles, price increases by product grade, customer project ramp-up, geographic capacity allocation, market share changes, and P/E valuation multiples. The report did not adjust earnings forecasts, and valuation remains based on 22x 2027E EPS.

Methodology notes

• Valuation methodsP/E valuation method

  12-month target price based on 22x 2027E EPS

  Goldman Sachs sets the NT$1,888 target price based on 22x 2027E P/E, a multiple about 2 standard deviations above the industry's average P/E over the past 3 years.

• Factor analysisGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  The disclosure section states that Goldman Sachs uses growth, financial returns, valuation multiples, and composite indicators to compare stocks relative to the market and industry peers.

• M&A assessmentM&A Rank

  M&A probability scoring framework

  The disclosure section states that Goldman Sachs uses an M&A rank from 1 to 3 to assess the likelihood of being acquired, but the main body of this report does not treat TUC's M&A factors as a core investment thesis.

Asset mapping & comparison

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

• Taiwan Union Technology Corp. (6274.TWO)

  The subject company of the report and the core beneficiary asset.

  Strengths

  High-end M7+ CCL supply capability, material opportunities in AI servers and high-speed switches, 20%+ high-end market share, and overseas expansion improving supply flexibility.

  Weaknesses

  Long expansion cycle with limited short-term capacity growth; part of growth depends on ramp-up of key customer projects and market share gains.

  Comparison

  The report believes its valuation is undervalued versus Taiwan CCL peers on a P/E basis, and that its path to overseas capacity share is superior to major peers with high mainland China exposure.

  Risks

  Slower-than-expected market share gains in low-loss CCL, trade tensions affecting server and switch shipments, and intensified competition from mainland China peers.

• AI server and high-speed switch supply chain

  The main downstream driver of TUC's demand growth.

  Strengths

  ASIC AI server projects began shipping in 2Q26, and 800G/1.6T switches use M8 and low-DK2 glass fiber, driving demand for high-end materials.

  Weaknesses

  Demand timing depends on CSPs, enterprise customers, and new platform adoption by key customers.

  Comparison

  The limited number of high-layer PCB and M7/M8 CCL suppliers makes the bottleneck in high-end materials more structural.

  Risks

  Global server and switch shipments may be affected by trade frictions or delays in customer projects.

Key data

• Report date2026-05-19The front page of the main text shows 19 May 2026.
• Investment ratingBuyThe report explicitly maintains a Buy rating on TUC.
• 12-month target priceNT$1,888Based on 22x 2027E EPS, with earnings forecasts unchanged.
• Disclosed priceNT$1,260.00The company-specific disclosure lists the price of Taiwan Union Technology Corp.
• Potential upside约49.8%Calculated based on the target price of NT$1,888 and NT$1,260.00.
• M2 price increase约40%Management said price increases for low-end products are steeper.
• M6 price increase15%-20%The overall CCL price increase in 2Q26 is expected to be higher than in 1Q26.
• Capacity plan2.6mn sheets/month至3.8mn sheets/monthAn increase of 1.2mn sheets/month from 3Q26 to 3Q27, approximately +46% YoY.
• Overseas capacity share>50%By 3Q27, capacity will be distributed across Thailand, Taiwan, and mainland China, with overseas capacity expected to exceed 50%.
• High-end CCL market share20%+The report says TUC has had a market share of more than 20% in M7+ high-speed CCL over the past two years.

Impact & implications

If management's judgment materializes, TUC may benefit in 2026 from a triple driver of price, share, and capacity: tight CCL supply supports price hikes, AI servers and high-speed switches bring product mix upgrades, and capacity expansion in Thailand and Taiwan improves geographic allocation and reduces reliance on mainland China capacity.

Risks

• Market share gains in low-loss CCL may be slower than expected.
• An escalation in trade tensions may weaken global server and switch shipments.
• Competition from mainland China peers may intensify.
• Customer project ramp-up or new product validation progress may fall short of expectations.
• Costs for resin, chemicals, and other inputs may continue to rise while price pass-through remains insufficient.

What to watch

• The extent of implementation and customer acceptance of the new round of CCL price hikes in June.
• The ramp-up pace of ASIC AI server project shipments starting from 2Q26.
• Progress of key customers adopting M8 CCL for 1.6T switches in 2H26.
• Order conversion following 400G validation with new customers.
• Whether capacity expansion in Thailand and Taiwan proceeds as planned from 3Q26 to 3Q27.
• Whether tight supply in high-end PCB and M7/M8 CCL continues into 2027.