25 February 2026 | 11:24PM CST Equity Research TAIWAN ABF Substrate pricing hike accelerating, with sustainable demand outlook in 2027-30; raise TP by ~15% for NYPCB (Buy, on CL) /Unimicron (Neutral) Unimicron and NYPCB announced their 4Q25 results yesterday (see here), and we joined Unimicron's results meeting today (Feb 25th) and did a supply chain check on the overall substrate industry. Our impression from the meeting and our supply chain checks is positive; more specifically, the market outlook is even ...

Flash | 24 Feb 2026 08:04:03 ET │ 12 pages Taiwan PCB & Laminates ABF/BT sector: Unimicron's and NYPCB's 4Q25 results roughly in line with the consensus CITI'S TAKE Both names released 4Q25 results on Feb 24th after-market. Both 4Q25 GMs were roughly in line with the consensus (driven by better product mix and FX tailwinds, in our view), while OPEX rate came a bit higher likely due to higher employee bonus or R&D for future product launches. Overall, 4Q25 earnings beat were majorly attributed to FX gains or ...

February 22, 2026 09:00 PM GMT Global Technology ABF Substrates – Upgrading Unimicron and NYPCB to OW An AI-driven ABF substrate up-cycle will last to the end of the decade, driving growth to accelerate and margins to expand. The stocks have started to move, but this cycle will be much stronger and more sustainable – fueling multiple expansion. Key Takeaways Based on the fundamental backdrop above, these are the stock implications – it's not too late. We upgrade Unimicron to OW (from EW) and NYPCB to OW (fr ...

Summary of Key Points from the Conference Call Industry Overview - The PCB/substrate market is experiencing significant growth driven by increased content in AI servers and anticipated ASP hikes in 2026 [2][12] - The supply of ABF substrates is concentrated in Taiwan, Korea, and Japan, with China playing a crucial role in MLPCB and HDI production [3] Company Dynamics Unimicron - Forecasts a 25% revenue and 117% EPS CAGR from 2025-2027, with an OPM expected to reach 16% due to strong demand for high-end ABF substrates [6] - Current stock price is NT$347.50 with a target price of NT$270.00, indicating a potential upside of ~15% [10] - Anticipates improved utilization rates and ASP growth due to T-glass shortages, with revenue expected to grow by ~30% in 2026 [70][83] Ibiden - Strong outlook due to Nvidia's GPU ramp-up and Intel's server CPU demand, with a price target set at ¥9,200 [7] - Plans to increase capex to ¥500 billion over the next three years, focusing on advanced technology for high ASP products [47] Ajinomoto - Holds a 95% market share in ABF Film, generating a 54% operating profit margin, with expectations for continued growth driven by AI demand [8] - Revenue growth forecasted at 40%+ through 2027 [8] Financial Performance - AI-related products are currently enjoying elevated margins, with gross margin expansions ranging from ~1ppt to 14ppts across various companies [5][58] - Companies like EMC and WUS are generating around 20% ROIC, the highest in the supply chain [5] Market Trends - The PCB market is capital-intensive, requiring continuous capacity expansion to meet cyclical demand [45] - Companies are ramping up investments for capacity expansion, with VGT expected to see a 7.8x increase in capex in 2026 [45] - The demand for high-end materials, particularly T-glass, is expected to remain tight through 2026, impacting pricing and margins [48] Investment Implications - Unimicron, Ajinomoto, and Ibiden are rated as outperformers, with respective price targets indicating significant upside potential [10][11] - The overall PCB market is projected to see revenue increases in 2025-2027, particularly for companies with higher AI and server exposure [38] Additional Insights - The complexity of PCBs is increasing, which supports a double-digit market outlook [4] - New product cycles, including midplane and backplane MLPCBs, are expected to partially offset competitive pressures on margins [5][58] - The geopolitical sensitivity of PCBs is lower compared to IC substrates, as they are sub-components shipped to ODMs for assembly [3] This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the PCB/substrate industry and the performance outlook for major companies involved.

