Summary of Conference Call on Taiwan PCB & Laminates Industry Industry Overview - The focus is on the ABF (Ajinomoto Build-up Film) and BT (Bismaleimide Triazine) sectors, which are currently experiencing an upcycle driven by AI demand and T-glass shortages [2][3][12]. Key Points ABF and BT Sector Dynamics - **ABF Consumption and Pricing**: There is an expected increase in ABF consumption driven by AI chips, with a projected growth of +75% year-over-year in 2026E. This is supported by ABF specification migration and CoWoS (Chip-on-Wafer-on-Substrate) capacity ramp-up [4][29]. - **Price Hikes**: Anticipated price hikes for ABF starting in 4Q25E due to T-glass shortages and rising material costs. BT prices are also expected to rise, influenced by memory demand and copper/gold price increases [3][41][42]. T-glass Shortage - **Impact on ABF/BT Sector**: T-glass shortages are expected to intensify in 2H25, affecting both ABF and BT sectors. New suppliers from Taiwan, such as Taiwan Glass Industry and Nan Ya Plastics, are expected to join the supply chain, but significant relief is not anticipated until 2H26E [3][17][25]. - **Supply Chain Challenges**: Current T-glass suppliers are unable to meet demand, leading to tight supply conditions for BT substrates. This situation is exacerbated by rising AI demand, which is consuming T-glass resources [17][24]. Company-Specific Insights - **Investment Recommendations**: - NYPCB has been upgraded to "Buy" with a target price raised to NT$360 from NT$175, driven by demand for high-speed switches and potential ASIC project wins [5][6]. - Unimicron is also favored, with a target price increase to NT$220 from NT$165, supported by improving yields in compute boards [5][6]. - Kinsus remains a "Buy" with a target price raised to NT$160 from NT$115, benefiting from BT price hikes and potential orders from tier-1 ABF players [5][6]. Financial Projections - **Earnings Estimates**: - Kinsus: EPS projected to increase from 3.69 to 5.98 in the next fiscal year. - Nan Ya PCB: EPS expected to rise from 1.89 to 2.30. - Unimicron: EPS forecasted to grow from 2.09 to 3.11 [6][9]. Risks and Considerations - **Market Risks**: Potential FX headwinds could dampen profitability in 2H25E. The balance of supply and demand for ABF is uncertain, with several conditions needing to be met for improvement in 2H26E [5][44]. - **Supply Chain Vulnerabilities**: Companies like AMD and AWS may face challenges if T-glass shortages persist, as they have lower bargaining power compared to larger players like Nvidia and Broadcom [53][56]. Conclusion - The ABF and BT sectors are poised for growth driven by AI demand and T-glass shortages, with significant price hikes expected. Companies like NYPCB, Unimicron, and Kinsus are well-positioned to benefit from these trends, although risks related to supply chain dynamics and market conditions remain [2][5][12].