AT&S Guidance Upgrade Reinforces ABF Shortage and Price-Hike Thesis, with Clearer Benefits for NYPCB and Kinsus

Overview

The report uses the FY1Q26/27 earnings call of Austrian PCB and substrate manufacturer AT&S as a reference to assess demand, pricing, capacity, and profitability trends in Taiwan's ABF substrate industry. AT&S significantly raised its full-year revenue and EBITDA margin guidance and said rush orders, long-term customer agreements, and demand for AI-related high-end products may bring further upside. On this basis, Goldman Sachs reiterates its view that ABF substrates entered a price-hike cycle in the first half of 2026 and that the future supply-demand gap will continue to widen.

Core views

First, AT&S's guidance upgrade does not simply come from shipment growth, but is jointly driven by new customer agreements, additional orders, and a better product mix, reflecting higher prices and gross margins for AI-related high-end substrates. Second, rush orders typically carry higher pricing; if orders increase further, industry revenue and margins may continue to exceed expectations. Third, customers are locking in long-term capacity through prepayments and incremental investment; Kulim 1.0 and 2.0 are already fully booked, indicating that high-end capacity beyond 2029 is also being competed for in advance. Fourth, Goldman Sachs expects the ABF substrate supply shortage ratio to expand from 8% in 2026 to 34% in 2027 and 51% in 2028, with price increases and utilization improvement supporting earnings improvement over the next several quarters to years. At the stock level, NYPCB and Kinsus have higher exposure to BT and non-long-term-agreement ABF, giving them stronger pricing flexibility; more than 70% of Unimicron Technology's ABF shipments are covered by long-term agreements, and its capacity expansion and execution are weaker than peers, so it is rated Neutral only.

Analysis framework

The report combines peer operating information read-through, industry supply-demand gap forecasts, product mix and gross margin comparisons, and forward P/E valuation. It first extracts AT&S's revenue, margin, order, and capacity expansion guidance; then compares these with the product mix, long-term agreement coverage, utilization, and earnings forecasts of Taiwan ABF manufacturers; finally, it determines 12-month target prices for the three companies based on expected 2028 P/E and historical upcycle valuation ranges.

Methodology notes

• Industry AnalysisPeer Operating Information Read-Through

  Using AT&S's guidance, orders, and capacity expansion information to infer cycle changes for Taiwan ABF suppliers

  AT&S and Taiwan manufacturers are in the same PCB and IC substrate value chain. Its rush orders, long-term agreements, and high-end product margins can serve as leading evidence for industry demand, pricing, and capacity tightness.

• Supply-Demand AnalysisSupply-Demand Gap Model

  Judging the direction of prices, utilization, and margins through the supply shortage ratio

  Goldman Sachs expects the ABF substrate supply shortage ratio to expand from 8% in 2026 to 34% in 2027 and 51% in 2028, and accordingly judges that price increases will accelerate further and industry utilization will continue to rise.

• Profitability AnalysisProduct Mix and Gross Margin Comparison

  Comparing gross margin levels of AI-related substrates, traditional substrates, and different manufacturers

  AI-related substrates have higher prices and gross margins that can exceed 50%; AT&S's FY26/27 implied gross margin guidance is 41%-46%, above Goldman Sachs's current forecasts of 35%, 30%, and 29% for NYPCB, Kinsus, and Unimicron Technology, indicating potential upside to forecasts for Taiwan manufacturers.

• Valuation methodsForward P/E Valuation

  Determining 12-month target prices by applying upcycle P/E multiples to expected 2028 earnings

  The NYPCB target price applies a 21x 2028 P/E, Kinsus applies 16.5x, and Unimicron Technology applies 17.4x; these are respectively 1.5, 1.2, and 2.7 standard deviations above their historical upcycle average valuations.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NYPCB（8046.TW）

  Key beneficiary of the ABF price-hike cycle

  Strengths

  BT substrates and non-long-term-agreement ABF substrates together contribute more than 70% of revenue, providing relatively high pricing flexibility; the high-end ABF revenue share is expected to rise to above 40% by 2027; expected 2026-2028 earnings CAGR is 122%.

  Weaknesses

  As of the first half of 2025, high-end ABF substrate revenue share was still below 20%, and new high-end capacity needs to complete customer qualification.

  Comparison

  Compared with Unimicron Technology, it is less constrained by long-term agreements and can benefit more directly from spot price increases and rush orders.

  Risks

  PC demand recovery slower than expected, ABF substrate price increases slower than expected, and new high-end capacity qualification slower than expected.

• Kinsus（3189.TW）

  Beneficiary of the ABF and BT substrate upcycle

  Strengths

  ABF and BT substrate market share was approximately 10% in 2024, with rising high-end ABF market share; about 36% of 2025 revenue comes from BT substrates, and about 30% of ABF revenue comes from non-long-term-agreement customers, providing strong price-hike flexibility.

  Weaknesses

  Approximately 18% of 2025 revenue comes from contact lens subsidiary Pegavision, and non-substrate businesses may affect overall earnings sensitivity.

  Comparison

  Its improving high-end ABF share and non-long-term-agreement exposure make it a greater beneficiary than Unimicron Technology, which has slower capacity expansion and higher agreement coverage.

  Risks

  PC demand recovery slower than expected, ABF substrate price increases slower than expected, and AI server orders below expectations from the second half of 2026 onward.

