Nvidia(US:NVDA)2025-10-22 02:12Summary of Conference Call Notes Industry Overview - Industry: ABF (Ajinomoto Build-up Film) and BT (Bismaleimide Triazine) substrates - Outlook: The overall supply-demand outlook for ABF substrates is improving, with expectations of a return to balance by mid-2026, leading to sustainable pricing for suppliers post-2026 [1][3][10] Key Points Demand and Growth Projections - AI Server Applications: Demand for high-end ABF substrates is primarily driven by AI server applications, projected to account for 18% in 2025, 21% in 2026, and 26% in 2027 of the overall Total Addressable Market (TAM) [2][10][18] - TAM Growth: The ABF substrate TAM is expected to grow at a CAGR of 24% from 2025 to 2027 [3][10][16] - Capacity Growth: Industry capacity growth is forecasted to slow to 11% YoY from 2025 to 2027, down from 17% CAGR from 2020 to 2024 [3][10] Pricing Outlook - Price Increases: ABF and BT substrate prices are expected to rise by 5-10% each quarter in 2026 due to supply shortages and strong demand [4][31][35] - BT Substrate Pricing: A significant price increase of 30-45% has been observed since July, with further increases anticipated [4][31] - Material Shortages: Shortages of key production materials are expected to restrict ABF substrate suppliers' utilization rates in 2026, leading to a high order backlog ratio in early 2027 [11][12] Company-Specific Insights - NYPCB: Maintained a Buy rating with a revised 12-month target price of NT$330, reflecting a positive outlook due to flexible pricing strategies [9][68] - Kinsus: Expected to outperform due to high exposure to BT substrates, with a target price increase to NT$125 [8][63][68] - Unimicron: Anticipated to underperform due to weak performance in the AI HDI market, with a target price adjustment to NT$150 [8][9][68] Earnings Revisions - NYPCB: 2025E earnings revised down by 1% due to rising costs, but 2026/27E earnings revised up by 6%/10% due to better pricing outlook [59][60] - Kinsus: 2025E earnings revised down by 2%, but 2026/27E earnings revised up by 12%/17% [63][64] - Unimicron: 2025E earnings revised down by 7%, with 2026/27E earnings revised up by 3%/15% [66][67] Additional Insights - Networking Demand: Anticipated surge in networking-related demand, projected to grow at a CAGR of ~150% from 2024 to 2027, driven by increased data traffic in AI datacenters [19][21] - Supply Constraints: Expected capacity constraints from 2027, with no new major capacity expansions announced by Japanese and Taiwanese suppliers [22][30] Conclusion The ABF and BT substrate markets are poised for significant growth driven by AI applications and networking demands, with favorable pricing dynamics expected to support supplier margins. Companies like NYPCB and Kinsus are well-positioned to capitalize on these trends, while Unimicron faces challenges in specific market segments.