Global Markets Research

Asia AI PCB & CCL 15 May 2024

EQUITY: TECHNOLOGY

Research Analysts
Incremental benefits from AWS’ AI ASIC
Asia Technology
Quick Note Anne Lee, CFA - NITB
[email protected]
+886 2 2176 9966
Higher-than-expected PCB/CCL benefits for AWS’ new AI ASIC in 2H24 Gillian Yen - NITB
Following the recent strong shipments for nVidia’s AI GPU servers (double-digit q-q [email protected]
growth in both 2Q24 and 3Q24; see our reports on Hon Hai [2317 TT, Buy] , Wistron +886(2) 21769963
[3231 TT, Neutral] , and EMC [2383 TT, Neutral] ), Amazon Web Services’ (AWS) new AI Bing Duan - NIHK
application-specific integrated circuit (ASIC) project – which is based on Marvell’s IC and [email protected]
+852 2252 2141
is scheduled to ramp up from 3Q24 – will likely bring higher-than-expected dollar content
for the PCB and CCL industries and also benefit AWS’ related component and assembly
suppliers, in our view.
Based on our survey of this project, EMC will ship M8-grade material for the 24L+ PCB
structure with a similar board size to nVidia’s UBB (universal baseboard; M7-grade
material for 24L PCB in H100 UBB), while a Japanese CCL maker will be in charge of the
M6 material used in 20L PCB, and that PCB performs a role similar to an open accelerator
module (OAM) board (OCP [Open Compute Project], vs HDI 5+8+5 [18L] based on M7-
grade material for H100 OAM).
Why this project matters to the PCB and CCL industries? Because it likely has only two
ASICs on one UBB, vs HGX 8 GPUs on one UBB, and each UBB spec and dollar content
are likely higher than H100 HGX’s UBB. This means PCB/CCL content per GPU for AWS’
project should be higher than that for HGX’s.
We believe: (1) Unimicron (3037 TT, Buy) will be one of the key IC substrate suppliers for
AWS’s new ASIC project; (2) major PCB suppliers include WUS (002463 CH, Buy) and
Shengyi Electronics (688183 CH, not rated, a subsidiary of Shengyi Technology [600183
CH, Buy]); and Wiwynn (6669 TT, Buy) and Accton (2345 TT, not rated) are also in the
supply chain of this project.
Implications for EMC: Incremental potential upside in 2H24F creating short-term
trading upside opportunity in the near term
We expect small-volume delivery in 3Q24 and mass-volume delivery in 4Q24 (link ). With
a sizable volume, we estimate this project could contribute 1-4% of total sales to EMC in
2H24F-1H25F, but the gross-profit impact may be larger given the better GM of the high-
end material. We had previously mentioned (link ) that the better-than-expected demand
from nVidia’s H-series products should benefit EMC in 2024, but we had also expressed
concerns about potential product transition risks in 4Q24. The incremental contribution
from AWS’ AI ASIC project in 2H24 may alleviate our concerns for 4Q24.
We maintain our Neutral rating for EMC and TP of TWD467.9, based on 18x 2025F EPS
of TWD25.94, as we still expect Doosan (000150 KS, not rated) to take market share in
the next-gen nVidia OAM, UBB and compute tray board.

Production Complete: 2024-05-15 12:00 UTC

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Nomura | Asia AI PCB & CCL 15 May 2024

Appendix A-1

Analyst Certification

We, Anne Lee, Gillian Yen and Bing Duan, hereby certify (1) that the views expressed in this Research report accurately reflect our personal
views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of our compensation was, is or will be
directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of our compensation is
tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other
Nomura Group company.

Issuer Specific Regulatory Disclosures

The terms "Nomura" and "Nomura Group" used herein refer to Nomura Holdings, Inc. and its affiliates and subsidiaries, including Nomura
Securities International, Inc. ('NSI') and Instinet, LLC ('ILLC'), U. S. registered broker dealers and members of SIPC.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures
WUS Printed Circuit 002463 CH CNY 31.86 15-May-2024 Buy N/A
Elite Material 2383 TT TWD 420.50 15-May-2024 Neutral N/A
Unimicron Technology 3037 TT TWD 182.50 15-May-2024 Buy N/A
Shengyi Technology 600183 CH CNY 20.17 15-May-2024 Buy N/A
TWD
WIWYNN CORP 6669 TT 2,595.00 15-May-2024 Buy N/A

WUS Printed Circuit (002463 CH) CNY 31.86 (15-May-2024) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
03-Aug-23 27.70 21.81

For explanation of ratings refer to the stock rating keys located after chart(s)
Valuation Methodology Our TP of CNY27.70 is based on 25x 2025F EPS of CNY1.11. Our target P/E multiple of 25x is at the
mid-to-high-end of its historical range (13-30x). The benchmark index for this stock is CSI 300 Index.
Risks that may impede the achievement of the target price 1) Slower-than-expected PCB growth from 5G basestation
PCBs, 2) weaker-than-expected datacenter demand, 3) slower-than-expected network product/platform upgrades from Intel and
AMD, 4) worse-than-expected auto demand.

