AI Moves from Cloud to Terminal
AI applications continue to expand, extending from cloud data centers to personal terminal devices. Investment trusts are optimistic that, as tech giants continue to invest in AI infrastructure, cloud and on-device computing will become the tech industry's two Dacheng growth engines. Beyond advanced processes and servers, four areas — power management, liquid cooling, high-speed networking, and high-end materials — are expected to see a new wave of hardware upgrade opportunities as computing density and power consumption rise, injecting growth momentum into Taiwan's tech supply chain.
NDC: Taiwan Orders Stable, Impact Limited
Facing recent market concerns over the ability to monetize AI investments, NDC Minister Yeh Chun-hsien said on November 1 that current concerns in the U.S. capital market are mainly focused on the payback from AI software and related investments. Taiwan is mainly focused on the hardware supply chain, with orders remaining relatively stable through the end of this year and next year, with companies earning substantial foreign exchange, and no obvious problems with funding or cash flow. He believes this market volatility is more of a short-term adjustment, and even if it affects Taiwan, the impact will be limited.
Giant Earnings Reflect Strong Computing Demand
The Cathay SITE ETF research team noted that as AI development is no longer confined to large data centers, corporate requirements for computing performance, energy efficiency, and system integration are rising together. Cloud AI relies not only on advanced chips and servers, but power supply, cooling, and high-speed transmission are becoming increasingly important; terminal AI must balance performance, power consumption, and cost in limited space, driving specification upgrades for related components. Microsoft reported fiscal 2027 Q1 earnings for the quarter ended September, with quarterly revenue of USD 92.3 billion, up 19% year-on-year, including 48% year-on-year growth in Azure cloud revenue. Apple launched a 14-inch MacBook Pro with the M6 chip, with on-device AI workload performance up to 25% higher than the previous generation.
Taiwan Supply Chain and ETF Positioning
Across Taiwan's tech supply chain, foundry leader TSMC (2330) is developing advanced processes and high-performance computing chips, while Hon Hai (2317) and Quanta (2382) are key AI server and system manufacturers. Delta Electronics (2308) in power management, AVC (3017) in thermal solutions, and Accton (2345) in high-speed networking equipment are key links in AI infrastructure. EMC (2383) in high-end copper-clad laminates and Unimicron (3037) in high-end PCBs and IC substrates are also benefiting from specification upgrades. The Cathay Taiwan Tech Leaders ETF (00881) exceeded NT$146.7 billion in size as of October 29, with holdings covering the above areas. Cathay SITE believes that with recent Taiwan stock volatility heightened by earnings season and market sentiment, investors may consider dollar-cost averaging or phased deployment, while watching valuation volatility and industry concentration risks.