FOCI (3363.TWO) Semicon Taiwan CPO FAU driving revenue growth and margin expansion; Buy

Equity Research 8 September 2026 | 1:55AM HKT

FOCI (3363.TWO): Semicon Taiwan: CPO FAU driving revenue growth and margin expansion; Buy

We host FOCI’s CFO on Sep 3 during SEMICON Taiwan. Management remains Allen Chang | positive on their CPO FAU business and expects strong earnings growth ahead, riding Goldman Sachs (Asia) L.L.C. on AI server racks ramp up and FAU specification upgrade (from 40 channels to 100 Verena Jeng channels). FOCI’s FAU started shipment in 3Q26, driving Aug revenues growth | Goldman Sachs (Asia) L.L.C. accelerating to +20% MoM (vs. +9% MoM in July). We expect CPO FAU revenue growth to further accelerate in 2H27, driving CPO FAU revenue contribution up to Yifan Hu | Goldman Sachs (Asia) L.L.C. 58% / 73% in 2027 / 28E (vs. 21% in 2026E), supporting GM expansion to 37.9% by 2028E (vs. 18.8% in 2025A). Maintain Buy.

Key takeaways: Management holds a positive view on the optical networking trend in AIDC and expects FOCI to ride on the rising CPO switch end demand from scale out to scale up. As the data transmission speed increases, the FAU channel amount increases and brings higher entry barriers to the market, reflecting FOCI’s strong R&D and high-precision manufacturing capabilities. With the FAU entering revenues contribution in 3Q26, the GM would also recover. FOCI’s FAU in 2026E would be mainly 40 channels (starting in 3Q26) for 3.2T, followed by 80 channels (within 2026E) for 6.4T, and 100 channels under R&D. The company’s FAU enjoys several customers across fabless, foundry, laser suppliers, etc. FOCI Aug revenues accelerated to +20% MoM (vs. +9% MoM in Jul), reflecting the ramp up of high-end FAU.

Valuation: Our 12-month target price of NT$833 is based on a 15.4x 2030E P/E, discounted back to 2027E at a COE of 12.6%. Our target multiple is derived from peers’ correlation between forward-year trading P/E and earnings growth.

Key downside risks: Fiercer-than-expected market competition, technology migration trends in optical networking, and slower-than-expected capacity ramp-up.

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3363.TWO 12m Price Target: NT$833.00 Price: NT$723.00 Upside: 15.2%

Buy GS Forecast 12/25 12/26E 12/27E 12/28E Market cap: NT$79.3bn / $2.5bn Revenue (NT$ mn) 1,892.0 2,704.0 9,745.0 25,477.2 Enterprise value: EBITDA (NT$ mn) ,659.5 7,677.7 NT$76.3bn / $2.4bn EPS (NT$) m ADTV: NT$2.6bn / $80.3mn P/E (X) NM NM 41.3 14.5 Taiwan P/B (X) Greater China Technology Dividend yield (%) 0.0 0.0 0.0 0.0 M&A Rank: 3 N debt/EBITDA (ex lease,X) ( ) Leases incl. in net debt & EV?: CROCI (%) Yes FCF yield (%) (0.8) (2.0) (0.7) 3.8

6/26 9/26E 12/26E 3/27E EPS (NT$) (

Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7 Sep 2026 close.