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原始內容
Lotes
Lighter 3Q26 sales +4% QoQ; improving margins; reiterate Buy, PO to NT$2,245
Reiterate Rating: BUY | PO: 2,245 TWD | Price: 1,915 TWD
Sep sales +5% MoM; lighter 3Q26 sales at +4% QoQ
Lotes posted Sep sales of NT$3.4bn (+5% MoM, +16% YoY). 3Q26 sales of NT$9.9bn (+4% QoQ, +18% YoY) were 11%/3% below BofAe/consensus. We attributed the lighter sales mainly to industry-wise key component shortage (e.g. memory, CPU, PCB), which likely capped the demand in general server and PC. While sales mix by segment is yet to be disclosed, we believe server should remain the biggest segment (BofAe: 55%) in 3Q26, vs. 54%/40% in 2Q26/3Q25. We now project 3Q26 GM at 45.7%, similar to 45.5% in 2Q26, vs. 51.2% in 3Q25, mainly due to higher raw material cost.
Gradually improving margins; new platform from '27
We project 4Q26 sales +4% QoQ (+12% YoY) amid likely fewer working days in Oct/Dec and market demand push out due to component shortage. Yet, we believe Lotes' quarterly GM should gradually improve with new CPU platform launches in early 2027 and more new products. We project 2027/28E GM at 49.0%/49.9%, considering potential margin dilution from QD (BofAe: 1.4%/3.5%/5.0% of 2026/27/28E sales).
PO to NT$2,245; reiterate Buy; cost pressure fully aware
We cut 2026-28E EPS by 9-18% to reflect 3Q26 preliminary sales, more conservative margin assumptions under material cost pressure, and higher share count (+1.3%) for new CB (total NT$300mn) and fund-raising plan (maximum 1.3mn shares). We cut PO to NT$2,245 (20x 2027E EPS) from NT$2,800 (was 22x) with valuation base unchanged but a lower P/E multiple. We lower P/E multiple to 20x (2SD above historical average) on industry-wise component tightness, which may partially cap CPU server market demand. In our view, Lotes' near-term margin pressure has been fully reflected as its share price corrected 15% in 3Q26, vs. TAIEX +4%. We reiterate our Buy rating on Lotes as a clear CPU server beneficiary to capture still robust market demand (see Vivek Arya's 15 Sep note), with attractive valuation under 24%/36% sales/EPS CAGR in 2026-28.
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 9,277 | 7,866 | 8,936 | 12,748 | 16,550 |
| EPS | 82.77 | 70.17 | 79.20 | 112.26 | 145.74 |
| EPS Change (YoY) | 63.4% | -15.2% | 12.9% | 41.8% | 29.8% |
| Consensus EPS (Visible Alpha) | 80.50 | 112.18 | 136.86 | ||
| Dividend / Share | 41.50 | 35.00 | 39.60 | 56.13 | 72.87 |
| Free Cash Flow / Share | 56.29 | 31.68 | 70.75 | 78.99 | 110.66 |
| Valuation (Dec) | |||||
| P/E | 23.14x | 27.29x | 24.18x | 17.06x | 13.14x |
| Dividend Yield | 2.17% | 1.83% | 2.07% | 2.93% | 3.81% |
| EV / EBITDA* | 16.14x | 15.60x | 15.10x | 10.82x | 8.64x |
| Free Cash Flow Yield* | 2.93% | 1.65% | 3.70% | 4.16% | 5.83% |
| * For full definitions of iQmethod SM measures, see page 7. |
This research report provides general information only. No part of this report may be used or reproduced or quoted in any manner whatsoever in Taiwan by the press or other persons without the express written consent of BofA Securities.
>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.
Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.
BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Refer to important disclosures on page 8 to 10. Analyst Certification on page 5. Price
09 October 2026
Equity
| Key Changes (NT$) | Previous | Current |
|---|---|---|
| Price Obj. | 2,800.00 | 2,245.00 |
| 2026E EPS | 96.64 | 79.20 |
| 2027E EPS | 127.27 | 112.26 |
| 2028E EPS | 160.10 | 145.74 |
| 2026E EBITDA (m) | 16,258.2 | 13,390.2 |
| 2027E EBITDA (m) | 20,846.5 | 18,688.1 |
| 2028E EBITDA (m) | 25,411.6 | 23,392.1 |
Doris Kao >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3722
Robert Cheng >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3731 robert.cheng@bofa.com
Katherine Zhu >> Research Analyst Merrill Lynch (Hong Kong) +852 3508 3374
Carol Hu >>
Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3721
| Stock Data | |
|---|---|
| Price | 1,915 TWD |
| Price Objective | 2,245 TWD |
| Date Established | 9-Oct-2026 |
| Investment Opinion | C-1-7 |
| 52-Week Range | 1,140 TWD-2,955 TWD |
| Mrkt Val / Shares Out (mn) | 6,774 USD / 112.5 |
| Market Value (mn) | 215,504 TWD |
| Average Daily Value (mn) | 77.45 USD |
| Free Float | 80.0% |
| BofA Ticker / Exchange | ZYZTF / TAI |
| Bloomberg / Reuters | 3533 TT / 3533.TW |
| ROE (2026E) | 21.8% |
| Net Dbt to Eqty (Dec-2025A) | -30.4% |
Acronyms, see page 4
iQprofile SM Lotes
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 30,089 | 33,783 | 39,184 | 49,355 | 60,589 |
| Gross Profit | 15,769 | 17,334 | 18,318 | 24,179 | 30,237 |
| Sell General & Admin Expense | (2,794) | (3,486) | (3,975) | (4,292) | (4,728) |
| Operating Profit | 10,245 | 10,344 | 10,285 | 15,607 | 20,446 |
| Net Interest & Other Income | 1,624 | (154) | 1,072 | 658 | 658 |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 11,869 | 10,191 | 11,357 | 16,265 | 21,103 |
| Tax (expense) / Benefit | (2,488) | (2,244) | (2,347) | (3,436) | (4,473) |
| Net Income (Adjusted) | 9,277 | 7,866 | 8,936 | 12,748 | 16,550 |
| Average Fully Diluted Shares Outstanding | 112 | 112 | 113 | 114 | 114 |
| Key Cash Flow Statement Data | |||||
| Net Income | 9,277 | 7,866 | 8,936 | 12,748 | 16,550 |
| Depreciation & Amortization | 2,279 | 2,610 | 3,105 | 3,081 | 2,947 |
| Change in Working Capital | (2,775) | (1,664) | (1,058) | (4,359) | (4,430) |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | 1,277 | (284) | 0 | 0 | 0 |
| Cash Flow from Operations | 10,058 | 8,528 | 10,983 | 11,471 | 15,066 |
| Capital Expenditure | (3,749) | (4,976) | (3,000) | (2,500) | (2,500) |
| (Acquisition) / Disposal of Investments | 0 | 0 | 0 | 0 | 0 |
| Other Cash Inflow / (Outflow) | (938) | (881) | 0 | 0 | 0 |
| Cash Flow from Investing | (4,687) | (5,857) | (3,000) | (2,500) | (2,500) |
| Shares Issue / (Repurchase) | 0 | 0 | 0 | 0 | 0 |
| Cost of Dividends Paid | (3,012) | (4,803) | (3,924) | (4,468) | (6,374) |
