260603_gs_GCE

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GCE (2368.TW): Computex & Corporate Day: New ASIC project win with meaningful upside driven by the large TAM; Buy

We hosted meetings with GCE at our Taiwan Computex & Corporate Day (June 2nd). Key takeaways include:

• (1) The company has announced a new ASIC project win from a major CSP customer for the fi rst time , with shipment expected to begin in 4Q26. The project is expected to carry higher ASP and GM, driven by higher PCB spec of 30+ layer count.
• (2) The company is seeing strong new order momentum in 400G/800G switches, particularly from a major CSP customer, supporting near-term demand visibility.
• (3) The company is currently in the R&D phase for 1.6T switches and expect small volume production starting in 2026 end. The PCB spec for 1.6T switches is 46-52 layers, upgraded to M9 grade CCL with low-DK2 glass fi ber. Management mentioned that MLB PCB will remain the mainstream solution for switches for the next two years, meanwhile sees some customers shifting toward HDI thick board solutions in 2028.
• (4) The company expects its GM to continue to go up sequentially throughout 2026, while mentioning FX as the main near-term headwind.
• (5) For the Thailand plant, the company believes the average monthly capacity value could reach NT$1.3bn in 3Q26 (vs. NT$600mn in 2Q26) mainly driven by the ramp up of phase 2, which is the main reason that overall average monthly capacity value will reach NT$8.4bn in 3Q26 (vs. NT$7.5bn in 2Q26).
• (6) To meet with the strong AI-demand, the company is being proactive with its capacity expansion plan, including three new plants over the next three years: Thailand 2nd plant in 2027, Suzhou 2nd plant in 2028 and a new Taiwan plant in 2029.

Investment view

We maintain our positive view on GCE following fi rst announcement of a new ASIC project win from a major CSP customer, with shipment expected to begin in 4Q26. While we have not estimated the market share yet, based on specs shared by the company on the project and our GC Tech teams AI PCB model forecasts, we think the PCB TAM for this speci fi c project could be ~USD$10bn, or equivalent to ~1.7x of GCE's 2027E revenue. We see meaningful upside potential as the project features higher PCB spec (30+ layer counts), which should support both revenue growth and GM expansion. Based on our estimation, GCE's AI projects average GM level is now at

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

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

40-50% (with more upside potential driven by better pricing outlook or better production yield), comparing to the company's average level of ~35% now. The increasing AI server revenue contribution also suggests a much more favorable GM outlook in coming quarters, which is in line with management comments that GM will go up sequentially throughout 2026.

GCE is a key cloud (server+switch) PCB supplier globally with 20%+ market share in 2022. We expect cloud PCB market demand to grow at a 15% 2024-26E CAGR (far stronger than the overall RPCB+HDI market demand growth rate at 5% 2024-26E CAGR). We believe GCE's proactive capacity expansion plan (33% in 2026) and high annualized ROI (300%+) will continue to drive the company's revenue/margin level in the coming quarters/years. Additionally, we believe GCE can continue to see strong demand from the increasing content per server/switch, as we expect both markets to see a 20-50%+ layer count increase after the generation upgrade (upgrade to 400G/Eagle Stream). We are constructive on GCE's long-term growth opportunity given its solid position in the rapidly growing cloud PCB market, and we are Buy rated on the stock. GCE is trading higher than its historical P/E average level driven by strong AI server demand, but lower than the TW AI server players' average.

Price Target Risks and Methodology

Valuation methodology: Our 12m TP of NT$1,585 is based on a 22x 4Q26E-3Q27E P/E (in-line with the AI PCB leaders valuation in the past 3 years).

Key downside risks: (1) weaker-than-expected AI server market demand; (2) delays in the company's Nvidia OAM/UBB product quali fi cation, (3) weaker-than-expected HDI demand, and (4) higher-than-expected ramp up cost for new capacity

Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 2 Jun 2026 close.

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