AI and CPO Drive Supply Chain Opportunities
The AI wave continues to advance, from 3nm and 2nm advanced processes to AI ASICs, CPO optical interconnects, high-speed optical modules and advanced packaging, bringing a new wave of growth opportunities for Taiwan's semiconductor and AI supply chains. A new report from Cathay Securities Investment Advisory names 7 major stocks and industry focuses, covering Alchip-KY, ASMedia, Quanta, TSMC, Zhen Ding-KY and Lianyou Metals-Creative and other benchmark companies, and is bullish on continued heating demand for advanced packaging equipment. In addition, the MSCI November semiannual index review will also affect fund allocation in Taiwan stocks, adding 3 constituents including Kinsus, Nan Ya PCB and TUC, with the AI supply chain becoming a market focus.
Earnings Outlook for Seven Key Stocks
Alchip-KY(3661) 3nm AI ASICs will ramp significantly in 2026, with 2nm chips expected to tape out by year-end, and automotive products also entering mass production. Benefiting from a low base, 2026 revenue is forecast to grow 138.8% year-on-year. In 2027, benefiting from higher average selling prices for 2nm AI ASICs and a Design Win from a second North American customer, with new projects ramping to drive revenue up another 102.0%, 2026 and 2027 EPS are estimated at 122.29 and 207.84, with a Buy rating maintained. ASMedia(5269) 3Q26 motherboard customer pull-ins beat expectations, with SATA shipments continuing to grow. In 4Q26, despite AMD inventory adjustments, the own-brand share rose to nearly 50%, helping optimize product mix. The AM5.5 platform is expected to ship in 2Q27, coupled with demand for PCIe Switch, SATA, robotics USB4 and Qualcomm ASICs, 2026 and 2027 EPS are estimated at 100.09 and 115.20, with a Buy rating maintained. Quanta(2382) 3Q26 profit margin came in below expectations due to a higher share of high-ASP products and increased R&D expenses. In 4Q26, VR racks will join shipments, with AI accounting for over 70% of revenue, and EPS estimated at 7.15. In 2027, benefiting from growing AI and general server demand and a higher ASIC share, revenue is set to challenge 5.2 trillion, with EPS reaching 30.2, but profit growth is slowing, with the rating downgraded to Neutral.
TSMC(2330) Although Samsung is actively deploying silicon photonics and optical interconnect technologies, the CPO market remains centered on TSMC's COUPE platform, which has already partnered with NVIDIA to advance Spectrum-X CPO switches. High-end Switch ASICs and DSPs mostly use TSMC's advanced processes, with clear technology and mass-production advantages. 2026 and 2027 EPS are estimated at 110.83 and 151.11, with a Strong Buy maintained. Zhen Ding-KY(4958) With its mSAP technology advantage, has become a major supplier of high-end products for globally leading optical module customers. In 2027, as 1.6T high-speed optical module penetration rises, optical module revenue is expected to reach 250-300 billion. HDI and substrate businesses will also benefit from growing AI server demand, with 2026 and 2027 EPS estimated at 14.05 and 23.63, with a Buy rating maintained. Lianyou Metals-Creative(7610) Its subsidiary Lianyou Advanced Materials continues to expand its cobalt metal business, expected to list on the Emerging Stock Board in 2027 and list in 2028, with new nickel wire, copper wire and chromium wire capacity added. With Pingnan Plant 3 and Pingke Plant ramping up, the self-sales share is expected to rise to 60%, with 2026 and 2027 EPS estimated at 83.77 and 109.27, with a Buy rating maintained.
Advanced Packaging and MSCI Fund Flows
On the advanced packaging industry, InEn Technology(7734) continues to drive warpage suppression equipment upgrades from contact-type WSAS-C to non-contact WSAS-V. As AI GPU package sizes expand and CoWoS, CoPoS and FOPLP move toward large areas, non-contact pressure control technology can effectively reduce stress risks, with future demand seen rising. In the MSCI November semiannual review, the Global Standard Index adds three stocks including Kinsus(3189), Nan Ya PCB(8046) and TUC(6274), and deletes Chailease(5871), E Ink(8069), Lotes(3533) and Wan Hai(2615). The new additions are mostly high-end AI supply chain components, expected to drive passive fund reallocation, with trading volume and fund flows worth watching around the effective date at end-November.