16 March 2026 Price Target Change Asia Tech Hardware Asia Tech Hardware: model updates across the AI supply chain; Delta remains our top pick Alex Wang, CFA +852 2123 2613 alex.wang@bernsteinsg.com Shirley Yang, CFA +852 2123 2660 shirley.yang@bernsteinsg.com Ethan Xu +852 2123 2634 ethan.xu@bernsteinsg.com YTD2026, tech hardware investors have favored AI plays with price hike narratives (e.g. substrate), or strong new technologies ramps expanding TAM (e.g. CPO). Following 4Q25 results, we updated our model ...

Summary of the China PCB Sector Conference Call Industry Overview - **Sector**: China PCB (Printed Circuit Board) Sector - **Key Focus**: Developments in LPU (Large Processing Unit) and Kyber midplane designs, CCL (Copper Clad Laminate) pricing dynamics, and substrate market trends Key Points PCB Design Developments - Upcoming GTC will highlight updates on LPU and Kyber midplane designs - Two potential PCB solutions for LPU identified: 1. Adopting a design similar to HGX with LPU accelerator cards on a universal baseboard (UBB) 2. Connecting LPU and CPU via a midplane, akin to CPX design - Kyber midplane developments include third round of Blackwell-based 78L MLB sampling, with Rubin Ultra-based solutions potentially exceeding 100 layers - Final design decisions and supplier allocations expected by mid-year, with mass production anticipated in Q4 2026 to H1 2027 - M9+Q glass identified as the most feasible CCL solution for both LPU and Kyber midplane [1][10] CCL Pricing Dynamics - A cost inflation-driven CCL pricing cycle has commenced, with glass fabric being the tightest raw material - High-end low-dk/CTE fabric and commodity E-glass prices have increased by 18% in the first two months of 2026 - Processing fees for copper foil have risen over 15% year-to-date, while resin supply remains relaxed but volatile - Conventional FR4 suppliers have issued price increases of 10-20% to PCB customers, with further adjustments likely - AI-related high-speed CCL pricing remains stable as suppliers prioritize share allocation over cost transfer [2][9] Substrate Market Trends - A-share BT substrate makers have been conservative on pricing, lagging behind regional peers - Expectation for A-share players to catch up on price lifts in Q1 2026, with gross margin upside anticipated from Q2 2026 - Order visibility remains strong into mid-2026 due to sustained memory cycle - ABF demand is improving, but Chinese suppliers have not yet begun mass production for overseas customers [3][18] Company Preferences and Sentiment - Preferred companies include Shengyi Tech (SYT) and Shennan Circuits, which have substrate exposure or existing AI exposure at key customers - Improved sentiment noted for FastPrint, although it is positioned further downstream in the AI supply chain [4] Financial Performance and Forecasts - SYT's Q4 2025 net profit expected between Rmb807-1,007 million, up 120-175% YoY - KBL anticipates 2025 net profit exceeding HK$2.39 billion, up over 80% YoY - CCL entering an upcycle driven by raw material costs and supply tightness, with conventional CCL leading price increases [9][18] Capacity and Investment Trends - Concerns about oversupply in the AI PCB supply chain due to aggressive capacity additions, particularly among PCB suppliers - CAPEX discipline noted among high-end CCL and upstream materials vendors - Projected growth of 66% in China PCB output value and 70% in CCL output value by the end of 2028 from 2025 levels [23][24] Risks and Considerations - Potential risks of high-end PCB oversupply in the next two years are mitigated by: 1. Increased complexity in designs leading to lower production yields 2. Not all announced PCB projects translating to real supply due to qualification challenges [24][26] Conclusion - The China PCB sector is poised for growth driven by advancements in technology and increasing demand for AI-related applications, despite challenges in pricing and capacity management. Key players are expected to benefit from strategic positioning and market dynamics in the coming years [1][2][3][4][9][18][23][24].

