GIS is allocating TWD4-5bn of capex to high-power laser packaging, which analysts estimate could contribute 30-50% of earnings by 2028 as co-packaged optics ramp up. The supplier has secured customer commitments from a leading US optics company for 300mW and 400mW continuous-wave laser packaging, with initial revenue expected to start in the first half of 2027. Although high-power lasers are projected to account for under 2% of total sales in 2027 to 2028 because GIS recognizes only manufacturing value-add without raw material costs, the high-margin profile delivers disproportionate operating leverage once shipments scale. The overall business is modeled to inflect from a projected net loss of TWD1,540mn in 2026 to net profits of TWD910mn in 2027 and TWD2,050mn in 2028. Capital deployment reinforces this strategic shift, with GIS committing TWD8bn in total capex this year, directing one-third of the packaging investment to Taiwan and two-thirds to Vietnam. Analysts note that this planned spending already surpasses the capital expenditure of the current largest laser packaging specialist, positioning the company to capture share as customers mandate outside-of-China manufacturing amid acute capacity shortages. This transformation aligns with broader industry momentum toward co-packaged optics, where peers like Coherent identify a $16.2bn content opportunity on advanced architectures and suppliers like FOCI prepare fiber array units. Key risks to monitor include consumer demand weakness across MacBooks and iPads, margin compression from component costs, and potential development delays in fiber array units. #Semiconductors# #Smartphones# Report date: 2026-11-10