Summary of Conference Call on ABF Substrate Industry Industry Overview - The conference call focuses on the ABF (Ajinomoto Build-up Film) substrate industry, highlighting a significant supply-demand imbalance expected to emerge from 2H26 through 2028, with shortage ratios projected at 10% in 2H26, expanding to 21% in 2027 and 42% in 2028 [1][9][12]. Key Insights and Arguments - **Supply Tightness**: The supply tightness for ABF substrates is expected to worsen monthly, with a projected shortage ratio of 10% in 2H26, which could escalate to 21% in 2027 and 42% in 2028. This trend mirrors the supply shortage experienced in 2020, which saw pricing hikes of 20-30% year-over-year [1][3]. - **Demand Drivers**: The demand for ABF substrates is anticipated to grow significantly, driven by: - AI server demand, which is expected to grow by over 70% from 2025 to 2028 [9]. - General server CPU shipments projected to increase by approximately 40% during the same period [9]. - The overall ABF Total Addressable Market (TAM) is expected to grow at a CAGR of 33% from 2025 to 2028 [8][9]. - **Capacity Expansion**: Limited capacity expansion is expected from ABF substrate suppliers until at least 2H27 due to conservative expansion plans and ongoing material shortages, particularly T-glass [3][36]. Kinsus is the only supplier with announced capacity expansion plans, aiming for a 25% increase in 2027 [57]. - **Pricing Outlook**: A pricing increase of 3-5% quarter-over-quarter is expected in 1Q26, with further increases of approximately 10% per quarter for the remainder of 2026, driven by the anticipated supply shortages [7][12]. Company-Specific Insights - **Kinsus**: - Upgraded to a Buy rating with a target price raised to NT$370 from NT$125.68, reflecting a strong earnings outlook driven by capacity expansion and increased market share in AI-related substrates [2][57]. - Expected to capture a growing share of the AI substrate market, with projections of 5% market share in 2025 increasing to 30% in subsequent years [57]. - **NYPCB**: - Maintained a Buy rating with a target price increase to NT$655 from NT$340, benefiting from favorable pricing conditions in the BT substrate market [2][49]. - **Unimicron**: - Target price raised to NT$370 from NT$170, but maintained a Neutral rating due to limited upside potential compared to peers [2][52]. Additional Important Points - **Material Shortages**: The ongoing T-glass shortage is exacerbating the supply issues for ABF substrates and delaying capital expenditure plans across the industry [4][36]. - **Longer Lead Times**: Customers are experiencing longer order lead times for ABF substrates, indicating a tightening supply despite suppliers not operating at full capacity [10]. - **Market Dynamics**: The current market conditions are reminiscent of the early stages of the last upcycle, with key materials in short supply for over six months [10]. - **Risks**: Potential risks include slower-than-expected recovery in PC and smartphone demand, which could impact Kinsus's revenue and profit outlook [65][67]. This summary encapsulates the critical insights from the conference call regarding the ABF substrate industry, highlighting the expected supply-demand dynamics, pricing outlook, and company-specific developments.

Accessible version Technology - Asia-Pacific (H/A) ABF substrate & CCL: supply/demand outlook remains benign driven by AI Price Objective Change ABF: stronger AI overtakes the weakness in non-AI We update the ABF substrate S/D model, and now expect 1%/9% (was 1%/6%) under- supply in 2026/27, following a 5% (was 6%) oversupply in 2027E. Key changes include: 1) a stronger demand in regular server from late-2025; 2) a softer outlook in PC/gaming due to the impact from memory shortage and price hike; and 3) the ...