Summary of Fastprint (002436.SZ) Management Call Company Overview - **Company Name**: Fastprint (002436.SZ) - **Founded**: 1999 - **Business Focus**: Provides prototype, various types, and low volume PCBs, and IC substrates - **Production Locations**: Mainland China, UK, Hong Kong, and the US, creating an international marketing network [3] Industry Insights PCB and IC Substrate Market - **Growth Outlook**: Management is optimistic about the growth of IC substrates, particularly BT substrates, driven by demand from memory clients [4] - **Pricing Trends**: Continuous rising trend in BT substrate pricing is expected, although there are pricing pressures from upstream materials like copper and gold [4] - **Product Mix**: The company is focusing on upgrading its product mix towards high-end products [4] AI Demand Impact - **AI PCB Growth**: Fastprint aims to increase its revenue exposure to AI PCBs, targeting entry into diversified AI server supply chains, including GPU and AI ASIC servers [10] - **Capacity Expansion**: Plans for capacity expansion in AI PCB production to better capture rising demand [10] - **Layer Count Demand**: Increasing demand for PCBs with more layer counts is anticipated, which presents growth opportunities [10] Key Takeaways 1. **IC Substrate Business**: Positive outlook on growth driven by BT substrates for memory clients, with expectations of rising pricing trends despite upstream pressures [4] 2. **PCB Specification Upgrade**: Management anticipates ongoing upgrades in PCB specifications due to increasing data transmission and processing requirements [5] 3. **AI Demand**: Fastprint is strategically positioning itself to benefit from the rising demand for AI-related PCBs, with plans for capacity expansion to meet this demand [10] Additional Insights - **Modularization of PCB**: Management expects that electronics components such as SiC chips and capacitors will be embedded into PCBs, leading to higher functionality [9] - **ABF Products**: The company has started mass production of ABF products and is considering switching production lines to HDI due to higher technical requirements [4] This summary encapsulates the key points discussed during the management call, highlighting Fastprint's strategic focus on growth in the PCB and IC substrate markets, particularly in relation to AI demand and technological advancements.

Summary of Conference Call Notes on Unimicron and NYPCB Industry Overview - The focus is on the ABF (Ajinomoto Build-up Film) substrate industry, which is experiencing a significant demand increase and pricing hikes due to supply constraints and rising material costs [1][2][4][5]. Company Insights Unimicron - Unimicron's 4Q25 results were discussed, revealing a positive outlook for the ABF substrate market, with expectations for demand to exceed previous estimates [2][3]. - The company reported a utilization rate of 90% for ABF substrates in 1Q26, indicating strong demand [3]. - Unimicron plans to increase ABF substrate prices by approximately 5% QoQ in 1Q26, driven by a projected shortage of ABF substrates [4]. - The company is expanding capacity with plans for the KF2 plant to start mass production in 2H27 and the Yangmei 2nd plant in late 2028/early 2029 [9][14]. - Unimicron's long-term demand visibility is supported by its careful review of customer capacity expansion requests [5]. NYPCB - NYPCB's target price has been raised to NT$750 from NT$655, reflecting a positive demand outlook for ABF substrates [2][24]. - The company is expected to benefit from spillover orders from tier 1 suppliers, with revenue estimates for 2026 and 2027 revised up by 3% and 7%, respectively [19][29]. - NYPCB's earnings are projected to grow significantly, with an expected earnings CAGR of 81% from 2026 to 2028 [31]. Demand and Supply Dynamics - The demand for high-end ABF substrates is expected to increase by 40-50% HoH in 2H26, driven by new AI projects [3]. - The supply-demand gap in the ABF substrate industry is anticipated to widen, with shortages projected at 10% in 2H26, 21% in 2027, and 42% in 2028 [4][10]. - Unimicron's pricing strategy is becoming more favorable as customers are more willing to accept price increases if lead times are met [4]. Financial Projections Unimicron - Earnings estimates for Unimicron have been revised up by 6% for 2026, 7% for 2027, and 13% for 2028, reflecting stronger-than-expected demand [22][27]. - The company’s revenue is projected to reach NT$183.119 billion in 2026 and NT$246.714 billion in 2027 [23]. NYPCB - NYPCB's earnings estimates for 2026 and 2027 have been revised up by less than 1% and 7%, respectively, with a new revenue estimate of NT$72.686 billion for 2026 [19][20]. - The gross margin is expected to improve significantly, reaching 34.1% in 2027 [20]. Risks and Considerations - There are concerns regarding the sustainability of demand and potential conflicts of interest due to Goldman Sachs' business relationships with the companies discussed [6][32][34]. - Unimicron faces challenges due to over 70% of its ABF shipments being under long-term agreements, limiting pricing flexibility [33]. Conclusion - The ABF substrate market is poised for significant growth, with both Unimicron and NYPCB positioned to benefit from rising demand and pricing power. However, potential risks related to capacity expansion and market dynamics should be closely monitored.

