Lishun Precision In-Depth Analysis: The Next AI Server Winner; Target Price Increased to RMB 86, Outperforming the Market Index

+852 2123 2613alex.wang@bernsteinsg.comShirley Yang, CFA+852 2123 2660shirley.yang@bernsteinsg.comEthan Xu +852 2123 2634ethan.xu@bernsteinsg.com 86.00 CNY(74.00OLD) Luxshare deep dive: the Next AI Server Winner; PT raised to RMB86, Outperform Leoni and Wingtech deals, and showed early success of its AI server components overseas. Thisnote deciphers Luxshare’s business by segments, focusing on its growing AI server business.Luxshare’s communication revenue is set to grow at a mid-40% CAGR till 2028, driven by the ramp of 1.6T optical transceivers and copper cartridges.About 40% of 2025communication revenue came from server components, mainly copper connectivity, and weexpect Luxshare’s long track record in copper links plus customer dual-sourcing needs tosupport share gains in the Vera Rubin cycle. Client’s adoption of CPC in late 2027 shouldextend this growth into 2028. In optical transceiver, we estimate roughly RMB 1B revenue from100/400/800G this year, with a sharp inflection in 2027 on 2M units of 1.6T shipments. At alow-teens net margin, we expect the communication segment to account for a mid-teens share after consolidating Leoni and Wingtech.We model Leoni to reach ~5% NPM by 2028,contributing ~10% of revenue and ~5% of profit, while Luxshare’s core auto business growsat ~39% YoY annually. In consumer, non-Apple revenue is set to grow double-digit, reaching~RMB126bn by 2028 (~40% of segment rev.), driven by Wingtech ODM and broader customerdiversification. Apple-related revenue and profit are projected to grow at 3% and 10% CAGR,respectively, supported by resilient iPhone demand and margin improvement at Lizhen (Exhibit16-Exhibit 19).More reports@wechat: Hillwood2024 2025-28E.Rising revenue mix of server and auto will lift corporate GPM by ~1ppts to 13.2%by 2028. Upcoming catalysts include WWDC, progress in cable cartridge & optical transceiver,and OpenAI’s consumer device launch. Investment Implications www.bernsteinresearch.com important information. Alternatively, visit our Global Research Disclosure Website.First Published: 06 May 2026 13:33 UTC Completion Date: 06 May 2026 13:33 UTC It’s been almost two years since we published previous Luxshare deep dive (A quality play in Apple supply chain & the foray into the U.S. server market provides optionality). Since then, the company has weathered through the tariff impact, completedacquisition of Leoni (auto) and WingTech ODM (consumer), and most importantly, demonstrated early success of its AI server Luxshare is a leading Chinese precision manufacturing and assembly company serving global technology brands across consumerelectronics, communications, and automotive. Originally focused on connectors for Apple, it has evolved into an integrated has grown its revenue by 24x and operating profit by 14x. (Exhibit 2) expanding AI-driven offerings such as high-speed copper interconnects, optical transceivers, and thermal/power solutions forservers. In automotive, it leverages strong manufacturing plus growing engineering capabilities to supply connectors, harnesses,ADAS controllers, and powertrain components. Alongside organic growth, Luxshare is strengthening its value chain through M&A.In 2H25, it acquired Leoni (a global leading automotive harness and connector provider) and Wingtech’s ODM business (primarilyAndriod smartphone ODM and Mac assembly), enhancing its manufacturing scale and customer reach. As a result, Apple’s revenueshare declined from 74% in 2021 to 57% in 2025 (about half from Apple assembly) and we expect it to fall to ~40% by 2028. We model Luxshare’s communication revenue to grow at a mid-40% CAGR through 2028, driven by the ramp of 1.6T optical transceivers and cable cartridges. With a low-teens net margin, we expect communication to account for a mid-teens share of group revenue and a mid-20s share of net profit by 2028. and server assembly. Revenues are generated from two entities - LuxshareTech (100% owned subsidiary) and Time Interconnect(1729 HK, not covered; 66% owned by Luxshare). 40% of the RMB 24B communication revenue in 2025 was from servercomponents, with a large portion coming from copper connectivity (DAC, AEC, etc.). We model this segment to grow topline by35% this year, and accelerate to 40-55% YoY in the next two years driven by backplane copper connector in GB300/Vera RubinMore reports@wechat: Hillwood2024 product upgrades.Rising CSP capex is fueling demand for optical modules, with Ethernet transceiver sales expected to grow by65% in 2026E and 20%+ next year, according to LightCounting. The transition toward higher data rates is also accelerating, with1.6T expected to become mainstream in 2029E, supporting ASP expansion and margin improvement. LightCounting has raisedits 2027E shipment forecasts for 800G and 1.6T transceivers to over 400mn and 10mn units, respectively, while our channel revenue.We estimate that Luxhsare generated RMB 400M optical transceiver revenue last year from 100G, 200G an