Microsoft reported better-than-expected revenue and profit for its fiscal second quarter 2026, but concerns linger over slowing cloud growth. Despite expanding capital expenditure (capex), Azure's core business showed a decline in growth, raising questions about Microsoft's competitive edge in the AI race.

Amid a cautious recovery in the consumer electronics market, Apple highlighted the critical role of its iPhone series in driving overall operations in its fiscal first-quarter 2026 earnings report. The company reported record-high iPhone-related revenue this quarter, with year-over-year growth significantly outpacing the overall average and serving as the core driver of holiday-season sales expansion.

AI computing demand is increasing the need for thermal management. To optimize space efficiency in data centers, server cooling is shifting from traditional air cooling to liquid cooling, bringing a new wave of high-growth revenue opportunities for thermal solution companies. Leading Taiwanese thermal module makers Asia Vital Components (AVC) and Auras Technology's revenues jumped as they expanded from PCs and smartphones into server cooling. AVC also benefits from server components like enclosures and quick connectors, with year-over-year growth approaching triple digits.

German industrial giant Merck KGaA announced the appointment of Benjamin Hein as a member of the executive board and CEO of its electronics business unit, effective May 1, 2026. Following extensive global experience within the group, Hein will return to the electronics division from the company's headquarters in Germany.

Taiwan-based National Aerospace Fasteners Corporation (Nafco) held a groundbreaking ceremony on January 30, 2025, for its second-phase expansion at its production base in Malaysia. Nafco stated that launching this expansion marks a significant milestone in the company's capacity growth and global manufacturing footprint.

Taiwan-based CviLux Corp announced on January 30, 2026, that, following a board resolution, it will publicly acquire up to 5,191,000 shares of Cystek Electronics, representing approximately 15% of its total issued shares. The public tender offer period runs from February 3, 2026, to March 10, 2026, and will proceed in accordance with relevant legal procedures.

Below are the most-read DIGITIMES stories from the week of January 16 – February 1, 2026.

India's finance ministry on February 1, 2026, unveiled the Union Budget for 2026–27, placing electronics and technology manufacturing at the heart of its growth strategy, with fresh funding for semiconductors, electronics components, and AI-linked infrastructure aimed at strengthening supply chains and boosting India's global manufacturing competitiveness.

After two decades, India and the EU close an FTA deal as US's tariff policy is disrupting the global supply chain.

Taiwan has taken a significant step forward in quantum computing development. On January 29, 2026, Academia Sinica—the island's premier national research institution—announced the successful development of a 20-qubit superconducting quantum computer, marking a major milestone in the global race for quantum supremacy.

The AI arms race among cloud service providers (CSPs) is intensifying rapidly. Meta has announced plans to more than double its capital expenditure in 2026 compared to 2025, while Microsoft is also increasing its spending significantly. Unlike consumer electronics sectors struggling with memory shortages, neither major CSP mentioned such issues during their earnings calls.

The global energy storage system (ESS) market based on lithium-ion batteries expanded in 2025. According to ET News and Ddaily, SNE Research reported that global shipments of lithium-ion batteries for ESS by manufacturers totaled 550 GWh in 2025, up 79% from 307 GWh in 2024, reflecting strong growth momentum. However, China alone accounted for more than 60% of the total. Unlike electric vehicle (EV) batteries, which are installed in vehicles and then sold to consumers, ESS batteries are typically deployed directly into regional projects. As a result, there is little discrepancy between shipment volumes and actual installed capacity.

Cloud service providers (CSPs) continue to maintain strong capex, driving steady growth in AI servers and high-speed network switches markets while elevating the grade of copper-clad laminate (CCL) materials. As orders for high-end products gradually increase, Taiwan's top three CCL manufacturers are set to deliver significant revenue growth with double-digit year-over-year gains in 2025.

On January 28, 2026, Minister of Economic Affairs Ming-Hsin Kung highlighted Taiwan's commitment to comprehensive collaboration with the US in developing a "non-China" supply chain, marking a new milestone following recent agreements such as the Taiwan-US investment cooperation MOU and the Economic Prosperity Partnership Dialogue (EPPD).

As generative AI gradually extends from the cloud to enterprise and edge environments, industry competition is shifting from a single high-performance computing platform toward multi-layered application scenarios. With expanding demand across use cases, market competition is evolving from a single technology path to a layered market structure that clearly segments large cloud data centers, enterprise data centers, and Small Office, Home Office (SOHO) personal applications. This segmentation is also reshaping supply chain roles and collaboration.

Recent reports from mainland China indicate that authorities have approved the import of an initial batch of Nvidia's H200 chips. The move highlights yet another turn in the intensifying US–China technology rivalry.

The collaborative robot (cobot) industry, a pivotal segment for artificial intelligence (AI) applications, anticipates new growth opportunities despite a weak economic recovery, according to leading manufacturers Universal Robots and Techman Robot. Both companies predict AI to be the main catalyst for expansion in 2026.

Altos Computing, Acer's AI server solutions subsidiary, is optimistic about its 2026 outlook as enterprise AI adoption gains momentum across Asia-Pacific. With a growing project pipeline and rising demand for practical AI deployments, the company expects a significant portion of its opportunities to convert into orders, supporting its double-digit growth goal for the year.

Taiwan is stepping up efforts to anchor global investment at home, offering equal incentives to US and foreign firms even as cross-border commitments under the Taiwan–US Investment Cooperation MOU remain asymmetric.

Dixon Technologies saw negative impacts due to the memory price rise for the third quarter of fiscal 2026. During an earnings call, management outlined plans to navigate global supply chain pressures while targeting long-term revenue of INR1 trillion (US$10.89 billion) over the next three to four years. For the quarter ended December 31, 2025, the company posted consolidated operating revenue of INR106.78 billion, up from INR104.61 billion a year earlier, supported by consolidated operating EBITDA of INR4.21 billion.

Tex Year Industries anticipates returning to growth in 2026 following a slight revenue decline in 2025, driven by expanded production capacity in India and Vietnam and the maturation of its high-end specialty chemical segment. The company remains cautiously optimistic despite ongoing geopolitical and economic challenges.

Asia Optical's subsidiary AsiaTech Imaging forecasts a 20-30% sequential revenue increase in the first quarter of 2026, signaling a recovery from a difficult 2025, President Iris Wu said during an online earnings call on January 28. Full-year revenue is expected to surpass 2025 levels.

The competition among cloud service providers (CSPs) and AI companies for application-specific integrated circuits (ASICs) has entered a new phase with Microsoft officially launching its Maia 200 chip. Industry forecasts indicate that 2027 will be a breakout year when multiple major players ramp up ASIC production simultaneously.