報告_GS_CCL產業_20260729

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TAIWAN CCL

High-end CCL GM expansion on the way with potential pricing hike in 2H26 + customers booking new capacity after 2028; recommend high quality CCL names; Buy on EMC & TUC

2Q26 overview

EMC's 2Q26 core business (OPI) was in-line with our estimate (the most bullish on the street; only 2% below our estimate) and was 18% higher than BBG consensus , thanks to the faster than expected pricing hike in 2Q (see here) and product mix improvement speed (revenue was 10% higher than BBG consensus and was 20-25% higher than the company's revenue target, but was in-line with our estimate; GM/OPM jumped 4.4/5.4ppt QoQ in 2Q26, which was 1.4/1.8ppt higher than the BBG consensus, but in-line with GSe). For earnings, EMC's 2Q26 EPS was 3% below our estimate due to some non-op loss, but was 16% higher than the BBG consensus.

TUC's 2Q26 core business (OPI) was also in-line with our estimate (the most bullish on the street; also 2% below GSe), and was 7% higher than BBG consensus , mainly driven by the solid GM expansion speed (4.6ppt QoQ and was 1.8ppt higher than BBG consensus, but was in-line with GSe), thanks to the solid demand from high-end AI customers' new projects ramp and 10-60% pricing hike across all product lines. EPS in 2Q was 12%/4% below GSe/BBG consensus due to the higher than expected tax rate (32% in 2Q vs. GSe/BBG consensus at 22%/23%) resulting from the loss making Thailand plant (which could be breakeven in 3Q26, leading to a much more stable tax rate).

3Q26 outlook

For EMC, considering the product mix improvement (Trainium 3 / Rubin / TPU v8 etc. new AI server projects with solid M8/9 grade CCL demand will ramp up more signi fi cantly from 3Q26) and potential pricing hike (we expect overall pricing will further go up by 0-10% QoQ in 3Q), we expect the company revenue to further go up by 21% QoQ, and GM should further expand from 33.9% in 2Q to 36.8% in 3Q26. Moreover, we expect EMC's substrate CCL business to pass quali fi cation in 3Q, which should start to contribute more earnings from 4Q26 with a much higher than company average GM level (we expect substrate CCL GM can easily reach 40-50% or even higher after mass production).

For TUC , with the faster than expected new Thailand plant capacity ramp up (July already starts some early contribution) and the faster demand from Trainium 3/Rubin projects, we believe the company will enjoy a 23% QoQ growth on revenue, with a solid GM expansion (+3.4ppt QoQ) . We continue to believe TUC's

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the fi rm may have a con fl ict of interest that could a ff ect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certi fi cation and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US a ffi liates are not registered/quali fi ed as research analysts with FINRA in the U.S.

Chao Wang

+886(2)2730-4195 | kuanchao.wang@gs.com Goldman Sachs (Asia) L.L.C., Taipei Branch

Allen Chang

+852-2978-2930 | allen.k.chang@gs.com Goldman Sachs (Asia) L.L.C.

Al Wang

+886(2)2730-4081 | al.wang@gs.com Goldman Sachs (Asia) L.L.C., Taipei Branch e92c7a75ab8b4efbba794e6b187208c8

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Trainium 3 market share will increase from 10-20% in 1H26 to 30-40% in 2H26, considering its new Thailand plant will start ramping up new capacity with nothing to suggest quality issues per our checks , and EMC's limited capacity expansion in 2H (most of the new capacity will only come on stream from late 4Q26).

Investment view - Pricing to further go up in 2H26 and beyond suggesting further upside on GM + new capacity expansion plans after 2028 are fully booked by AI/LEO/Switching customers

As discussed in our latest CCL industry report (see here), we have already started to see high-end CCL players' GM expansion in 2Q26 thanks to (1) the solid demand from the high end M8 CCL driven by early ramp up of new AI server projects, and (2) 10-60% pricing hike across di ff erent products. As we mentioned in the industry report, we expect the high-end CCL players' pricing/GM outlook to be more favorable than the pure mid-to-low end CCL suppliers, especially going into 4Q26 when we expect the traditional consumer electronics demand will start to slow down (90%+ of the low end CCL demand contributed from consumer electronics) and trigger fund fl ow back from low-end CCL players to high-end CCL players.