Summary of Asia Tech Hardware Conference Call Industry Overview - The global PCB market is valued at over **US$80 billion**, with AI-driven demand expected to grow at a **double-digit** rate this year [2][20] - The PCB market consists of various products, with **rigid PCBs** accounting for roughly half, while the remainder includes **flexible printed circuits (FPC)**, **high-density interconnects (HDI)**, and **IC substrates** [20] - The consumer sector represents **one-third** of the PCB market, while the server/storage sector is projected to grow from **18%** to **22%** by 2029, with an **11% CAGR** [20][24] Key Market Trends - **MLPCB (Multi-layer PCB)** is increasingly used in AI servers, with layer counts rising from **16 layers** to over **40 layers** in advanced applications [2][31] - **HDI demand** is accelerating, with its market share increasing to around **20%** of the PCB market, driven by the need for higher thermal robustness in AI servers [3][36] - The **ABF substrate** market is growing due to rising package sizes and manufacturing complexity in AI accelerators, with expectations of price increases due to material shortages [5][6] Competitive Landscape - **WUS** is the primary supplier of MLPCB for Nvidia's GB300 rack, followed by **Unimicron** and **Victory Giant (VGT)** [2] - **Victory Giant** has become the largest HDI supplier for Nvidia's GB200/GB300, thanks to investments in new facilities and equipment [37] - **Ajinomoto** is a leading supplier of Build Up Film for ABF substrates, experiencing mid-20% top-line growth [6] Material Insights - **CCL (Copper-Clad Laminate)** constitutes about **30%** of PCB costs, with a shift from **M6** to **M8** and plans to move to **M8.5/M9** next year [4] - The demand for **low-CTE glass fiber (T-glass)** is increasing, with market leader **Nittobo** achieving a CTE of **2.8 x10^-6/℃** [6] - The supply of high-end materials is tight, benefiting companies capable of producing advanced materials [45] Financial Performance and Projections - **Unimicron** is rated **Outperform** with a price target of **NT$270.00** [9] - **Ajinomoto** is rated **Outperform** with a price target of **JPY5,000.00** [10] - **Ibiden** is rated **Outperform** with a price target of **JPY8,250.00** [11] Investment Implications - The PCB market is expected to maintain a **mid-single-digit growth** rate over the next two years, with potential upside as demand for AI applications increases [20] - The overall substrate mix in the PCB market is projected to grow to approximately **20%** by 2027 [63] Additional Insights - The PCB market is fragmented, with the top three players in the IC substrate market holding about **35%** of the share [64] - The complexity of AI accelerators is increasing, driving demand for high-end ABF substrates [72] - The industry is exploring new materials like **glass-core substrates**, which could significantly enhance performance but face challenges in commercialization [73][77]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the U.S. Semiconductors industry, particularly the AI value chain and its implications for various companies involved in hardware and semiconductor verticals [1][2] Core Insights and Arguments - A top-down framework is constructed to dimension the AI upside across sectors from 2025 to 2027, aimed at simplifying comparisons across different companies [2][19] - The analysis updates the breakdown of data center capital expenditures (capex) to reflect rising prices for DRAM and NAND, estimating an increase of approximately $70,000 per rack for server DRAM and $35,000 per rack for storage costs, raising all-in capex from $5.9 million to $6.0 million per rack [3][21] - Incremental revenue estimates per gigawatt (GW) of capacity are derived from market share estimates across nine key hardware/semiconductor verticals, with a regression analysis used to estimate margins on incremental AI revenue [4][23] Company-Specific Insights - **Unimicron and Ibiden** are highlighted as having significant upside potential, particularly in ABF substrate and HDI, with Unimicron expected to benefit from large opportunities [5][27] - **Nvidia (NVDA)** and **Broadcom (AVGO)** are identified as industry favorites, with Nvidia's AI substrate upgrade expected to double content generation [5][27] - **Intel (INTC)** and **Cisco** are noted to have lower exposure to AI opportunities compared to their market prominence, with Intel facing challenges in capturing market share [6][28][31] - **Delta Electronics** is rated as outperforming, with a price target of NT$1,300, benefiting from increased electrical content in AI data centers [13][30] - **MediaTek** is expected to see growth from the TPU ramp, while memory/storage players like **SanDisk**, **Samsung**, **Micron**, **SK Hynix**, and **KIOXIA** are projected to benefit from rapid memory price surges [6][30] Financial Metrics and Valuations - The report includes a detailed ticker table with performance metrics for various companies, including EPS and adjusted P/E ratios, indicating that Unimicron has room for growth while Intel appears expensive relative to its AI opportunities [9][29] - **Nvidia** is rated outperform with a target price of $275, while **AMD** is rated market perform with a target of $225, reflecting high expectations for AI growth [11][12] Additional Considerations - The analysis acknowledges that estimates of AI upside are imprecise and that valuations are influenced by various non-AI factors, suggesting that investors should consider their own assumptions for more accurate estimates [20][26] - The report emphasizes the importance of understanding the nuances of each company's position within the AI landscape, including their ability to adapt to evolving data center requirements [20][30] Conclusion - The semiconductor industry is poised for significant growth driven by AI, with specific companies like Unimicron and Ibiden positioned to capture substantial market share. However, challenges remain for established players like Intel, highlighting the dynamic nature of the sector and the need for careful analysis of individual company prospects [5][6][27][30]