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.

Summary of Key Points from Conference Call Industry Overview - **Industry**: ABF substrate and CCL (Copper Clad Laminate) within the Technology sector in the Asia-Pacific region - **Key Drivers**: The demand outlook is primarily driven by advancements in AI technology, which is expected to significantly influence supply and demand dynamics in the substrate market ABF Substrate Supply/Demand Outlook - **Supply/Demand Model Update**: - Expected undersupply of 1% in 2026 and 9% in 2027, revised from previous estimates of 1% and 6% undersupply respectively [2] - Anticipated oversupply of 5% in 2025, down from 6% [11][13] - **Demand Growth**: - Demand for substrates from AI accelerators projected to grow by over 50% CAGR towards 2027, up from approximately 40% [2] - Demand mix for AI accelerators expected to reach 38% in 2026 and 48% in 2027, compared to 25% in 2025 [2] CCL Market Developments - **Expansion Plans**: - Suppliers like EMC and Shengyi are expanding capacity, with Shengyi investing CNY 4.5 billion in Guangdong [3] - EMC is expected to gain market share in TPU, with potential for a 50-60% allocation if volume forecasts are revised upwards [3] - **Revenue Expectations**: - Record-high revenue anticipated for EMC and TUC in Q1 2026, attributed to new capacity and price hikes [3] Company Recommendations - **Buy Ratings**: - Reiterated Buy ratings for Unimicron, NYPCB, EMC, and TUC due to their higher exposure to AI server demand [4] - **Underperform Ratings**: - Underperform ratings for Kinsus and Shengyi due to stretched valuations [4] - **Price Objective Changes**: - Price objectives raised for Unimicron (NT$450), EMC (NT$2300), TUC (NT$665), and Shengyi (CNY 52) [8] Financial Adjustments - **Earnings Estimates**: - Unimicron's 2027E EPS raised by 10% reflecting a stronger pricing outlook and tighter supply/demand situation [23] - EMC's operating profit estimates for 2026 and 2027 raised by 2% and 5% respectively due to stronger revenue growth assumptions [27] Capacity Breakdown - **Market Leaders**: - Ibiden (22%) and Unimicron (18%) are the leading suppliers in terms of capacity for ABF substrates [21][22] Important Upcoming Events - **Watch for Updates**: - Commentary from Ibiden and AT&S on February 3, 2026, and Toppan on February 13, 2026, will be significant following upcoming results releases [2] Conclusion - The ABF substrate and CCL markets are poised for growth driven by AI advancements, with specific companies positioned favorably for this trend. Adjustments in earnings estimates reflect a positive outlook, while capacity expansions indicate a proactive approach to meet increasing demand.

