The AI computing power craze does not only belong to the chip leader! Beating 99% of peers, fund managers are betting on small and medium-sized companies in the PCB, packaging board, and testing industry.

A fund focusing on the AI computing power infrastructure supply chain of the Chinese Taiwanese stock market, with a strategy of not heavily investing in AI chip super giants like NVIDIA Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Samsung Electronics, but instead betting on diversified Asian small to medium market cap AI computing power supply chain related stocks, has stood out in the backdrop of increased volatility in the global tech stocks over the past year, and achieved extremely impressive performance. Managed by George Hsieh, the Nomura Taiwan High Tech Fund has a return rate of 164% in the past 12 months, outperforming 99% of its peers. Even after the Iran conflict erupted, the fund has still risen by 29% so far this year, while the Taiwan benchmark stock index has seen a rise of 9.5% during the same period. Hsieh stated that by investing in companies in different segments of the AI supply chain, the fund effectively diversifies risks. According to fund data, among its top ten core holdings, nine companies have a market cap of less than $25 billion USD, covering various sub-fields such as advanced packaging and chip testing, printed circuit board (PCB) manufacturing, electronic fabrics and copper foils, and ABF packaging substrates. Unlike most funds focusing on emerging markets and Asian stock markets, the fund's top holding, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, with a market cap of $1.7 trillion USD, is the second largest core holding of the fund. Hsieh stated in a recent interview, "Some companies in the AI server, high-end AI computing power infrastructure components, and other segments of the AI supply chain are almost monopolizing the market, and continuously occupy the vast majority of market share." He also added that these Chinese Taiwanese companies "have already considered various potential risks in advance." As of the end of February, the fund managed assets worth 12.6 billion New Taiwan Dollars (approximately $393 million USD). Its solid performance proves that the strategy of avoiding excessive concentration in a single industry has obvious advantages. In recent months, due to factors such as high capital expenditures, valuation pressures, and rising energy costs after the Iran conflict, the market's heavy betting on the chip manufacturing sector has suffered significant shocks. Hsieh pointed out that there is a "severe shortage" of production capacity for advanced chip processes and advanced packaging technologies because "to achieve the high-speed growth of AI companies, these technologies are indispensable." He believes that the huge demand for storage chips in AI data centers is driving the development of other industries that provide components for chip manufacturers, thereby promoting comprehensive growth in various segments of the AI supply chain. The fund's top core holdings include: Unimicron Technology Corp., a leader in PCB and ABF substrates; Nan Ya Printed Circuit Board Corp., a core manufacturer of high-end PCB and IC substrates; Powertech Technology Inc., a global leader in semiconductor packaging testing services; Phison Electronics Corp., a leader in USB storage controller chips and global flash memory chip solutions; Chunghwa Precision Test Tech Co., a leader in semiconductor testing technology and high-end GPU/ASIC probe cards. Hsieh stated that the fund has been actively adjusting its holdings in these companies. If industry demand remains strong and valuations become more attractive, he plans to further increase holdings. Over the past five years, the fund has achieved a cumulative return rate of 32% below the benchmark, outperforming 94% of its fund manager counterparts. Of course, Hsieh also cautioned that if the Middle East conflict lasts more than three to four months, Taiwan may face restrictions on electricity and chemical raw material supplies, which could inevitably squeeze the profit margins of local tech companies. However, he remains optimistic about the long-term demand for products from these companies. "We believe that once the external environment stabilizes - for example, with the start of negotiations and a reduction in political risks with GEO Group Inc - the previously declining stock prices will rebound," Hsieh stated.