AllRing Tech Co.: No Changes to Next-gen AI GPU TIM1 Design; OW

Core Conclusion

Supply chain checks confirm that the next-generation AI GPU’s TIM1 design remains a graphene-based solution with no changes, decoupling it from recent TIM2 design modifications. This removes a key overhang that had weighed on investor sentiment regarding AllRing’s involvement in the OS process for heat sink attachment. We see no revision required to our 2025 revenue forecast of +52% YoY (NT$8,141mn), with CoWoS contributing 75% of total revenue. The stock offers exposure to AI GPU ramp with a clear catalyst (1Q26 earnings release on May 8) and trades at 66.5x 2026e P/E.

What the Market May Be Underpricing

Investors had raised concerns that changes to Rubin’s TIM2 design could cascade into TIM1, where AllRing provides heat sink attachment services. The market likely priced in a non-zero probability of a design change that would disrupt AllRing’s revenue visibility. Our evidence shows TIM1 is unaffected, implying that any downside scenarios linked to this uncertainty are now off the table. The stabilization of the TIM1 specification reinforces AllRing’s near-term revenue trajectory and removes a potential negative catalyst.

Evidence Chain

• Design Stability: Supply chain checks explicitly confirm no changes to TIM1 for the next-gen AI GPU. The solution continues to use a graphene-based material, maintaining the same architecture as prior designs.
• Revenue Linkage: AllRing’s 2025 revenue forecast of +52% YoY rests heavily on CoWoS capacity expansion (75% of total revenue). TIM1-related work (heat sink attachment in OS) is embedded within CoWoS process flow; any TIM1 redesign would have directly reduced throughput or altered AllRing’s scope.
• Earnings Catalyst: The company is scheduled to report 1Q26 results on May 8, 2026. With the design concern cleared, focus shifts to execution on CoWoS ramps and margin trends.

Key Risks and Disagreements

• Downside Risks: A slowdown in CoWoS capacity expansion would directly pressure AllRing’s revenue and earnings. AllRing’s “WoS” market share could decline if competitors win more allocation. Slower adoption of advanced packaging technologies (SoIC, silicon photonics) would reduce the addressable opportunity beyond 2026.
• Upside Risks: Stronger-than-expected CoWoS capacity builds; faster silicon photonics adoption; market share gains from ongoing R&D and China’s localization trend.
• Disagreement Point: The stock currently trades above the NT$1,280 price target (NT$1,345 as of May 5, 2026), implying ~5% downside. The Overweight rating suggests the analyst expects positive catalysts (earnings beat, further design wins) to close the gap or warrant a target revision.

Valuation and Trading Implications

• Current Valuation: NT$1,345 close implies 66.5x 2026e P/E (versus 39.1x 2027e and 37.1x 2028e) and 56.8x EV/EBITDA on 2026e. This premium reflects high near-term growth (EPS CAGR ~37% 2025-2027e based on ModelWare net income) and the AI GPU exposure.
• Price Target: NT$1,280 (downside ~5%) derived from residual income model with 8% CoE, 4.5% terminal growth, 16% intermediate growth. The target may lag if earnings momentum accelerates.
• Catalyst: 1Q26 earnings on May 8 are flagged as high importance with modest upside surprise potential. Any positive revenue/guidance could push the stock above the current target.

Appendix: Key Financial Data