Taiwan Surface Mounting Technology enters new growth phase

台灣表面黏著技術進入新的成長階段

TAIPEI (Taiwan News) — Taiwan Surface Mounting Technology Corp. (TSMT) is entering a new growth phase, supported by rising demand tied to AI servers, high-speed data transmission, and next-generation memory products, CTEE reported Sunday.

The company mainly provides electronic assembly services using surface-mount technology, a manufacturing process used to place components onto circuit boards. Its services cover products including memory chips and AI-related modules, according to Sinotrade and Allion.

Earlier estimates suggested AI- and optical communications-related business would account for about 5% of TSMT’s revenue in 2026 and 2027. As demand in the semiconductor and electronics supply chain recovers, market expectations for the company’s growth this year and beyond have improved.

That forecast has now been raised to 10-15%, reflecting a growing contribution from newer business areas. Institutional investors said the company’s growth outlook over the next two years is becoming clearer, particularly as orders linked to optical communications and AI infrastructure continue to expand.

Revenue from both areas is expected to increase severalfold this year and become an important driver of future earnings growth.

Supply chain sources said demand from optical communications customers is large in scale and offers strong order visibility. Optical communications technology uses light signals to transmit information, unlike traditional methods that rely on electrical signals through copper wires, allowing for the transmission of large amounts of data at high speeds over long distances, according to CommonWealth Magazine.

One major growth driver is the company’s long-term partnership with US-based Applied Optoelectronics. The two companies work together on optical modules, which are components that transmit data through fiber-optic networks used in AI data centers.

As cloud service providers continue expanding AI infrastructure, monthly output of optical modules for the customer is expected to rise from about 100,000 units at the end of 2025 to 500,000 units by the end of this year. It is projected to reach 1 million units by the end of next year.

TSMT is also expected to begin trial production of higher-speed optical products capable of transmitting 800 gigabits of data per second in the second quarter, followed by mass production in the second half of the year. It plans to move into even faster 1.6-terabit products in 2027.

Beyond optical communications, demand linked to AI servers is also becoming a new source of growth. Analysts said the company’s advanced assembly capabilities position it to win more AI-related orders, which generally carry higher profit margins.

The company’s traditional memory-related business is also improving. Demand for DDR5 memory, the latest generation of high-performance computer memory, remains strong.

Analysts said tight supply and higher pricing have helped TSMT expand its share of outsourced assembly work tied to DDR5 products. Revenue from DDR5-related business is expected to grow more than 20% this year.

In the automotive sector, the company supplies products used by customers including Tesla and several European and Chinese automakers. New automotive products include display modules, lighting components, and power management modules.

As new projects complete certification and move into mass production, shipments are expected to increase starting this year. With several growth drivers expanding at the same time, analysts have raised their earnings forecasts for the company.

Revenue for this year is now projected at NT$54.5 billion (US$1.7 billion), up from an earlier estimate of NT$53.5 billion, representing annual growth of 9.3%. Earnings per share have been slightly revised upward to NT$12.85, while the 2027 forecast has been increased from NT$16.5 to NT$19.23.