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Elite Material (2383 TT) TWD 420.50 (15-May-2024) Neutral (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
01-May-24 467.90 412.00
29-Feb-24 484.80 495.00
27-Nov-23 Neutral 398.00
27-Nov-23 454.47 398.00
25-Oct-23 493.00 415.50
03-Aug-23 Buy 400.50
03-Aug-23 481.00 400.50
17-Jun-22 Suspended 206.00
23-Feb-22 333.00 288.00
28-Jul-21 266.00 230.00

For explanation of ratings refer to the stock rating keys located after chart(s)
Valuation Methodology Our TP of TWD467.9 is based on 18x 2025F EPS of TWD25.94. Our target multiple is above high-end
of its historical P/E range of 10-18x since 2017. The benchmark of this stock is TAIEX.
Risks that may impede the achievement of the target price Downside/upside risks: 1) smartphone demand is
weaker/stronger than expected; 2)EMC's progress in high speed CCL/RCC is slower/faster than expected; 3) the adoption of
HDI in vehicles is slower/faster than expected; and 4) unexpected share loss/gains in AI server/switch, 5) weaker-/stronger-
than-expected demand from AI server/switch.

Unimicron Technology (3037 TT) TWD 182.50 (15-May-2024) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
23-Apr-24 262.00 170.00
26-Feb-24 247.00 196.00
23-Oct-23 258.00 158.50
25-Jul-23 Buy 195.50
25-Jul-23 264.00 195.50
25-Apr-23 144.00 135.00
03-Feb-23 Neutral 137.00
03-Feb-23 150.00 137.00
25-Oct-22 176.00 121.50
27-Jul-22 248.00 179.50
26-Apr-22 332.00 199.50
23-Feb-22 305.00 240.50
12-Jan-22 270.00 216.00
26-Oct-21 207.00 156.00
16-Jul-21 180.00 143.50

For explanation of ratings refer to the stock rating keys located after chart(s)
Valuation Methodology Our target price of TWD262 is based on 18x 2025F EPS of TWD14.55. Our target P/E multiple of 18x
is at the high end of its historical P/E range of 7-20x. The benchmark index for this stock is Taiwan TAIEX.
Risks that may impede the achievement of the target price Downside risks include: (1) worse-than-expected market
demand for HPC and 5G infrastructure-related ICs; (2) unexpected market share losses; and (3) lower-than-expected margins
due to yield rate, utilization rate, FX, and raw material prices.

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Shengyi Technology (600183 CH) CNY 20.17 (15-May-2024) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
04-Jan-24 22.00 17.25
03-Nov-23 Buy 17.47
03-Nov-23 21.00 17.47
13-Apr-23 20.00 19.06
12-Aug-22 Neutral 16.97
12-Aug-22 19.00 16.97
15-Feb-22 25.00 19.71
16-Aug-21 36.00 26.35
13-Jul-21 32.00 24.30

For explanation of ratings refer to the stock rating keys located after chart(s)
Valuation Methodology Our TP of CNY22.00 is based on 30x 2024F EPS of CNY0.72, in line with FY24-25F earnings CAGR
of 30%. The benchmark index is CSI 300.
Risks that may impede the achievement of the target price Downside risks include: 1) lower-than-expected PCB demand in
downstream sectors such as 5G, servers, auto electronics; and 2) more intensified market competition in the CCL market
leading to margin pressures.

WIWYNN CORP (6669 TT) TWD 2,595.00 (15-May-2024) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
07-May-24 2,967.00 2,345.00
27-Feb-24 2,445.00 2,120.00
06-Nov-23 Buy 1,760.00
06-Nov-23 2,050.00 1,760.00
08-Aug-23 1,964.00 1,755.00
09-May-23 1,237.00 1,115.00
04-Jan-23 Neutral 801.00
04-Jan-23 827.00 801.00
01-Nov-22 910.00 735.00
03-May-22 1,285.00 1,035.00
18-Nov-21 1,155.00 984.00

For explanation of ratings refer to the stock rating keys located after chart(s)
Valuation Methodology Our TP of TWD2967 is based on 22x 2025F EPS of TWD134.85. Our target P/E multiple of 22x is
above the high-end of Wiwynn's historical P/E range of 8-15x, but in line with other AI-related ODM peers. The benchmark index
of this stock is Taiwan TAIEX index.
Risks that may impede the achievement of the target price Downside risks include lower new server platform penetration,
lower-than-expected server demand, unexpected IC shortage.

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