Taiwan substrate makers exiting BT and shifting to ABF are becoming a new trend

Overview

This report focuses on changes in capacity structure in the Taiwan and Asia IC substrate industry. The central view is that substrate makers are converting part of their BT capacity to ABF capacity in response to rising ABF core-layer demand from AI and chip-size migration. Since ABF margins are clearly higher than BT margins, JPMorgan believes this conversion is overall beneficial to substrate makers' revenue and margins.

Core views

First, BT-to-ABF capacity shifting has already emerged in the supply chain and may be becoming an emerging trend. Second, ABF demand growth is mainly driven by AI-related demand and chip-size migration. Third, BT supply may tighten on a phase basis, requiring leading smartphone SoC/OEMs to adjust procurement. Fourth, if major suppliers cut back or exit BT, second-tier Taiwanese substrate makers, as well as smaller manufacturers in Korea and mainland China, may absorb some spillover orders.

Analysis framework

The report mainly relies on supply-chain research, changes in supplier capacity allocation, recent announcements from substrate makers, and BT price and supply-demand changes to assess industry trends.

Methodology notes

• Industry supply and demand analysisCapacity conversion and margin comparison

  Capacity reallocation from BT to ABF

  By comparing demand drivers, supply dynamics, and margin differences between BT and ABF, the report evaluates the impact on revenue and margins after substrate makers adjust their product mix.

Asset mapping & comparison

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

• Unimicron (3037.TW)

  A Taiwanese substrate company discussed in the report, rated Overweight

  Strengths

  Benefits from ABF demand growth and a higher-margin product mix.

  Weaknesses

  If BT business contracts too quickly, it may face customer procurement adjustments and near-term supply-chain volatility.

  Comparison

  Compared with BT, ABF demand is driven by AI and chip-size migration and carries higher margins.

  Risks

  BT price increases may not persist, ABF capacity conversion may not meet expectations, and customer demand may shift.

• Second-tier Taiwanese substrate makers

  Potential recipients of spillover BT orders

  Strengths

  Could win incremental orders if leading suppliers reduce BT supply.

  Weaknesses

  Scale, customer qualification, and technical capabilities may be weaker than first-tier suppliers.

  Comparison

  Compared with leading suppliers exiting BT, second-tier suppliers may depend more heavily on spillover BT demand.

  Risks

  Spillover order volumes may be limited, price cycles may be short, and competition from smaller Korean and mainland Chinese suppliers may be intense.

Key data

• Unimicron current priceNT$840.00Report disclosed price as of the close on 2026-07-07.
• Unimicron ratingOverweightLabeled as OW in the company coverage list.
• BT price changeUpward for 1-2 quarters after mid-2025The report says the rise was driven by supply tightness, which stemmed from rising memory demand and limited supply growth.
• J.P.Morgan global equity research coverage rating distributionOverweight 53%, Neutral 36%, Underweight 12%Table figures are as of 2026-07-04; percentages may not equal 100% due to rounding.
• JPMS equity research coverage rating distributionOverweight 51%, Neutral 37%, Underweight 12%Table figures are as of 2026-07-04.

Impact & implications

For substrate makers, shifting BT to ABF is expected to improve product mix quality and margins; for smartphone SoC/OEMs, reduced BT supply may create procurement restructuring and some supply disruption; for second-tier suppliers, spillover BT orders may create a phased opportunity.

Risks

• BT supply disruptions may affect procurement stability at leading smartphone SoC/OEMs.
• If BT supply remains tight, another broad wave of large-scale price rises may occur.
• If ABF demand falls short of AI and chip-size migration expectations, the benefits from capacity conversion may be less than expected.
• The pace and scope of suppliers fully exiting BT remain uncertain.
• The valuation approach and security-specific risks should be referenced in the company-specific research reports; current materials do not provide a full target price and valuation model.

What to watch

• Whether Asian substrate makers continue to reduce BT exposure or fully exit BT operations.
• Whether ABF core-layer demand continues to sustain high growth driven by AI and chip-size migration.
• Whether BT prices experience another broad rise.
• The progress of procurement restructuring at leading smartphone SoC/OEMs.
• Whether second-tier Taiwanese, Korean, and mainland Chinese smaller manufacturers are receiving spillover orders.