Going into coming quarters/years, we expect the AI demand will further trend up, making the high-quality high-end capacity to be in even more shortage, suggesting further pricing hike and ASP expansion in the foreseeable future. Based on our supply chain checks, we believe EMC/TUC's M7 and below grade CCL pricing will continue to go up by 10-40%+ per quarter in 2H26, as both companies try to raise the pricing more to accelerate their product mix improvement speed; for high-end products (M8+ grade), we expect the pricing will start going up by 10%+ from end of 3Q26, considering PCB customers' willingness to accept more pricing hikes just to get more high-end high quality CCL products to improve their production yield rate.

For long term, investors are concerned about the high-end CCL demand sustainability; however, as shown in Exhibit 4, we estimate both EMC and TUC will not only just expand average monthly capacity by 35-40% YoY in 2027, but also expand capacity by at least 20-50% YoY in 2028E (EMC plans to expand capacity by 1.8mn sheet/month in 1H28 from 9.3mn by end of 2027, while more capacity could also come on stream in 2H29; for TUC, the company today announced (see here) it will expand 1.95mn sheets/month capacity in 2028-early 2029 from 3.8mn sheets/month by end of 2027, while, based on our supply chain check, all the new capacity that will come on stream in the next few quarters/years has all been booked by the high-end customers (including AI server / LEO / high-end switching customers) already, suggesting a good demand sustainability into long term (even after 2028).

Overall, we maintain our bullish view on high-end CCL players' business outlook and margin expansion trend; maintain Buy on EMC and TUC, with a new TP of NT$10,200 / NT$3,010 (from NT$9,500/NT$2,860).

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emoll < loc earnings comparison table

50%

TUC (6274. TW)

EMC (2383.TW)

45%

Revenue

Diff (%)

2Q26

2Q26

GS est.

GS est.

Diff (%)

14,301

Revenue

40%

35%

47,275

16,003

14,300

47,275

16,110

0%

0%

-1%

Exhibit 1: EMC earnings comparison table

30%

Pre-tax income

3,358

Operating profits

25%

Net earnings

Pre-tax income

20%

Net earnings

EPS, NT$

15%

EPS, NT$

Gross margin (%)

EBIT margin (%)

Net margin (%)

Gross margin (%)

EBIT margin (%)

Net margin (%)

Avelage montly cer capacity (sheets/mont)

12,000

YoY

Q0Q

QoQ

YoY

1Q26

1Q26

QoQ

33,067

9,729

10,000

10,054

2,529

1,828

Bloomberg consensus

Bloomberg consensus

Consensus

YoY

2Q25

2Q25

22,508

6,829

6,780

1,435

853

%

Consensus

%

YoY

110%

43,045

134%

14,320

111%

196%

174%

294%

13,983

10,814

4,644

7,128

QoQ

43%

42%

8,000

68%

64%

79%

0%

10%

14%

18%

4,004

3,130

6%

7%

Source: Company data, Goldman Sachs Global Investment Research, Bloomberg

Exhibit 2: TUC earnings comparison table

Source: Company data, Goldman Sachs Global Investment Research, Bloomberg

Exhibit 3: We expect both EMC and TUC GM to start the next round of expansion driven by solid AI demand and tightening S/D outlook

Source: Company data, Goldman Sachs Global Investment Research

Earnings revisions EMC

We revise up our 2026/27/28E net income estimates by 3/7/7% to factor in the faster

84%

3,419

-2%

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Exhibit 4: Both EMC and TUC will expand more than 100%+ capacity in coming 2 years, while both companies future capacity has all been booked by high-end customers

Average monthly CCL capacity (k sheets/month)

Source: Company data, Goldman Sachs Global Investment Research e92c7a75ab8b4efbba794e6b187208c8

camble sue call selevision lavie

Exmolto. l0c earmings revision lable

EMC P&L (NT$ mn)

TUC P&L (NT$ mn)

Sales

Sales

Gross Profit

Gross Profit

EBIT

EBIT

Net Income

Net Income

EPS (NTS)

Ratio analysis

EPS (NT$)

Ratio analysis

Gross margin

EBIT margin

Gross margin

EBIT margin

Net margin

Diff.

Diff.

