Goldman Sachs is bullish on Elite Material: doubled ASIC demand and M9 CCL ramp-up support capacity expansion benefits

Overview

This report summarizes Goldman Sachs' key conclusions following exchanges with Elite Material management during Taiwan Computex & Corporate Day. The core view is that, driven by AI server and ASIC demand, the company has strong competitive advantages in high-end CCL capacity, technology roadmap, and customer mix. In particular, against the backdrop of doubled demand from major CSP customers in 2027 and the inability of some Japanese competitors to expand capacity in time, the company is likely to gain incremental market share.

Core views

Goldman Sachs maintains a positive view and a Buy rating. Its bullish thesis includes: first, major CSP customers' ASIC demand is expected to double in 2027, giving Elite Material an opportunity to expand supply share; second, the company's long-term goal is to maintain over 50% market share in the CCL supply chains of its top three AI customers; third, its 2025-2027E capacity expansion CAGR is about 26%, above the industry average of 15%-20%; fourth, M9 CCL is expected to become an important growth driver over the next 12-24 months, with ASP significantly above the average level of existing products; fifth, the company already holds leading share in high-end HDI, SLP, AI server, and switch CCL segments.

Analysis framework

The report is mainly based on company meeting minutes, management guidance on capacity and product roadmap, customer adoption timing, peer capacity expansion comparisons, the company's position in the AI server supply chain, and Goldman Sachs' valuation framework. Valuation uses a 2027E P/E multiple approach, combined with the peak valuation levels of AI component suppliers over the past three years.

Methodology notes

• Valuation methods12-month target price / P/E method

  27x 2027E P/E

  Goldman Sachs' 12-month target price of NT$6,000 is based on 27x 2027E P/E, a multiple comparable to the peak P/E multiples of AI component suppliers over the past three years.

• Factor frameworkGS Factor Profile

  Comparison across growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs discloses that its GS Factor Profile compares stocks with the covered market and industry peers across growth, financial returns, valuation multiples, and composite indicators; this section is methodological disclosure rather than the sole basis for the investment conclusion in this report.

• M&A frameworkM&A Rank

  A scoring framework for the probability of becoming an acquisition target

  Goldman Sachs discloses that its M&A Rank is used to assess the probability of covered companies becoming acquisition targets; the main body of the report does not treat M&A factors as a core driver of Elite Material's target price.

Asset mapping & comparison

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

• Elite Material (2383.TW)

  The covered company in the report, directly benefiting from growth in high-end CCL, AI servers, and ASIC demand

  Strengths

  The company holds leading share in high-end HDI materials, SLP materials, AI server CCL, and switch CCL; Goldman Sachs believes it is an important supplier for Nvidia, Google, and AWS AI server projects and capable of maintaining leadership in M9 CCL adoption.

  Weaknesses

  The growth path depends on the pace of high-end customer adoption, execution of capacity expansion, and sustainability of AI server demand; final adoption of M8.5/M9 still depends on customer design decisions.

  Comparison

  The company's 2025-2027E capacity expansion CAGR is about 26%, above the industry average of 15%-20%; Japanese and Korean peers are expanding more slowly, and a key Japanese competitor is described as lacking any capacity expansion plan.

  Risks

  RCC substitution in high-end smartphone HDI designs, trade frictions leading to weaker smartphone and server shipments, intensified competition from mainland Chinese peers, and M9 adoption falling short of expectations.

• High-end CCL / AI server materials chain

  The core industry chain in which Elite Material operates, driven by AI servers, switches, and ASIC projects

  Strengths

  Upgrades in AI servers and high-speed switches raise requirements for high-end CCL grades, low-loss materials, and stable supply capability.

  Weaknesses

  Customer qualification cycles are long, and there is uncertainty around product grade migration and final design finalization.

  Comparison

  M9 CCL has an ASP more than 5 times the company's current average product ASP, showing that high-end grades command a significant price premium over traditional products.

  Risks

  Changes in technology roadmap, delayed customer adoption, competitors catching up, and volatility in downstream AI hardware demand.

Key data

• Target capacity by end-20279.3 million sheets/monthSlightly below the previous target of 9.45 million sheets/month because some space was allocated to office building construction.
• 2025-2027E capacity expansion CAGRapproximately 26%Above the industry average of 15%-20%, supporting the company's continued share gains in the high-end CCL market.
• New AI substrate CCL capacity300,000 sheets/monthNew Taiwan capacity is expected to come online in 4Q26; if fully converted, the company's AI substrate CCL capacity could reach about 1 million sheets/month.
• M9 CCL mass production timing2H26Management expects Nvidia may adopt M9 CCL first, with ASIC customers following later.
• M9 CCL revenue contributionAt least low-single-digit percentage in 2026, potentially rising to double-digit percentage in 2027Reflects revenue elasticity after the adoption of high-end materials.
• M9 CCL ASPMore than 5 times the average ASP of current productsGoldman Sachs believes this will bring significant upside potential to revenue.
• Revenue share of M7 and above high-end productsMore than 50% in 2025, at least 60% in 2026Product mix continues to shift toward the high end.
• High-end HDI material market shareMore than 70%The company is described as a key supplier of high-end HDI materials.
• SLP material market shareMore than 90%Indicates the company's strong position in advanced packaging/substrate-related materials.
• Switch market shareAbout 40% in 2024, more than 30% in 2023Compared with less than 5% before 2019, the company has expanded significantly in the switch CCL market.
• Server platform share trajectoryBelow 10% in the Purley generation, about 15%-20% in Whitley, above 20% in Eagle StreamGoldman Sachs expects the company's share in the server industry to continue rising.
• Target priceNT$6,000Based on 27x 2027E P/E.

Impact & implications

The report has positive investment implications for Elite Material: if major CSP customers' ASIC demand in 2027 doubles as management expects, while competitors' capacity expansion remains insufficient, the company could benefit simultaneously from share gains, capacity release, a higher mix of high-end products, and M9 CCL ASP premium. For the AI server supply chain, high-end CCL may continue to be one of the key bottlenecks and profit pools; for investors, it is necessary to track the ultimate material adoption by Nvidia and ASIC customers, execution of capacity expansion, as well as trade and competitive risks.

Risks

• RCC may replace all high-end smartphone HDI designs.
• Escalating trade frictions may lead to weaker-than-expected smartphone and server shipments.
• Rising competition from mainland Chinese peers may compress share or pricing.
• Final adoption of M8.5/M9 CCL still depends on Nvidia and other customers, and backplane design has not yet been finalized.
• If capacity expansion execution, yield ramp-up, or demand realization falls short of expectations, revenue and margin upside may be affected.

What to watch

• Whether major CSP customers' ASIC demand in 2027 doubles as management expects, and whether Elite Material gains incremental share.
• Construction, ramp-up, and utilization of the 9.3 million sheets/month target capacity by end-2027.
• Progress of the release of the new 300,000 sheets/month AI substrate CCL capacity in Taiwan in 4Q26.
• Nvidia's adoption progress after M9 CCL enters mass production in 2H26, and whether ASIC customers migrate to M9 in 2027.
• Whether revenue share from M7 and above high-end products can rise to at least 60% in 2026.
• Whether the M9 CCL price premium of more than 5 times the average ASP of existing products can translate into revenue growth and gross margin/operating margin expansion.