| Cash Flow from Financing | (322) | (8,844) | (3,924) | (4,468) | (6,374) |
| Free Cash Flow | 6,309 | 3,552 | 7,983 | 8,971 | 12,566 |
| Net Debt | (14,894) | (12,275) | (16,335) | (20,837) | (27,029) |
| Change in Net Debt | (5,526) | 6,159 | (4,060) | (4,503) | (6,192) |
| Key Balance Sheet Data | |||||
| Property, Plant & Equipment | 10,990 | 13,429 | 13,324 | 12,743 | 12,297 |
| Other Non-Current Assets | 3,459 | 3,770 | 3,770 | 3,770 | 3,770 |
| Trade Receivables | 12,638 | 14,182 | 15,021 | 19,255 | 23,432 |
| Cash & Equivalents | 18,659 | 12,500 | 16,560 | 21,062 | 27,254 |
| Other Current Assets | 4,465 | 6,552 | 6,862 | 7,985 | 9,086 |
| Total Assets | 50,211 | 50,433 | 55,536 | 64,816 | 75,839 |
| Long-Term Debt | 0 | 0 | 0 | 0 | 0 |
| Other Non-Current Liabilities | 1,069 | 1,013 | 1,013 | 1,013 | 1,013 |
| Short-Term Debt | 3,765 | 225 | 225 | 225 | 225 |
| Other Current Liabilities | 7,417 | 8,780 | 8,871 | 9,870 | 10,717 |
| Total Liabilities | 12,251 | 10,018 | 10,109 | 11,108 | 11,956 |
| Total Equity | 37,960 | 40,415 | 45,427 | 53,708 | 63,883 |
| Total Equity & Liabilities | 50,211 | 50,433 | 55,536 | 64,816 | 75,839 |
| iQmethod SM - Bus Performance* | |||||
| Return On Capital Employed | 22.6% | 19.8% | 18.9% | 24.6% | 27.2% |
| Return On Equity | 29.1% | 21.1% | 21.8% | 26.8% | 29.1% |
| Operating Margin | 34.0% | 30.6% | 26.2% | 31.6% | 33.7% |
| EBITDA Margin | 41.6% | 38.3% | 34.2% | 37.9% | 38.6% |
| iQmethod SM - Quality of Earnings* | |||||
| Cash Realization Ratio | 1.1x | 1.1x | 1.2x | 0.9x | 0.9x |
| Asset Replacement Ratio | 1.7x | 2.0x | 1.0x | 0.8x | 0.8x |
| Tax Rate (Reported) | 21.0% | 22.0% | 20.7% | 21.1% | 21.2% |
| Net Debt-to-Equity Ratio | -39.2% | -30.4% | -36.0% | -38.8% | -42.3% |
| Interest Cover | NM | NM | NM | NM | NM |
Key Metrics
- For full definitions of iQmethod SM measures, see page 7.
Company Sector
Connectors, Passive Components & Distribution
Company Description
Lotes was founded in Keelung, Taiwan, in 1986, and went publicly listed on Taiwan Stock Exchange in 2007. Lotes is the global top-tier PC/server CPU socket supplier. It also supplies connector/cable/harness for PC, server, auto and industrial. Key end-customers include global PC brands (Lenovo, HP, Dell, Apple) and global datacenter hyperscalers (FAMG). Besides headquarter in Taiwan, Lotes has production sites in China (Guangzhou, Suzhou, and Hunan) and Vietnam.
Investment Rationale
We have a Buy rating on Lotes in view of (1) solid CPU server demand outlook, (2) ongoing server/DT CPU platform upgrade to support ASP, (3) double-digit sales/earnings CAGR in 2026-28 with margin improvement in 2027-28, (4) solid balance sheet, and (5) attractive valuation. AI business remains the watch point with potential upside.
