<TXC Outlook> AI and Automotive 'Dual A' to Drive Growth, Revenue Share to Exceed 50%

Frequency component giant TXC (3042-TW) held its annual business briefing today (19th). Amid the sweeping wave of AI driving demand for transmission, computing, and synchronization, along with the automotive electronics trend toward 'cockpit-driving integration,' TXC's CEO Ya-Ping Kuo stated that despite ongoing revenue growth, AI and automotive (AUTO) applications are expected to accelerate significantly by 2027.

Executive Chairman Wan-Hsing Lin also noted that both segments deliver gross margins above the company average, and their accelerated growth will positively impact TXC's overall profitability.

TXC forecasts automotive revenue to account for 26% of total sales in 2025, rising to 28% in 2026, making it the largest revenue contributor. AI-related revenue has increased from 11% last year to 16% currently, bringing the combined share of both sectors to 44%. By year-end, AI could reach a quarterly peak of 20%, and by 2027, the combined AI and automotive revenue share is expected to exceed 50%.

Lin emphasized that transmission speeds in AI data centers continue to rise, with 1.6T specifications expected to advance rapidly from this year into the second half of next year. As high-speed transmission demands lower jitter, stricter specifications will inevitably drive up unit prices. Currently, TXC holds over 20% market share in optical module applications, and its 3.2T application products are in the sampling phase. Mass production will commence once market specifications are finalized.

For automotive applications, TXC has already established an independent legal entity, Jingchuang Technology, in Ningbo, Zhejiang Province, China, dedicated to meeting the demand for frequency components in automotive electronics.

As vehicle intelligence advances and the electronic design trend of 'cockpit-driving integration' spreads, autonomous driving levels progressing from L2 to L3 and beyond will increase the number of frequency components required per vehicle by over 45 units. Additionally, rising demand for high-frequency components will boost the value of timing devices per vehicle. Beyond the Chinese mainland market, TXC continues to expand its customer base among non-Chinese automakers, anticipating significant future market potential.

In the first half of 2026, TXC reported revenue of NT$7.038 billion, a gross margin of 32.74% (down 1.73 percentage points year-on-year), net profit of NT$1.006 billion, and earnings per share of NT$2.96.