Asia semiconductor supply chain: UBS sees an expanding AI-led semiconductor upcycle across leading-edge foundry, advanced packaging and silicon wafers.

Overview

UBS presents a positive update on the Asia semiconductor supply chain. Its central argument is that AI-related demand is accelerating leading-edge foundry investment and advanced-packaging activity, creating spillover opportunities in ASIC design, silicon capacitors and wafers through 2028-29.

Core views

UBS argues that TSMC is accelerating its leading-edge capacity build-out. It expects A14 tool move-in to begin at Fab 20 in Baoshan in H2 2026, while expansion at Fab 25 in Central Taiwan Science Park is being pulled forward to support larger-scale mass production in 2028. UBS estimates A14 capacity may reach 60kwpm by end-2028, above the 30-40kwpm installed capacity that N2 had at the same stage. In its comparison of advanced-node roadmaps, Intel targets high-volume 14A manufacturing in 2028, while Samsung Foundry appears to be delaying SF1.4 mass production to 2029 because of yield challenges. UBS raises its TSMC capex forecasts for 2027E and 2028E to US$90bn and US$105bn, respectively, from US$80bn and US$95bn, reflecting broader N3/N2 expansion and a faster A14 ramp supported by cloud-AI demand and ongoing smartphone and PC migration. On MediaTek, UBS is increasingly positive on TPU v9 execution using EMIB-T. The report cites improving substrate yield at Ibiden and growing support from Unimicron and Shinko for TPU v9 volumes above 2mn units in 2028. It believes MediaTek may also explore CoWoS alongside EMIB-T for stronger TPU v9 demand in 2029, although it stresses that this remains early stage. UBS further identifies potential new ASIC projects, including SpaceX's Dojo3 and Tesla's AI6, which together could offer up to US$10-15bn of revenue opportunity. The report says the market underappreciates MediaTek's strategic role in Google TPU and upside from new ASICs. UBS's base-case forecast shows Google's TPU sales increasing from US$2,113mn in 2026E to US$18,000mn in 2027E, US$43,500mn in 2028E, US$52,500mn in 2029E and US$60,000mn in 2030E; corresponding estimated EPS contribution to MediaTek rises from NT$8.1 to NT$114.4, NT$291.4, NT$351.7 and NT$402.0. The report sees silicon capacitors becoming a critical advanced-packaging component as AI/HPC packages grow larger and consume more power, making power integrity a bottleneck. While SiCaps initially sat mainly in TSMC's CoWoS/interposer ecosystem, UBS expects the opportunity to broaden through Intel EMIB and OSAT expansion, including ASE. It estimates potential non-TSMC SiCap demand of 40-50kwpm in 2028-29. UBS identifies PSMC, already qualified with Intel and shipping products, and UMC from late 2028-29 as potential beneficiaries; both are described as working closely with AP Memory. SEMCO has also announced plans to expand SiCap supply for Intel EMIB. UBS believes the EMIB-T substrate yield learning curve in 2027-28 will further amplify near-term SiCap demand. Finally, UBS maintains a positive view on the wafer cycle. Taiwan press reports indicate that WaferWorks, which UBS does not cover, may be negotiating a second 8-inch wafer price increase after an approximately 10% rise for selected 6-inch and 8-inch customers announced in Q2 and effective in H2 2026. UBS's supply-demand analysis argues that meaningful price increases are needed to prompt new industry capacity expansion and resolve tight supply by 2028E. It forecasts price hikes beginning in H2 2026 and potentially exceeding 20% year-on-year on a like-for-like basis in 2027-28E.

Analysis framework

UBS combines recent industry feedback with supply-demand analysis, technology-roadmap comparisons and company estimates. It links AI compute demand to foundry capex, advanced-packaging requirements, component demand and wafer pricing, then uses forecasts for MediaTek's TPU business and comparative valuation tables to frame the relevant equity exposures.

Methodology notes

• Industry AnalysisSupply-demand framework

  Wafer supply-demand analysis

  UBS assesses wafer capacity, tight supply and the price increases it believes are needed to incentivize expansion and rebalance the market by 2028.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  AI-driven semiconductor supply-chain transmission

  The report traces cloud-AI demand through leading-edge foundry investment, advanced packaging, silicon capacitors and wafer demand.

Asset mapping & comparison

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

• MediaTek (2454.TW)

  UBS sees Google TPU execution and potential new ASIC projects as important growth drivers.

  Strengths

  Improving EMIB-T execution, expected TPU v9 volume support and potential participation in SpaceX Dojo3 and Tesla AI6.

  Weaknesses

  CoWoS participation for 2029 demand remains early stage.

  Risks

  TPU v9 substrate yields remain on a learning curve in 2027-28.

• ASE (3711.TW)

  Advanced-packaging expansion is described as broadening the silicon-capacitor opportunity beyond TSMC.

  Strengths

  Potential exposure to broader OSAT advanced-packaging demand.

  Comparison

  Part of the non-TSMC advanced-packaging ecosystem alongside Intel EMIB.

• GlobalWafers (6488.TWO)

  UBS's positive wafer-cycle view is supported by expected price increases and tight supply through 2028E.

  Strengths

  Potential beneficiary of a wafer-price upcycle.

  Comparison

  The report references GlobalWafers' historical 12-inch blended ASP trend.

  Risks

  The expected pricing recovery depends on supply-demand conditions and capacity expansion.

Key data

• TSMC A14 capacity60kwpm by end-2028EUBS estimate; compared with N2 installed capacity of 30-40kwpm at the same stage.
• TSMC capexUS$90bn in 2027E; US$105bn in 2028ERaised from US$80bn and US$95bn, respectively.
• MediaTek new ASIC opportunityUp to US$10-15bnPotential revenue opportunity from projects including SpaceX Dojo3 and Tesla AI6.
• Non-TSMC silicon-capacitor demand40-50kwpm in 2028-29UBS estimate as Intel EMIB and OSAT adoption expands.
• Wafer price outlook>20% year-on-year in 2027-28EUBS forecast on a like-for-like basis, following expected hikes from H2 2026.
• Google TPU sales forecastUS$2,113mn in 2026E to US$60,000mn in 2030EUBS forecast used in its MediaTek TPU-business model.

Impact & implications

UBS believes AI demand is broadening beyond leading-edge logic into advanced packaging, associated power-integrity components and silicon wafers. Its view implies that a faster A14 ramp and ASIC growth can support selected foundry, semiconductor-backend, silicon-capacitor and wafer suppliers, while wafer pricing may improve as supply remains tight.

Risks

• Technology-company operating models are volatile and unpredictable, making financial results difficult to project.
• Advanced-packaging execution faces yield risks, particularly the EMIB-T substrate learning curve in 2027-28.
• The MediaTek CoWoS opportunity for TPU v9 demand in 2029 remains early stage.
• Different assumptions could produce materially different results.

What to watch

• Progress of TSMC A14 tool move-in in H2 2026 and the timing of Fab 25 expansion.
• EMIB-T substrate yields and supplier support for TPU v9 volumes above 2mn units in 2028.
• Evidence of MediaTek participation in new ASIC projects and any move toward CoWoS for 2029.
• Intel EMIB and OSAT advanced-packaging expansion, including silicon-capacitor supply additions.
• Confirmation of WaferWorks' proposed second 8-inch price increase and broader wafer pricing from H2 2026.