Stock Data
Price to Book Value
5.0x
lül
Exhibit 1: We trim our 2026-28E EPS by 9-18%
Earnings revisions summary, 2026-28E
| NT$mn | BofA 2026E - New | BofA 2026E - Old | BofA 2026E - Diff (%) | BofA 2027E - New | BofA 2027E - Old | BofA 2027E - Diff (%) | BofA 2028E - New | BofA 2028E - Old | BofA 2028E - Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 39,184 | 42,108 | -7% | 49,355 | 51,188 | -4% | 60,589 | 61,636 | -2% |
| Gross profit | 18,318 | 21,592 | -15% | 24,179 | 27,133 | -11% | 30,237 | 32,845 | -8% |
| Operating profit | 10,285 | 13,153 | -22% | 15,607 | 17,766 | -12% | 20,446 | 22,465 | -9% |
| Pretax profit | 11,357 | 13,890 | -18% | 16,265 | 18,347 | -11% | 21,103 | 23,045 | -8% |
| Net income | 8,936 | 10,834 | -18% | 12,748 | 14,268 | -11% | 16,550 | 17,947 | -8% |
| EPS (NT$) | 79.20 | 96.64 | -18% | 112.26 | 127.27 | -12% | 145.74 | 160.10 | -9% |
| Margin % | |||||||||
| Gross margin | 46.7% | 51.3% | 49.0% | 53.0% | 49.9% | 53.3% | |||
| Operating margin | 26.2% | 31.2% | 31.6% | 34.7% | 33.7% | 36.4% | |||
| Pre-tax margin | 29.0% | 33.0% | 33.0% | 35.8% | 34.8% | 37.4% | |||
| Net margin | 22.8% | 25.7% | 25.8% | 27.9% | 27.3% | 29.1% |
Source: BofA Global Research estimates
Exhibit 2: Our 2026-27E EPS is 2-4% below consensus while 2028E EPS is 4% above consensus
BofAe vs. consensus, 2026-28E
| NT$mn | 2026E - BofAe | 2026E - Consensus | 2026E - Diff (%) | 2027E - BofAe | 2027E - Consensus | 2027E - Diff (%) | 2028E - BofAe | 2028E - Consensus | 2028E - Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 39,184 | 39,887 | -2% | 49,355 | 49,638 | -1% | 60,589 | 58,506 | 4% |
| Gross profit | 18,318 | 18,684 | -2% | 24,179 | 24,428 | -1% | 30,237 | 29,618 | 2% |
| Operating profit | 10,285 | 10,471 | -2% | 15,607 | 15,489 | 1% | 20,446 | 19,590 | 4% |
| Pretax profit | 11,357 | 11,699 | -3% | 16,265 | 16,295 | 0% | 21,103 | 20,319 | 4% |
| Net income | 8,936 | 9,168 | -3% | 12,748 | 12,725 | 0% | 16,550 | 15,756 | 5% |
| EPS (NT$) | 79.20 | 82.40 | -4% | 112.26 | 114.37 | -2% | 145.74 | 140.29 | 4% |
| Margin % | |||||||||
| Gross margin | 46.7% | 46.8% | 49.0% | 49.2% | 49.9% | 50.6% | |||
| Operating margin | 26.2% | 26.3% | 31.6% | 31.2% | 33.7% | 33.5% | |||
| Pre-tax margin | 29.0% | 29.3% | 33.0% | 32.8% | 34.8% | 34.7% | |||
| Net margin | 22.8% | 23.0% | 25.8% | 25.6% | 27.3% | 26.9% |
Source: BofA Global Research estimates, Bloomberg consensus
Exhibit 3: Our new 3Q26E EPS was 6% below consensus
3Q26 key earnings change summary and comparison to consensus
| NT$mn | 3Q26 BofAe New | QoQ % | YoY % | 3Q26 BofAe Old | Diff (%) | 3Q26 Consensus | Diff (%) | 2Q26 | 3Q25 |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 9,924 | 4% | 18% | 11,088 | -11% | 10,235 | -3% | 9,569 | 8,422 |
| Gross profit | 4,533 | 4% | 5% | 5,781 | -22% | 4,690 | -3% | 4,351 | 4,313 |
| Operating profit | 2,568 | 22% | 2% | 3,585 | -28% | 2,698 | -5% | 2,103 | 2,525 |
| Pretax profit | 2,719 | 5% | -6% | 3,727 | -27% | 2,902 | -6% | 2,598 | 2,882 |
| Net income | 2,150 | 8% | -7% | 2,956 | -27% | 2,273 | -5% | 1,984 | 2,318 |