• Unimicron Technology（3037.TW）

  Limited beneficiary of industry improvement

  Strengths

  ABF substrate market share was approximately 25% in 2025, giving it significant industry scale; supply-demand improvement helps it pass through raw material costs and improve long-term profitability.

  Weaknesses

  More than 70% of ABF shipments are covered by long-term agreements, limiting price flexibility; execution, production yield, and capacity expansion speed are weaker than peers, and AI-related revenue growth may be slower.

  Comparison

  Although its market share is relatively large, long-term agreements and capacity expansion constraints mean its earnings leverage in this price-hike cycle is lower than NYPCB and Kinsus.

  Risks

  PC demand recovery, ABF upgrade progress, and AI server PCB market share changes could all be faster or slower than expected.

• AT&S（ATS.VI）

  Reference company for Taiwan ABF industry conditions; not covered in the report

  Strengths

  Revenue and margin guidance were significantly raised, Kulim 1.0 and 2.0 are fully booked, customer long-term agreements provide utilization assurance, and it has technologies such as EMIB-(T).

  Weaknesses

  Capacity expansion requires substantial capital and continues to face constraints in fiberglass raw materials such as E-glass and T-glass.

  Comparison

  Its FY26/27 implied gross margin guidance is above Goldman Sachs's current forecasts for the three Taiwan suppliers, providing a reference for upward earnings revisions for Taiwan manufacturers.

  Risks

  Raw material shortages, capacity ramp-up falling short of expectations, new customer project execution, and risks to fulfillment of long-term agreements.

Key data

• AT&S FY26/27 revenue growth guidance45% to 55%Previously 30% to 35%, with the midpoint corresponding to revenue of approximately EUR2.7bn; FY25/26 revenue was EUR1.8bn.
• AT&S FY26/27 EBITDA margin guidance32% to 37%Previously 25% to 29%; FY25/26 actual was 23%.
• AT&S implied gross margin guidance41% to 46%Higher than Goldman Sachs's gross margin forecasts for the three Taiwan ABF manufacturers from the second quarter of 2026 to the first quarter of 2027.
• Taiwan ABF manufacturer gross margin forecastsNYPCB 35%; Kinsus 30%; Unimicron Technology 29%The report believes there is still upside versus AT&S's latest guidance.
• ABF substrate supply shortage ratio2026 8%; 2027 34%; 2028 51%The supply-demand gap is expected to continue widening, supporting upward movement in prices and utilization.
• AT&S Kulim capacity expansion investmentEUR1.5bn to EUR2.0bnPlans to add one production line for Kulim 1.0 in FY28 and advance Kulim 2.0 for a new large customer in FY29.
• AI-related substrate gross marginAbove 50%Higher than the 30%+ for AT&S's substrate business in FY1Q26/27.
• NYPCB earnings growth forecast2026 to 2028 earnings CAGR of 122%Driven by ABF and BT price increases, a higher share of high-end ABF, and tightening industry supply.
• Kinsus earnings growth forecast2026 to 2029 earnings CAGR of approximately 106%Mainly driven by pricing improvement for BT substrates and non-long-term-agreement ABF substrates.
• 12-month target pricesNYPCB NT$2,310; Kinsus NT$1,125; Unimicron Technology NT$1,220The report maintains the original target prices and corresponding ratings.

Impact & implications

AT&S's latest information increases the likelihood of upward revisions to earnings forecasts for Taiwan ABF substrate manufacturers. Supply shortages, rush orders, and customer prepayments that lock in capacity will strengthen suppliers' bargaining power, while demand for AI ASIC servers and high-end switching chips is expected to raise the share of high-value products. NYPCB may be a key beneficiary due to its higher revenue share from BT and non-long-term-agreement ABF and faster pricing pass-through; Kinsus combines a higher high-end ABF share with price-hike flexibility in non-long-term-agreement products; while Unimicron Technology can benefit from industry improvement and raw material cost pass-through, its high long-term agreement coverage, slower capacity expansion, and weaker yields limit its relative upside.

Risks

• PC end demand recovery slower than expected.
• ABF substrate supply-demand gap or price increase magnitude below expectations.
• AI server and high-end switching chip orders below expectations.
• New high-end capacity qualification, capacity expansion, or yield improvement slower than expected.
• Continued shortages of key fiberglass raw materials such as E-glass and T-glass, pushing up costs.
• Long-term supply agreements limiting some manufacturers' ability to raise prices.
• High valuation multiples amplifying share price risk when earnings forecasts are revised down.

What to watch

• Whether AT&S secures more high-priced rush orders and raises revenue or margin guidance again.
• Whether the pace of ABF substrate price increases and industry utilization continues to rise in the second half of 2026.
• Whether supply shortage ratios in 2027 and 2028 evolve toward the forecasts of 34% and 51%.
• Whether customers continue to lock in capacity beyond 2029 through prepayments or incremental investment.
• NYPCB's high-end ABF revenue share and progress on customer qualification for new capacity.
• Kinsus's high-end ABF market share, BT substrate pricing, and changes in AI server orders.
• Unimicron Technology's yield, capacity expansion speed, and AI server PCB market share.
• E-glass and T-glass supply conditions and whether raw material costs can be smoothly passed through.