Core Viewpoint - China is entering the semiconductor glass substrate market, intensifying competition with established players from South Korea, Taiwan, Japan, and the United States [1][2] Group 1: Market Entry and Competition - Visionox, one of China's leading display companies, plans to invest in glass substrates this year, having built a supply chain since last year [1] - AKM Midville, a top 20 global PCB company, is preparing to supply glass substrates and has established a trial production line [1] - Uncheon Semiconductor is also developing its supply chain for semiconductor glass substrates, leveraging its technical expertise [1] Group 2: Technological Adoption and Growth Potential - Glass substrates are gaining attention as they replace traditional plastic materials, enhancing semiconductor packaging performance, particularly in AI semiconductor applications [2] - BOE, a leading Chinese display manufacturer, has launched a semiconductor glass substrate business to leverage its expertise in the display industry [2] - Industry insiders indicate that companies are viewing glass substrates as future growth engines, planning significant investments based on their knowledge in the glass sector [2] Group 3: Competitive Advantages - Chinese companies are expected to leverage their financial strength and rapid response capabilities to gain market advantages [3] - They are actively addressing technical challenges, such as micro-cracks in glass substrates, which may lead to cost advantages in future commercialization [3]

Summary of Global PCB and CCL Market for AI Servers Industry Overview - The global PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) market for AI servers is projected to reach **US$27 billion** and **US$19 billion** respectively by **2027E**, up from **US$17 billion** and **US$8 billion** in previous estimates, indicating a **140%** and **178% CAGR** from **2025-2027E** [2][8][40]. Key Drivers of Growth 1. **Demand Drivers**: - The demand is primarily driven by the rise of high-end AI servers, including GPU and ASIC servers, which require advanced PCBs and CCLs [1][40]. - High-end products such as **30+ layer multilayer PCBs**, **6L+ HDI**, and **M9+ CCL** are expected to account for **16%**, **23%**, and **14%** of total shipments for AI server applications by **2027E** [1][42]. 2. **Specification Upgrades**: - The transition to next-generation high-end AI servers is expected to significantly increase the value TAM (Total Addressable Market) [1][42]. - The adoption of **M9 materials** and **6L HDI** is anticipated to enhance product value and performance [42]. 3. **Capex Growth**: - Capex for PCB suppliers is expected to grow by **24%** YoY in **2025**, **23%** in **2026E**, and **15%** in **2027E**; for CCL suppliers, growth is projected at **38%**, **22%**, and **7%** respectively [1][57]. 4. **Utilization Rates**: - Utilization rates for PCB and CCL are expected to remain high despite capacity expansions, driven by the ramp-up of AI infrastructure [1][41]. Market Dynamics - **Shipment Growth**: - PCB shipments are projected to increase by **69% CAGR** to **2.5 million square meters** by **2027E**, while CCL shipments are expected to grow by **72% CAGR** to **78 million sheets** [2][41]. - **Average Selling Price (ASP) Increases**: - The ASP of AI server PCBs is expected to grow at **42% CAGR**, reaching **US$11,062** per square meter by **2027E**; CCL ASP is projected to increase by **62% CAGR** to **US$239** per sheet [43][40]. Gross Margins and Profitability - Major PCB and CCL companies are expected to see higher gross margins due to increasing sales of high-margin AI server products, tight supply, and rapid transitions to newer generations [44][40]. Investment Recommendations - Companies recommended for investment include **Shennan (002916.SZ)**, **GCE (2368.TW)**, **EMC (2383.TW)**, and **TUC (6274.TWO)**, which are positioned to benefit from the growth in the AI server PCB and CCL market [3]. Conclusion - The global PCB and CCL market for AI servers is poised for robust growth driven by technological advancements, rising demand, and significant increases in average selling prices. This presents a compelling investment opportunity in the sector, particularly for companies that are adapting to the evolving specifications and demands of AI infrastructure.