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 ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Taiwan PCB & Laminates, specifically focusing on the ABF (Ajinomoto Build-up Film) and BT (Bismaleimide Triazine) sectors - **Context**: The conference call discusses the recent price adjustments in the ABF CCL (Copper Clad Laminates) and Prepreg sectors announced by Resonac Core Insights - **Price Increase Announcement**: Resonac announced a 30% price increase for all CCLs and prepregs, effective from March 1, 2026, primarily due to rising costs of T glass and other raw materials like copper foil [1] - **Market Implications**: The price increase indicates a server shortage in T glass, suggesting strong demand from AI-related chips with larger body sizes [1] - **Cost Pass-Through**: Downstream ABF substrate manufacturers are expected to pass through these costs and potentially earn premiums due to robust demand [1] - **Future Price Trends**: Anticipation of further price increases in BT CCL in upcoming quarters due to market tightness [1] - **Sector Tightness**: Observations of tightness in the ABF/BT sector, with expectations that more fabless companies may be affected by a widespread substrate shortage in the near future [1] - **Outlook**: The overall sentiment remains bullish on the ABF/BT sector, indicating positive growth prospects [1] Additional Important Points - **Raw Material Costs**: The price adjustments reflect significant increases in raw material costs, particularly T glass, which is critical for the production of ABF substrates [1] - **Demand Drivers**: The demand for AI-related chips is a key driver for the current market dynamics, influencing both pricing and production strategies in the sector [1] - **Potential Risks**: While the outlook is positive, the sector may face risks related to supply chain disruptions and fluctuations in raw material availability [1]

Summary of Taiwan PCB & Laminates Conference Call Industry Overview - The focus is on the copper clad laminate (CCL) sector, which is expected to see unit and average selling price (ASP) growth in 2026E [1] - The recent share price correction in the sector is viewed as healthy, as initial expectations for M9-grade CCL adoption were overly optimistic [1][3] - AI server production is anticipated to ramp up more aggressively in 2026 compared to 2025, driven by the launch of more AI ASICs [1][2] Core Insights - **AI Demand and Production Bottlenecks**: Despite concerns about an AI bubble, demand for AI servers is expected to remain strong in 2026 due to unresolved production bottlenecks in the AI supply chain [2][11] - **ASP Growth Drivers**: The CCL sector is expected to benefit from spec migration and price hikes on low-end products, with multiple favorable ASP trends anticipated from 2026E onward [3][31] - **Southeast Asia Capacity Expansion**: While there is ongoing capacity expansion in Southeast Asia (SEA), production efficiency is likely lower than expected, leading to a preference for Chinese capacity in the short term [4][11] Company-Specific Insights - **Initiation of Coverage**: Coverage has been initiated on EMC and TUC with target prices set at NT$2,100 and NT$600, respectively, reflecting strong growth potential in high-end CCL for AI applications [1] - **EMC and TUC Positioning**: EMC is recognized as a leading player in high-end CCL for AI GPU/ASIC, while TUC is noted for its strength in high-end networking applications [1][27] Market Dynamics - **AI as a Growth Driver**: AI-driven server and networking demand is projected to underpin structural growth in the PCB industry, with server and data storage PCB demand expected to grow at an ~11% CAGR from 2025 to 2029 [14][15] - **Material Shortages**: Key materials such as low dielectric constant (Dk) glass fiber and high-end HVLP copper foil are in significant shortage, impacting the competitive landscape of the CCL industry [32][61] Risks and Considerations - **Investment Risks**: Key risks include slower-than-expected AI server demand and challenges in CCL upgrades [4] - **Supply Chain Challenges**: The transition to higher-grade materials like HVLP4 copper foil may lead to supply bottlenecks, as upgrading production lines can take 1-2 years [62][63] Conclusion - The CCL sector is poised for growth driven by AI demand, with specific companies like EMC and TUC positioned to capitalize on this trend. However, challenges such as material shortages and production inefficiencies in SEA could impact overall market dynamics.