2Q17 operationally behind expectations: Revenue was previously released:TWD446mn, down 2% QoQ but up 47% YoY. Aspeed reported today 2Q17 EPS ofTWD3.75, up 23% QoQ/30% YoY but operationally behind HSBC/consensusestimates. We believe the weaker sales momentum was a result of furtherpostponement of BMC orders ahead of Intel’s Purley platform launch and continuedcomponent shortage, while the slight contraction in GM (57.2%; down 80bps QoQ)was a result of unfavourable product mix during the quarter.    Launch of Intel’s Purley platform to drive 2H17 growth: Despite the slower 1H17performance so far, we believe momentum should pick up more meaningfully in 2H17following Intel’s official launch of the Purley platform and wafer shortage being resolved.    We anticipate improvements in data transfer speed to help drive global server demandand Aspeed’s BMC chipsets. We now expect Aspeed to deliver 10% sequential revenuegrowth in 3Q17e and another 21% growth in 4Q17e as customers pull in shipmentsstarting late 3Q17e.    iCafe solution to be additional driver in 2018e: As we have highlighted previously(here), we expect Aspeed’s proliferation into the iCafe market to become an additionalgrowth driver starting 2018e. We expect its iCafe solution, which allows for benefitssuch as better energy management, to blossom within the highly underestimatedChinese internet café market. Given the nature of this niche market, we maintain ourestimates for 9% revenue and 12% gross profit in 2018e based on a 9% penetrationand c70-80% gross margin profile. We would again note that every 5% increase inpenetration would lead to 5%/10% impacts to our 2018e revenue/earnings estimates.    Maintain Buy: Post Aspeed 2Q17 results release, we fine tune our 2017e/2018e/2019eearnings estimates by -2%/0%/0% to factor in the further delay of customer purchasesresulting from server platform transition and new revenue/margin assumptions. Despitethe delay, we continue to maintain our constructive view on Aspeed given ourexpectations of gradual recovery of server demand from top-tier data centre players,stable competitive landscape, and launch of iCafe solution. We maintain our Buy ratingand TP of TWD821, still derived by applying an unchanged P/E target multiple of 30.5xto our new 2018e EPS of TWD26.89. Key downside risks to our view include: (1) weakerend demand; (2) further demand push out; (3) stronger ASP pressure; and (4) poorexecution.

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