7%

7%

than expected high-end CCL demand growth and better CCL pricing outlook, and we also factor in a 1/4% high-end substrate revenue contribution in 2027/28E, suggesting a better GM outlook (revising up 2026/27/28E revenue by 2/5/4%, and revise up 2026/27/28E GM by 0.2/0.7/1.0ppt). 29.4% 0.8pp 0.8pp

Net margin

Exhibit 5: EMC earnings revision table

Source: Goldman Sachs Global Investment Research

TUC

We revise up our 2027/28E net income estimates by 1/5/7% to factor in the faster than expected high-end CCL demand growth and better CCL pricing outlook, as well as the company's solid expansion in high-end AI server and switching customers' market share (revising up 2026/27/28E revenue by 1/1/4%, and revise up 2026/27/28E GM by 0.6/1.1/1.1ppt).

Exhibit 6: TUC earnings revision table

Source: Goldman Sachs Global Investment Research

Valuation EMC

Maintain Buy on EMC, with a new TP of NT$10,200 from NT$9,500, based on the same 27x 2H27-1H28E EPS (in line with the peak P/E multiple for AI component suppliers in past 3 years), and factoring in our earnings revisions.

2026 New

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2026 Old

2027 New

2027 Old

2028 New

2028E New

2028 Old

2028E Old e92c7a75ab8b4efbba794e6b187208c8

exmollo. lUe ral lable

NTSmn

1Q26

NTSmn

1Q26

Revenue

Revenue

Gross profit

Gross profit

Operating expense

Operating income

Operating expense

Operating income

Pretax income

Pretax income

Taxes expense

Net income

(2,601)

7,128

(701)

1,828

2Q26

2Q26

(3,269)

12.734

(892)

3,358

3Q26E

3Q26E

17.621|

57,349

21,117

5,835

(3,556)

17,561

(1,022)

4,813

4Q26E

4Q26E

59,952

19,785

22,649

6,897

(3,897)

18,752

(1,108)

5,789

7,194

1,874

18,752

17.561

12,785

3,427

4,813

5,269

Exhibit 7: EMC P&L table

Taxes expense

Net income

EPS, NTS

EPS, NTS

(4,126)

(1,265)

27.56

37.75

14.90

Ratio analysis and assumption

As % of sales

Ratio analysis and assumption

As % of sales

Gross margin

Gross margin

Operating expense ratio

Operating margin

Operating expense ratio

Operating margin

Net margin

Net margin

QoQ growth (%)

Revenue

QoQ growth (%)

Revenue

Gross profit

Gross profit

Operating income

Net in come

Operating income

Net income

YoY growth (%)

YoY growth (%)

Revenue

Gross profit

Revenue

Gross profit

Operating income

Operating income

Net income

3Q27E

3Q27E

94,459

33,587

38,502

12.468

(4,912)

33,591

(1,511)

10,956

10,956

33,591

(7.726)

25,865

(2,739)

8.217

28.14

2026E

2026E

197,643

61,760

69,498

19.510

(13,322)

(3,723)

15,787

56,176

56.293

(12,934)

15,383

(4,119)

11,264

43.362

121.03

38.63

4Q27E

4Q27E

109,822

39,348

46,151

14.883

(5,162)

40.990

(1,613)

13,270

40,990

(9.428)

13,270

(3,317)

9,952

31,562

88.10

34.08

2027E

2027E

120,421

353.024

143,548

44,457

(19,081)

124.467

(5,687)

38,770

37,850

124,467

(28,628)

95,840

(9,463)

28.388

97.22

1Q28E

1Q28E

41.153

122,256

52,156

15.466

(5,502)

46,655

_(1,708)

13,758

46,655

(10,731)

13,722

(3,431)

10,292

35.924

100.28

35.25

3Q28E

3Q28E

153.104

55,305

66,695

21.093

(6,277)

60.418

(1,963)

19,130

60,418

(13,896)

19,130

(4,782)

14.347

46,522

129.86

49.14

2028E

2028E

202,913

580,049

77.288

251,894

(24,385)

227,509

_(7,732)

69,556

69,485

227,509

(52,327)

175,182

(17,371)

52,114

178.48

2029E

2029E

827,957

297,071

(11,341)

106,329

339.766

339,766

(78,146)

106,258

(26,565)

79.694

261,620

730.27

272.94

4Q28E

4Q28E

165,161

60.569

72,969

23,533

(6,606)

66.362

(2,271)

21,262

21,262

66.362

(15,263)

51.099

(5,315)

