Taiwan's Han Quan Pivots to High-Margin AI Market, Eyes NT$6-7 EPS

Han Quan, a Taiwanese connector manufacturer, is strategically pivoting away from low-margin consumer electronics to focus on the more lucrative AI and high-tech supply chains. The company anticipates a significant boost in its financial performance this year, projecting revenue between NT$3.8 billion and NT$4 billion, a roughly 20% increase from the previous year. Earnings per share are expected to climb to NT$6-7, a substantial jump from last year's NT$3.92.

Chairman Yang Chao-chun highlighted the company's strategic shift during a shareholder meeting, emphasizing a move from prioritizing revenue volume to enhancing profit margins and added value. Han Quan is actively transitioning its product applications from traditional consumer electronics, where its notebook business has decreased to 17-18% of revenue, to AI and high-tech fields. The company is also evolving its business model from a pure EMS (Electronics Manufacturing Services) provider to a collaborative partner that assists terminal brand clients with product design and development.

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In recent years, the company's business strategy has shifted from pursuing revenue scale to increasing profit margins and added value, hoping to achieve higher profits with the same products.

While acknowledging that major international players currently dominate the high-speed cable and connector market for AI servers, Yang sees potential for Taiwanese firms. He noted that as AI competition intensifies, clients are increasingly focused on reducing token costs. Taiwanese companies, with their advantages in administrative costs and service efficiency, could gradually penetrate this supply chain. Furthermore, to mitigate geopolitical risks and align with international brands' "China Plus N" strategies, Han Quan is expanding its Southeast Asian presence, establishing production and delivery capabilities in Thailand and Malaysia.

Looking ahead, Yang anticipates new growth drivers from board-end connectors for Nvidia's Vera Rubin equipment and high-wattage power supplies, with mass production expected to begin next year. The AI PC and AI laptop markets are still in their early stages, and a significant consumer upgrade cycle might not occur until next year due to new platform introductions.

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As AI industry competition intensifies, customer demand for reducing Token costs is increasing. Taiwanese companies have advantages in administrative costs and service efficiency, and there is an opportunity to gradually enter the relevant supply chain in the future.