Gross margins hit 47% while China revenue collapsed 8 points. That's pricing power.
Thesis: The Street is obsessing over the optical weakness in H1 FY2026 caused by the China pull-forward unwinding. They are missing the structural margin expansion. TEL printed 47.1% gross margin because the mix is shifting aggressively to high-value HBM and advanced logic tools. The China revenue is empty calories; the new revenue is nutrient-dense. The H1 dip is the entry point before the H2 acceleration confirms the cycle.
Verdict: LONG — Conviction: HIGH
Catalyst: H2 FY2026 guidance confirmation showing the promised acceleration in non-China AI revenue.
Key Risk: If the 'double-digit' WFE growth for 2026 fails to materialize because AI capex slows, the H2 recovery thesis collapses.
The Tell: When asked about the H1 dip confidence, management cited 'orders and LOIs' explicitly, stating confidence is 'rather high'. Usually, they hedge H1 seasonality. Here, they pointed to the backlog.
Friction Level: MODERATE_FRICTION — Whether the H1 FY2026 dip is a structural reset due to China normalizing, or a temporary air pocket before AI-driven acceleration.
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