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 Conference Call Notes Industry Overview - The focus is on the Taiwan PCB (Printed Circuit Board), CCL (Copper Clad Laminate), and substrate industry, with expectations of solid demand driven by AI applications in 2026 and beyond [1][2]. Key Takeaways 1. **Positive Market Sentiment**: Investors remain optimistic about the PCB/CCL/substrate industry, anticipating improved pricing and shipment conditions [1]. 2. **Earnings Estimates Adjustments**: Earnings estimates for companies like EMC, TUC, and UMC have been fine-tuned upwards by up to 15% to reflect the positive outlook and gains from ASIC AI [1]. 3. **Market Share Gains**: Taiwan suppliers are expected to gain market share in ASIC PCB/CCL from competitors in mainland China and Korea [2][3]. 4. **Demand from Major Players**: Increased demand from companies like NVIDIA (NVDA) for AI server PCB/CCL is anticipated, with EMC expected to dominate high-end products [2][3]. 5. **Raw Material Supply Risks**: There are increasing supply risks for high-end copper foil and glass fiber, leading to expectations of higher pricing across all PCB/CCL/substrate products [2][13]. Company-Specific Insights EMC (Electronics Manufacturing Company) - **Market Position**: Expected to hold a 70% market share in CCL for AWS Trainium 3 servers by 2026, with a significant ASP increase anticipated due to M9 grade CCL adoption [3][11]. - **Earnings Revisions**: 2026E/2027E earnings estimates revised up by 2%/3% due to earlier-than-expected M9 grade CCL adoption, leading to a 3x+ higher ASP compared to M8 grade [23][24]. - **Target Price Revision**: Target price raised to NT$1,800 from NT$1,695, maintaining a Buy rating [26]. TUC (Taiwan United Corporation) - **Earnings Outlook**: Earnings estimates for 2025E-2027E revised up by 1-3% due to better-than-expected market share in ASIC AI projects [29]. - **Target Price Revision**: Target price increased to NT$540 from NT$470, reflecting a better pricing environment [31]. Unimicron - **Earnings Revisions**: 2026E/2027E earnings estimates revised up by 2%/2% due to increasing penetration of CPO substrate [34]. - **Target Price Revision**: Target price raised to NT$170 from NT$148.84, maintaining a Neutral rating [36]. Additional Insights - **Material Shortages**: Shortages in both high-end and mid- to low-end PCB materials are expected to lead to increased pricing, with lead times for low-end E glass now exceeding 10 weeks [13][14][15]. - **ABF/BT Substrate Pricing**: Positive pricing outlook for ABF substrates, with a projected 30-40% supply gap in 2026, leading to potential shortages in 2027 [17][22]. - **Competition Dynamics**: Taiwan PCB/CCL players are expected to maintain leadership in the ASIC AI server supply chain, while second-tier suppliers may struggle to meet quality standards in the short term [9]. Conclusion The Taiwan PCB/CCL/substrate industry is poised for significant growth driven by AI demand, with key players like EMC and TUC expected to benefit from improved market conditions and pricing dynamics. The ongoing material shortages present both challenges and opportunities for pricing adjustments across the sector.

Summary of Conference Call Notes Industry Overview - **Industry**: Technology Hardware - Asia-Pacific, specifically focusing on ABF substrate and PCB markets - **Key Drivers**: Continued demand from datacenter investments, particularly in AI and compute sectors Core Insights 1. **Demand Growth**: - AI server demand is projected to grow by over 25% from CY25 to CY27, significantly impacting the ABF substrate market [1][2] - Server accelerators and GPUs are expected to be the main growth drivers, with their mix in demand projected at 32% in 2025, 36% in 2026, and 43% in 2027 [2][15] 2. **Supply and Demand Dynamics**: - An oversupply of 6% is expected in 2025, followed by undersupply of 1% in 2026 and 6% in 2027 [2][10] - Ibiden aims to increase its capacity for GPU package substrates to 1.4x by FY3/26 and 2.3x by FY3/28 [2] 3. **Company Ratings and Price Objectives**: - Price objectives for Unimicron, NYPCB, and Kinsus have been raised to NT$150, NT$130, and NT$110 respectively, while maintaining an Underperform rating due to competitive pressures [1][9] - Ibiden maintains a Buy rating due to its technological strength in the high-end market [1] 4. **Competitive Landscape**: - Taiwan companies are losing market share to Chinese competitors due to faster production ramp-up and aggressive capacity expansion [4] - Unimicron's share loss in NVIDIA is highlighted as a significant concern [4] 5. **Material Supply Insights**: - Ibiden does not foresee major supply issues into FY3/26 and plans to diversify supply in FY3/27 [3] - Non-NVIDIA customers are adapting to substrate supply from non-Japanese vendors [3] Financial Projections 1. **Earnings Estimates**: - Unimicron's 2026/27 EPS estimates have been raised by 9-10% and 2-8% respectively, reflecting a better margin outlook due to price hikes [1][22] - The gross margin for Unimicron is expected to improve to 19.9% by 2027, up from 18.7% [22] 2. **Comparison with Consensus**: - BofA's estimates for Unimicron are 2% to 4% below consensus for 2026 and 2027 operating profit due to conservative gross margin assumptions [24][25] Additional Insights - **Technological Advancements**: The report emphasizes the importance of technological strength in maintaining competitive advantage in the high-end substrate market [1] - **Market Adaptation**: Non-NVIDIA customers are increasingly reliant on alternative supply sources, indicating a shift in the supply chain dynamics [3] This summary encapsulates the key points from the conference call, focusing on the industry dynamics, company performance, and financial projections.