Delta Electronics, Inc. (2308.TW): Section 337 investigation: Limited near-term impact

Delta Electronics, Inc. (Overweight; Price Target NT$2,500). The U.S. International Trade Commission (USITC) has instituted a Section 337 investigation into alleged patent violations (complaint filed by Vicor Power) related to certain vertical power delivery (VPD) system designs. Delta is one of 20 companies named. We estimate DC/DC server power represents ~6% of Delta's 2026 revenue, driven primarily by Google VPD modules, with a smaller contribution from Nvidia HGX-related lateral power products, and forecast DC/DC power revenue to grow ~60% YoY in 2027, accounting for ~7% of total revenue next year. The initiation of an investigation does not imply a violation of Section 337 and does not impose restrictions on Delta's shipments. Delta is required to respond within 20 days;