3Q26 Dual Engines Ignite, Profit Beats Expectations
Yuanta Investment Consulting released its latest research report stating that quartz-component leader TXC (3042) benefited from AI upgrades driving high-end Photo die demand, as well as better-than-expected growth in automotive applications, with strengthening profit momentum. 3Q26 revenue reached 42億元, up 13% quarter-on-quarter and 20% year-on-year, with estimated EPS revised up 16% to 2.07元, up 28% quarter-on-quarter and 39% year-on-year. The better-than-expected profit was mainly due to AI and automotive revenue performing better than originally expected, with revenue shares reaching 16% and 29% respectively, and year-on-year growth rates of 76% and 44% respectively.
4Q26 Operations Remain at High Levels, Automotive Demand Revised Up
Looking ahead to 4Q26, Yuanta Investment Consulting estimates TXC revenue at 40億元, up 20% year-on-year, with EPS revised up 12% to 1.86元, up 41% year-on-year. This is mainly due to raising automotive revenue by 10% to 35% year-on-year growth, while AI applications are estimated to account for 16%, up 75% year-on-year, with overall operations remaining at high levels. The report remains positive on subsequent momentum on the back of high-end capacity ramp-up and the AI specification transition.
High-Speed Transmission Specification Upgrades, Capacity Plan Up 5 Times
In response to AI high-speed transmission demand, hardware specifications are being upgraded simultaneously. Yuanta Investment Consulting points out that optical transceiver modules mainly used 156.25MHz products in the 800G generation, while entering the 1.6T generation requires upgrading to 312.5MHz quartz components with a photolithography (Photo die) process. For switches, legacy switches below 25.6T use 156.25MHz, while mainstream 51.2T AI switches and next-generation 102.4T switches have all been upgraded to 312.5MHz quartz oscillators. To meet demand, TXC Photo die capacity is planned to expand from the current 8KK per month to 24KK per month by mid-2027, reaching 40KK by the end of 2028, a 5-fold increase in capacity.
2027 AI Share to Surpass Mobile Phones, Target Price 236元
Yuanta Investment Consulting estimates TXC 2026 revenue revised up 5% and EPS revised up 7% to 6.86元, up 30% year-on-year; 2027 revenue revised up 2% to 165億元, with EPS revised up 5% to 8.44元, up 23% year-on-year. The 2027 AI revenue share is revised up from 22% to 23%, up 64% year-on-year, higher than 10% in 2025 and 15% in 2026, and surpassing the 19% mobile-phone share to become the most core growth driver. Referring to optical-communication and mobile-phone component peers with P/E ratios of 10 to 50 times, based on 2027 EPS of 8.44元 and 28 times P/E, a target price of 236元 is given with a Buy rating maintained.