| EPS (NT$) | 19.06 | 8% | -8% | 26.37 | -28% | 20.36 | -6% | 17.59 | 20.68 |
| Margin % | |||||||||
| Gross margin | 45.7% | 0.2 ppt | -5.5 ppt | 52.1% | -6.5 ppt | 45.8% | -0.2 ppt | 45.5% | 51.2% |
| Operating margin | 25.9% | 3.9 ppt | -4.1 ppt | 32.3% | -6.5 ppt | 26.4% | -0.5 ppt | 22.0% | 30.0% |
| Pre-tax margin | 27.4% | 0.2 ppt | -6.8 ppt | 33.6% | -6.2 ppt | 28.4% | -1.0 ppt | 27.1% | 34.2% |
| Net margin | 21.7% | 0.9 ppt | -5.9 ppt | 26.7% | -5.0 ppt | 22.2% | -0.5 ppt | 20.7% | 27.5% |
Source: BofA Global Research estimates, Bloomberg consensus. Diff: difference to new 3Q26 BofAe data
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 4: Lotes' historical P/E trading average since 2017 is 12x
Lotes' P/E trend and -1/+1 standard deviation since 2017
Exhibit 5: Lotes' historical P/B trading average since the IPO is 1.8x
Lotes' P/B trend and -1/+1 standard deviation since the IPO
Source: BofA Global Research estimates, Bloomberg
Source: BofA Global Research estimates, Bloomberg
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 4: We model 2026-28E sales/EPS CAGR at 24%/36%
Quarterly earnings summary, 2025-28E
| NT$mn | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 1Q28E | 2Q28E | 3Q28E | 4Q28E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 9,328 | 9,569 | 9,924 | 10,364 | 10,467 | 11,402 | 12,981 | 14,506 | 14,214 | 14,704 | 15,466 | 16,205 | 33,783 | 39,184 | 49,355 | 60,589 |
| Gross profit | 4,622 | 4,351 | 4,533 | 4,813 | 4,961 | 5,558 | 6,430 | 7,230 | 7,134 | 7,369 | 7,722 | 8,011 | 17,334 | 18,318 | 24,179 | 30,237 |
| Operating profit | 2,708 | 2,103 | 2,568 | 2,906 | 3,057 | 3,517 | 4,198 | 4,836 | 4,689 | 4,899 | 5,309 | 5,548 | 10,344 | 10,285 | 15,607 | 20,446 |
| Pretax profit | 3,003 | 2,598 | 2,719 | 3,037 | 3,208 | 3,670 | 4,399 | 4,988 | 4,841 | 5,051 | 5,511 | 5,700 | 10,191 | 11,357 | 16,265 | 21,103 |
| Net income | 2,397 | 1,984 | 2,150 | 2,405 | 2,547 | 2,732 | 3,500 | 3,970 | 3,853 | 3,768 | 4,389 | 4,540 | 7,866 | 8,936 | 12,748 | 16,550 |
| EPS (NT$) | 21.24 | 17.59 | 19.06 | 21.31 | 22.42 | 24.06 | 30.82 | 34.96 | 33.93 | 33.18 | 38.65 | 39.98 | 70.17 | 79.20 | 112.26 | 145.74 |
| Margin % | ||||||||||||||||
| Gross margin | 49.5% | 45.5% | 45.7% | 46.4% | 47.4% | 48.7% | 49.5% | 49.8% | 50.2% | 50.1% | 49.9% | 49.4% | 51.3% | 46.7% | 49.0% | 49.9% |
| Operating margin | 29.0% | 22.0% | 25.9% | 28.0% | 29.2% | 30.8% | 32.3% | 33.3% | 33.0% | 33.3% | 34.3% | 34.2% | 30.6% | 26.2% | 31.6% | 33.7% |
| Pretax margin | 32.2% | 27.1% | 27.4% | 29.3% | 30.7% | 32.2% | 33.9% | 34.4% | 34.1% | 34.4% | 35.6% | 35.2% | 30.2% | 29.0% | 33.0% | 34.8% |
| Net margin | 25.7% | 20.7% | 21.7% | 23.2% | 24.3% | 24.0% | 27.0% | 27.4% | 27.1% | 25.6% | 28.4% | 28.0% | 23.3% | 22.8% | 25.8% | 27.3% |
| QoQ % | ||||||||||||||||
| Sales | 1% | 3% | 4% | 4% | 1% | 9% | 14% | 12% | -2% | 3% | 5% | 5% | ||||
| Gross profit | -3% | -6% | 4% | 6% | 3% | 12% | 16% | 12% | -1% | 3% | 5% | 4% | ||||
| Operating profit | -2% | -22% | 22% | 13% | 5% | 15% | 19% | 15% | -3% | 4% | 8% | 4% | ||||