15,946

54.61

2Q27E

2Q27E

81,696

25,821

32,690

9.395

(4,616)

28,075

(1,381)

8,013

7,613

28.075

(1.903)

(6,457)

21,618

60.34

1Q27E

1Q27E

67,047

21,664

7.712

26,204

(1,181)

(4,392)

6,531

21,813

21.813

(5,017)

6,011

(1,503)

4.508

16,796

46.88

2Q28E

2Q28E

139,528

45.886

60,074

17.196

(1,790)

(6,000)

15,407

54,074

54.074

(12,437)

15,372

(3,843)

11,529

41,637

116.22

2025

2025

94,261

30,340

28,120

6.898

(9,012)

19.108

(2,554)

4,344

4,519

18.876

(4.231)

14.649

(1,109)

3.409

4,005

5,710

Source: Company data, Goldman Sachs Global Investment Research

TUC

We maintain Buy on TUC, with new TP of NT$3,010 (from NT$2,860) which is based on an unchanged 22x on 2H27-1H28E P/E, which is +2x STDV higher than the past 3-year industry average P/E multiple, and factoring in our earnings revisions.

41.67

142.63

488.99

267.52

72.20

Net income

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40.83

Exhibit 8: TUC P&L table

Source: Company data, Goldman Sachs Global Investment Research

Investment Thesis & PT methodology and risks

EMC, a key supplier of high-end HDI material (70%+ market share) and SLP material (90%+ market share), has been focusing on the high-speed switch/server CCL market for 3-5+ years. We are positive on its market share trajectory in the server industry and expect EMC to increase its share from <10% in the Purley generation to 15-20%/20+% in the Whitley/Eagle Stream platforms. EMC is also proactively expanding its share in the switch market (40%/30%+ in 2024/23 vs. <5% before 2019), with an expanding AI customer base (only one 400G customer in 3Q20, to being one of the largest suppliers in e92c7a75ab8b4efbba794e6b187208c8

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2023), which should continue to bene fi t the company's top/bottom line growth over time. We believe EMC's leading position in the AI server CCL market should drive strong revenue growth and GM/OPM expansion in the long term, given that it is the major supplier for all Nvidia/Google/AWS AI server projects, and we expect it to maintain its leadership position. Considering its leading position in the high-end CCL industry, solid production skills and earnings growth outlook, we are Buy rated on the stock. With the shares trading at a 2026E P/E below AI server component suppliers and supported by a solid growth outlook, we view valuation as attractive.

Key downside risks include: (1) RCC to replace all high-end smartphone HDI design; (2) rising trade tensions, which could lead to weaker smartphone and server shipments; and (3) rising competition from mainland China peers.

Valuation methodology: Our 12m TP of NT$10,200 is based on 27x 2H27-1H28E P/E (in line with the peak P/E multiple for AI component suppliers in the past 3 years).

Key downside risks: (1) RCC to replace all high-end smartphone HDI design; (2) rising trade tensions, which could lead to weaker smartphone and server shipments; and (3) rising competition from mainland China peers.

TUC is a key high-end global CCL supplier that focuses on M7+ grade high-speed CCL (key applications include high-end switches (100G+) and AI server materials), with 20%+ market share in the past two years. The company continues to expect its unit market share in the server industry to increase from 15% in Whitley and Purley processors to higher in the Eagle Stream generation, and plans to launch two types of p roducts for low-end and high-end customers (T2A and T2C) to gain market share. Also, strong growth in 400G/800G switch shipments and new 800G switch shipments, scheduled for launch in 2025-27, should continue to be a key demand driver for TUC, in our view. Additionally, the company is working on high-end AI projects with CSP and enterprise players, which we believe should drive revenue momentum in the long term. We view the stock as undervalued vs. Taiwan CCL peers on a P/E basis and rate it Buy.

Key downside risks include: (1) slower-than-expected share gains in the low-loss CCL segment; (2) rising trade tensions, which could lead to weaker server and switch shipments globally; and (3) rising competition from mainland China peers.

Valuation methodology: Our 12m TP of NT$3,010 is based on a 22x 2027E P/E (+2x STDV higher than the past 3-year industry average P/E multiple).

Key downside risks: (1) slower-than-expected share gains in the low-loss CCL segment; (2) rising trade tensions, which could lead to weaker server and switch shipments globally; and (3) rising competition from mainland China peers.

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