Foreign investment Goldman Sachs pointed out in its latest research report that investors' sentiment in the field of artificial intelligence (AI) continues to rebound, and in contrast, the sentiment in the field of non-AI is sluggish. Despite the overall resurgence, investors remain cautious, and many long-term funds have not fully participated in the rebound in the past few months. Therefore, as we enter the third quarter, which is usually seasonal fatigue, we still have a low profile or ambition. Based on the above factors, we are optimistic about the performance of Taiwan Stock Exchange's Taiwan Stock Exchange's NT$1000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,
The report pointed out that AI situation has returned and advanced packaging has become the focus, which benefited from the increase in yield of downstream ODM-assembled AI server racks, which has solved the market's concern about the possibility of further reduction in recent AI orders. Advanced packaging technology has also become a hot topic for investors. Therefore, many investors underestimate the importance of chiplet design for the 2nm process. The cost benefits of small chip design and hybrid integration (achieved through advanced packaging technologies such as CoWoS) are promoting its widespread adoption in various applications and expanding from the AI field to the non-AI field.
The report stated that the CoWoS/Advanced Packaging technology is expected to continue to increase in the permeability of server CPUs, network chips and other high-level consumer chips, which will promote the continuous improvement of CoWoS/Advanced Packaging in 2027 and beyond. Therefore, the shipment of CoWoS is expected to reach 664,000, 1.08 million, and 1.566 million wafers in 2025-2027, while the production capacity will reach 675,000, 1.2 million and 1.74 million wafers in 2025-2027.
Taiwan is the leader in AI, and its long-term growth can be strong, so it is the first choice of "buy" and is expected to have potential upward risks in 2026. One of the most frequently asked questions from investors is expectations for the NTD July 17 French Representative Conference. The foreign exchange expects this meeting not to be too shocking, and the full-year 2025 revenue forecast (USD is about 20% to 25% increase year by year) and capital expenditure (USD 38 billion to 42 billion US dollars) should remain roughly unchanged. Therefore, we continue to maintain the forecast of an annual increase of 28.7% for the full year of 2025.
Although the analyst meeting expected stability, we believe that NTEC's profit prospects in 2026 have upward potential, including advanced processes and CoWoS, which may significantly increase prices. According to current forecasts, the 2026 process points of 5 nanometers and below will increase by 3%, and the 2026 CoWoS will increase by 5%. However, considering the continued strength of the new Taiwan dollar, the possibility of an increase in the price increase in 2026 is increasing in order to reduce the pressure on gross profit margin by NT$ to reduce the negative exchange rate trend. Secondly, the demand for 2 nanometers is more powerful. According to supply chain surveys, smart phones may have a stronger demand for 2nm process. It is currently expected that the US dollar's annual revenue will increase by 17.1% in 2026.
Overall, TEK is the world's leading crystalline foundry enterprise, with a global market share of more than 60% in advanced processing. We are optimistic about the practical and technical leadership and execution of Taiwan Electric, so that it can better seize the long-term structural growth opportunities in AI/5G/HPC/EV and other fields than its peers. In addition, Taiwan Electric is also regarded as a key AI promoter in Taiwan's semiconductor industry, mainly due to its leading position in the leading process stage and CoWoS advanced packaging technology. Therefore, it is believed that Telco will achieve a goal of 20% in the next few years, under the promotion of chip content growth and AI/HPC demand, and its long-term gross profit margin will remain above 53%. Taiwan Power's P/E ratio is 10-29 times, and the current trading area is at the low end of a decade-old history, with attractive valuations. Therefore, the target price of NT$1,210 is reiterated for the investment evaluation of NT$1,210.
However, the AI ASIC project is still the focus of recent times, making the long-term growth story of joint technology unchanged. However, the potential AI ASIC project cancellation or further delay is the main issue that investors are currently concerned about. As some investors expect the project to pay about $1 billion in 2026, this may cause downside risks to profits in 2026. However, it was noted that short fund sentiment is more negative, while long-term funds are mostly happy with the long-term ASIC market expansion stories of Joint Development Technology and hope to buy in the event of a potential decline. Therefore, we are happy with the ASIC market that continues to expand to a USD 45 billion USD. In particular, with TPU becoming the first step for Joint Development Corporation to enter this new market, it is very likely to win more CSP projects in the future.
Overall, the foreign investment is optimistic that the joint venture will become a traditional smart phone application processor (AP) supplier to transform into AI participants, and expand to enterprise ASICs and smart cars (cooperating with NVIDIA) solutions, etc. The joint-department department is expected to achieve a combined annual growth rate of 16% and 21% in 2025-2027, respectively. Its main growth factors include market share growth, especially in high-level markets (especially high-level 5G flagship SoC). Also, the smart phone upgrade cycle driven by generative AI demand, plus the new potential market (TAM) that expands to corporate ASICs and automotive/computing markets. Therefore, the price of the foreign investment and joint account is NT$1,800.
Finally, external resources also observed that investors' interest in Sun and Moonlight Project Control has increased significantly, and the focus is mainly on the development of its advanced packaging technology.. As highlighted in All Ring and GPTC reports, Sun and Moonlight Projection has been developing FOCoS-bridge and FOCoS-CL (for CoWoS-L and CoWoS-R) and gradually improving production yields. A U.S. CPU supplier is expected to be the main adopter of its FOCoS-Bridge's next-generation universal server platform in 2026.
As advanced packaging continues to expand its end applications from AI to non-AI fields, such as Sun and Moonlight and Silicon products, are actively expanding their advanced packaging capabilities. The FOCoS production capacity of Sun and Moonlight and Silicon products is expected to reach 5,000, 15,000 and 30,000 wafers per month in 2025-2027, respectively, representing 200% and 100% annual capacity growth in 2026 and 2027, respectively. Therefore, it is expected that Sun and Moonlight Project Control will surpass its peers through its continuous market share growth. Currently, Sun Moonlight Investment Holdings stock is trading in the mid-range of its ten-year historical price-to-earning ratio (5-18 times), but we believe that considering the prospects of AI's new business with an increased profit rate, we give Sun Moonlight a "buy" investment rating, with a target price of NT$165.
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