Why would DSX POD change contractors’ workload?

  • NVIDIA’s DSX POD packages 7 VR200 NVL72 racks and 3 Spectrum-6 SPX racks, with more than 10 million components in each container. Hon Hai says factory pre-integration can shorten deployment at a prepared site from six months to as little as 14 days, with initial deliveries expected in early 2027.
  • Morgan Stanley believes that contractors taking on more factory integration and testing could increase their own value added, even if some components come from external suppliers.

How can Hon Hai compete for a larger share of Rubin racks?

  • Hon Hai doubled its AI rack assembly capacity over the past year to about 2000 racks per week. Morgan Stanley believes capacity expansion and automation will support a higher Vera Rubin rack share in 2027.
  • Hon Hai says the cable-free Vera Rubin compute tray design cuts assembly time from more than two hours to about 20 minutes, with a target of reducing it further to 5 minutes. Management believes greater automation helps improve output and consistency while reducing labor intensity.
  • Hon Hai says it can supply up to 50% of the value of the non-semiconductor components in an AI rack; its diversified manufacturing footprint also helps it meet customers’ regional needs and compete for business.

How does Morgan Stanley view the valuation and other businesses?

  • Morgan Stanley has an Overweight rating on Hon Hai with a price target of 310 New Taiwan dollars; compared with the closing price of 251 New Taiwan dollars on 2 November 2026, the report shows upside of 24%.
  • Downside factors listed by the bank include a smaller profit contribution from the AI business, weaker iPhone sales, slower electric vehicle business development and geopolitical changes that could affect foreign investment.
  • In electric vehicles, Hon Hai unveiled three new models, expanding its reference model portfolio to 12 models covering passenger and commercial vehicles for use in its contract design and manufacturing services.