Gabriel Neo

To believe that you're getting a good deal on $MU, you need to believe that current very high prices on memory will stick This assumes that input costs do not rise It assumes that you have no competition And it assumes that demand doesn't decrease Dangerous assumptions

Samsung has overtaken Meta to enter the global top 10 by market capitalization.🇰🇷

What's happening in the MLCC market First off, MLCC as a whole is a $15B market. MLCCs for servers were a $1.3B market in 2025 ($600m for AI servers, $700m for general servers) The AI server MLCC market is growing at 80%+ CAGR, and the general server MLCC market will also accelerate due to agentic AI increasing CPU demand (around 30%-40% CAGR) We will see negative growth in the smartphone/mobile MLCC market for at least 2026-27. Humanoids are another future high-growth market for MLCCs Book-to-bill ratio for most MLCC suppliers is over 1 now Reasons for price hikes- High Nickel & Silver are affecting all segments There is a supply-demand mismatch in the high-end (high capacitance, high voltage) segment, which is used in autos & servers High-end MLCC lead time is over 20 weeks Spot/distributor prices have increased by 20%-40% for low capacitance & consumer device MLCCs due to hoarding and double booking, especially in China OEM contracts have not seen large price hikes yet What's happening now: Rapid capacity expansion happening across the industry Murata expects blended ASP prices to remain flat (ASP going down in consumer electronics, expansion in AI server market) Tier 1 players like Murata, Taiyo Yuden, SEMCO building capacity to serve AI server MLCC market This will create opportunities for Tier 2/3 and Chinese suppliers to expand in the mid to low end market (Macronix effect) Future: MLCC production equiment & raw materials suppliers will be the biggest beneficiary of this CAPEX boom MLCC producer stocks have performed well, and it is finally spilling to raw material/equipment producers I expect them to outperform MLCC producers now

A Guide by Serenity: How to Cripple the Western Hyperscaler buildout with just $170m. Just take over Nippon Chemical (4092) with $169m! For InP substrates, you need: Indium and High Purity Phosphorus. Thought $AXTI was a bottleneck? NCI is the bottleneck of the bottleneck. NCI is actually the leader of the high purity red phosphorus chokepoint holding 26-27% of the market share (Rasa has less share, then the rest is China). And they export to $AXTI, Sumitomo, JX that need it to make InP substrates. 
So… if you have $160m to spend to acquire NCI (plus Rasa as smaller capacity), you can remove the leading Western world’s production of 6N/7N red phosphorus needed to make InP substrates! And without InP substrates: no photonics. Fun fact: China’s tech companies would get pretty disrupted with it too by NCI. For $AXTI, the mapping/reliance is actually pretty interesting: - AXT's Tongmei outlined its structural reliance on importing high-purity precursor materials from Japan on their STAR Market listing 
- WITS data showing ~$460/kg high-purity phosphorus flowing from Japan into China So they secretly do depend on NCI. 
China does have capacity like Wylton Chemical, Qin Xi New Materials, Jinding Electronics, and Chuxiong Chuanzhi, Guizhou Wylton Jinglin Electronic Materials as well. However, they’re all smaller players so can’t make up for high purity red phosphorus capacity provided by NCI for InP substrate production at scale. $LITE CEO already said inp substrates keeps him up at night. So now with NCI, you can give the guy permanent insomnia? For just $169M. So here's what the supply chain looks like: -> DGC phosphate rock mine and ships it to NCI -> NCI refines Yellow Phosphorus into High Purity Red Phosphorus -> Sumitomo / JX / AXT melt the Red Phosphorus with Indium to grow InP Substrates -> $COHR / $LITE fab InP substrates into Lasers -> Innolight/Fabrinet package them into 800G/1.6T transceivers -> $NVDA / $GOOGL use them for ASIC/GPU clusters. 
And basically, the entire West depends on NCI to make InP substrates for photonics. I hold some very small positions, just for fun. However, Japan is not well known for price hiking. So you’d probably run into regulatory problems eg. FEFTA if you bought the company and hiked prices 15000% (like government seizing back the company once they realize)… Maybe 30-50% hikes is possible to compress fwd p/e? But very likely wont end up like $AXTI. 
 Regardless, this company is a massive, massive national security risk priced at ~$160m. As for fundamentals, they’re trading at .54 book value and a forward P/E of 11.4 so it’s probably undervalued anyway. TLDR: -> Is it the next $AXTI? No. -> Is it an unknown structural bottleneck + critical vulnerability of the Western hyperscaler buildout with photonics? Yes. -> Is there still room for re-rating? Just reverting to Book Value of 1 is immediate 80-85% upside. Maybe more if you give it multiples past 11 fwd p/e. Regardless, it’s fun to find a major point of failure in the hyperscaler supply chains for $169m.

$AAOI - THE BULL CASE (numbers) Let me show you the numbers: On the earnings call, management said if the hyperscaler demand plays out like expected, $AAOI could reach a data center revenue production rate equivalent to $378M per month by Q2 2027 which would equate to ~$4.5B in annualized run rate. They also guided for 40% gross margins by Q3. P/S: $LITE trades at 14x FY26 revenue with 76% expected growth with mid 20% operating margins. $AAOI trades at 7.0x FY26 revenue with 112% expected growth with anticipated 40% operating margins. So if $AAOI's AI/hyperscaler segment even gets to ~75% the multiple of LITE (which it should based on numbers), then $AAOI is deserving of 9x sales multiple on FY27 revenue, you're already looking at $40.5B in equity value right there. This is excluding the lower multiple segment of $AAOI which is CATV/Broadband which management expects ~$300M / year business. Give that a 2.0x sales multiple and you can add another $0.6B or so to the valuation. I don't think 9x sales multiple on the data center revs is unlikely at all so based on those numbers (if you believe management), then $AAOI is a great buy here. Even if you assume $AAOI achieves only 50% of the $4.5B annualized AI revenue run rate, and the multiples therefore compress to say 6x/7x you're still looking at potentially 2x from here. That's not the full story but that's a clear picture of the bull case looking purely at the numbers.