中国下一批赢家：科技硬件 - 立讯精密的AI布局及中国在光模块和HDI领域的主导地位

China Next Winners: Tech Hardware - Luxshare's AI play andChina's dominance in optical transceiver & HDI This report is part of "China Next Winners" series in which we identify the next generation ofindustries and corporate winners in China. We updated the market outlook and competitivelandscape on AI datacenter connectivity sectors, including copper connectors (Luxshare),optical transceivers (Innolight, Eoptolink, TFC), and PCB (Victory Giant, Sinoma). Alex Wang, CFA+852 2123 2613alex.wang@bernsteinsg.com Ethan Xu+852 2123 2634ethan.xu@bernsteinsg.com Copper is likely to dominate in-rack connectivity solutions in the next few years, andLuxshare’s AI narrative will become clear next year.Compared to optics, copper solutionsremain cost-effective and superior for short-reach, low-latency applications within racks.After resolving the patent dispute with Amphenol in 2022, Luxshare has strengthened itscustomer base in the U.S. market, driving a c.50% YoY growth in its communication segmentin 1H25 (9% of corp. revenue). We think it’s likely for them to gain share from Amphenol forthe GB300 backplane copper connector, which brings mid-single-digit upside to our 2026EPS estimates (model; Exhibit 7). Next-gen products like Co-Packed Copper (CPC) furtherenhance Luxshare’s competitiveness in the long term. With ongoing progress in GB300 andthe preparation for optical transceivers, power and cooling components in AI datacenter, webelieve Luxshare’s AI narrative becomes clear going forward. Shirley Yang, CFA+852 2123 2660shirley.yang@bernsteinsg.com The broader adoption of ASIC chips and continuous technology upgrades createssignificant market opportunitiesfor Chinese optical transceiver players.ASIC clustersrequire more chips than GPU clusters in order to achieve comparable computing power,thereby enlarging the TAM for optical connectivity. Additionally, the increasing need for high-speed communication in AIDC accelerates the transition to higher data rate products and theadoption of new technologies such as silicon photonics (SiPh). The higher adoption of SiPh isa part of reason for Innolight’s gross margin improvement in 1H25. Risks related to the opticaltransceiver stocks include geopolitical tensions, lower-than-expected ASIC adoptions anddelays of GPU rack shipment (our estimates for GB rack). Longer term, the role of traditionaloptical transceivers suppliers in CPO is not clear yet, as semiconductor suppliers play a moreimportant role in the final product. HDI and multi-layer PCB content are increasing in AI server, with Chinese suppliersplaying a critical role.Victory Giant Technology (VGT), the largest HDI supplier for NVIDIA’sGB200 racks, is aggressively expanding capacity to meet rising demand. Despite that, wenote this expansion also carries long-term risks, as the PCB market is capital-intensive,highly competitive, and historically subject to cyclical demand. Raw material suppliers such asSinoma also benefit from the booming AI demand for PCB. It’s subsidiary, Taishan Fiberglass,supplies T-glass (for ABF substrate) and low-Dk resin (for HDI/PCB) to JP and Taiwan CCLcustomers that supply to Nvidia and ASIC chip makers. It’s worth noting that Sinoma has awide range of products, and high-end PCB materials represents only low-to-mid single digitof total revenue in the near term. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS Chroma ATE (model):We rate Chroma ATE Outperform, with PT = NT$570. Unimicron Technology (model):We rate Unimicron Technology Outperform, with PT = NT$170.Delta Electronics (model):We rate Delta Electronics Outperform, with PT = NT$630.Quanta Computer (model):We rate Quanta Computer Underperform, with PT = NT$240.Luxshare Precision (model):We rate Luxshare Precision Outperform, with PT = RMB59.Sunny Optical (model):We rate Sunny Optical Outperform, with PT = HK$110.Largan Precision (model):We rate Largan Precision Market-Perform, with PT = NT$2,400. DETAILS Following ourChina 2.0andDeglobalization: It’s a Big World, After allnotes, this note updates market outlook and technologyroadmap for connectivity segments in AI datacenter, including copper connectors, optical transceivers and PCBs, and howChinese companies excel in each segment. COPPER CONNECTIVITY Optical vs. copper connectivity in datacenter:Copper interconnections gained global attention after Nvidia (NVDA US,covered by U.S. Semis team) showcased the GB200 NVL72 rack in the GTC 2024. While optics solutions lead in bandwidth andenergy efficiency for scalable AI, copper remains cost-effective for short-reach density.Optical linksdeliver high bandwidth(≥224Gbps) and long reach (≥10m) with low attenuation and terabit scalability, making them ideal for DCI (data centerinterconnects), intra datacenter and rack-to-rack connections. In contrast,Copper(DAC/ACC/AEC) offers lower cost, minimalpower overhead, and ultra-low latency over short distances (<10 m), so it dominates within racks and chip-to-chip connections.However, as