| Pretax profit | -7% | -13% | 5% | 12% | 6% | 14% | 20% | 13% | -3% | 4% | 9% | 3% | ||||
| Net income | -5% | -17% | 8% | 12% | 6% | 7% | 28% | 13% | -3% | -2% | 16% | 3% | ||||
| YoY % | ||||||||||||||||
| Sales | 20% | 15% | 18% | 12% | 12% | 19% | 31% | 40% | 36% | 29% | 19% | 12% | 12% | 16% | 26% | 23% |
| Gross profit | 16% | 2% | 5% | 1% | 7% | 28% | 42% | 50% | 44% | 33% | 20% | 11% | 10% | 6% | 32% | 25% |
| Operating profit | 11% | -19% | 2% | 5% | 13% | 67% | 63% | 66% | 53% | 39% | 26% | 15% | 1% | -1% | 52% | 31% |
| Pretax profit | 5% | 113% | -6% | -6% | 7% | 41% | 62% | 64% | 51% | 38% | 25% | 14% | -14% | 11% | 43% | 30% |
| Net income | 5% | 165% | -7% | -5% | 6% | 38% | 63% | 65% | 51% | 38% | 25% | 14% | -15% | 14% | 43% | 30% |
Source: BofA Global Research estimates, company data
Exhibit 11: Acronyms
Acronyms used through the report
| Acronym | Acronym | Acronym | Acronym | Acronym | |
|---|---|---|---|---|---|
| AI | Artificial Intelligence | FX | Foreign Exchange | PC | Personal Computer |
| AMD | Advanced Micro Devices (AMD US) | GM | Gross Margin | P/E | Price to Earnings |
| ASP | Average Selling Price | GPU | Graphic Processing Unit | PO | Price Objective |
| CAGR | Compound Annual Growth Rate | IPO | Initial Public Offering | QD | Quick Disconnect |
| CPU | Central Processing Unit | NPO | Near-Packaged Optics | R&D | Research & Development |
| DT | Desktop | NTD / NT$ | New Taiwan Dollar | RMB | Renminbi (Chinese Yuan) |
| EPS | Earnings Per Share | OPM | Operating Profit Margin | SD | Standard Deviation |
| FAMG | Facebook (Meta), Amazon, Microsoft, Google | P/B | Price to Book | USD / US$ | US Dollars |
Source: BofA Global Research
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Price objective basis & risk
Lotes (ZYZTF)
Our PO of NT$2,245 is based on 20x 2027E EPS. Our valuation multiple of 20x (2SD above historical P/E trading average) reflects rising sales mix from better-margin server business with ASP increase, double-digit sales/EPS CAGR in 2026-28, and solid balance sheet. Our P/E multiple can also be justified by solid CPU server demand amid accelerating agentic AI needs, Lotes' top position as desktop/server CPU socket supplier to ride on Intel/AMD's ongoing desktop/server CPU platform upgrade.
Upside risks: (1) further ASP increase thanks to faster adoption/penetration of new DT/server platform and new product, (2) faster progress in AI related business, (3) faster AI PC launch/adoption, (4) GM upside from lowering/stabilizing raw material prices, and (5) more favorable FX (USD/NTD and/or USD/RMB) movement to benefit GM and/or non-operating items.
Downside risks: (1) slower ASP increase due to new CPU platform delay, (2) slower progress from AI business, (3) weaker PC/server market demand amid inflation/macro uncertainties, (4) GM pressure from higher raw material prices, (5) higher labor/logistics cost from supply-chain disruption and uncertain China lockdown policy, (6) unfavorable FX movement to weigh on GM and/or non-operating items, and (7) peers' more aggressive pricing competition.