Asia AI PCB and ABF substrate market Report Interpretation

Overview

This tracker reviews 2Q26 operating results, component shortages and 2027–28 capacity plans across Asia’s AI-exposed PCB and ABF-substrate supply chain. Bernstein’s central conclusion is that demand, mix and pricing are improving faster than supply can respond, supporting continued earnings momentum through 2027.

Core views

Bernstein finds that the AI PCB market accelerated in 2Q26: leading AI PCB suppliers grew approximately 45% year on year and 18% quarter on quarter. Shengyi, GCE and WUS delivered the strongest growth among AI PCB/HDI players. VGT grew 38% year on year and 13% quarter on quarter in US-dollar terms, but its gross margin declined sequentially because of upfront labor and depreciation ahead of new-site ramp-up. Newer AI-exposed suppliers are also expanding: Delton doubled revenue year on year, achieved a 41% gross margin, and benefited from general-server-board and ASIC MLPCB demand; Zhen Ding’s IC-substrate and server/optical-transceiver PCB revenue rose 40% quarter on quarter to 23% of 2Q26 revenue, from 20% in 1Q26. The report sees a stronger profitability trend in ABF substrates than in conventional PCBs. Unimicron, Ibiden, Kinsus and Nan Ya PCB recorded meaningful sequential gross-margin expansion, driven by ASP increases and a richer mix. Revenue growth among major ABF suppliers accelerated to nearly 50% year on year in 2Q26, with demand broad across CPUs, GPUs, ASICs and networking chips. Rising combined contract liabilities at key suppliers are interpreted as evidence of improving order visibility and customer commitments. Bernstein expects this momentum to continue into 2H26 as AI demand accelerates. The demand driver is a rising performance requirement for next-generation AI hardware. Initial NVIDIA Vera Rubin and Google TPU v8 shipments are expected in 2H26 and are expected to lift PCB and substrate demand in 2027. Bernstein highlights MLPCB layer-count increases from roughly 20 layers to 30–44 layers, broader use of 6+N+6 HDI designs, and greater adoption of M8-grade-and-above CCL and HVLP-4 copper foil. VR200 specifications, for example, move compute-tray PCBs from 22-layer to 26-layer HDI and switch-tray PCBs from 22-layer to 32-layer MLPCB/HDI versus GB300. TPU v8 also requires 36–40-layer MLPCB for UBB PCBs versus 28 layers for TPU v7. Separately, 1.6T optical-transceiver shipments are encouraging a shift to mSAP HDI, which enables finer line widths and higher routing density. Supply, in Bernstein’s view, will remain constrained despite a new investment cycle. Industry-wide PCB capex is expected to rise 70% in 2026E, while substrate-industry capex is expected to increase about 80%. Much of the spending is directed to facility construction, so MLPCB and HDI supply is expected to stay tight until capacity is fully ramped in 2H27. ABF suppliers are expanding more aggressively with customer prepayments, capex-sharing arrangements and long-term agreements, but most incremental ABF capacity is not expected until 2028, leaving the market tight through 2027. Unimicron raised its 2026 capex budget to NT$53.7bn from NT$19.4bn and targets 40% year-on-year ABF-capacity growth by end-2026; its Kaohsiung and Yangmei expansions are expected to ramp in 2H27 and 2028. Consensus FY26 capex estimates for major ABF suppliers have risen 66% since the start of the year. Upstream material constraints reinforce pricing power. The report expects shortages of T-glass, HVLP-4 copper foil and high-end CCL to persist for the next few quarters because of technological barriers, yield-ramp times and equipment constraints. T-glass availability should improve in 1H27 as Nittobo and tier-two suppliers raise capacity and yields, while high-end CCL shortages may last longer because the material is required by both substrate and PCB makers. EMC plans to ramp its Guanyin facility in 4Q26 and has guided to a 50% capacity increase by 2027; TUC’s Thailand facility is expected online in 3Q26 and targets a 45% total-capacity expansion next year. For covered companies, Bernstein remains constructive. It expects Unimicron’s revenue and EPS to compound at 33% and 117%, respectively, over 2025–2028; it views a country-of-origin labelling investigation as a near-term compliance and sentiment overhang rather than a material fundamental risk because the affected PCB/HDI products represent only a small portion of that business and ABF supply remains tight. For Ibiden, it forecasts a 33% three-year revenue CAGR to ¥980bn and operating profit of ¥344bn in FY29/3E versus ¥62bn in FY26/3, supported by GPU, CPU and EMIB-T demand, high utilization and higher ASPs. Ajinomoto’s June-quarter ABF-film revenue and business profit grew 54% and 77%, respectively; management said demand growth and specification upgrades continue into the September quarter and denied reports of a 30% supply cut to Chinese customers.

Analysis framework

Bernstein tracks quarterly supplier revenue, margins, contract liabilities, customer demand, technology specifications, component availability and announced capacity plans. It combines company disclosures, Bloomberg consensus, Prismark estimates, channel checks and its own estimates to connect AI hardware requirements with supplier earnings, pricing and capacity timing.

Methodology notes

• Industry AnalysisSupply-demand framework

  Supply-demand analysis of PCB, HDI and ABF substrates

  The report compares AI-led demand growth and specification upgrades with the timing of new capacity and material bottlenecks to assess pricing, utilization and margin conditions.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  AI hardware specification and materials transmission

  Bernstein traces higher AI-rack and optical-module requirements through PCB designs, substrates, CCL, copper foil and T-glass to supplier demand and profitability.

• Valuation methodsP/E and PEG Valuation

  P/E-based target prices

  Target prices for Unimicron, Ibiden and Ajinomoto are set using stated P/E multiples against forecast EPS.

• Valuation methodsDCF (Discounted Cash Flow)

  DCF cross-check for Ajinomoto

  Bernstein compares Ajinomoto’s target-price multiple with an implied valuation from DCF using 8.5% WACC and 3.5% terminal growth.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  SOTP cross-check for Ajinomoto

  The report also cites a sum-of-the-parts valuation as a comparison for Ajinomoto’s target-price multiple.

Asset mapping & comparison

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

• Unimicron (3037.TT)

  Covered ABF-substrate and PCB supplier benefiting from tight ABF supply and AI demand.

  Strengths

  Bernstein forecasts 33% revenue CAGR and 117% EPS CAGR for 2025–2028; targets 40% year-on-year ABF capacity growth by end-2026.

  Weaknesses

  PCB and HDI account for approximately 35% of revenue and face a near-term labelling-investigation overhang.

  Comparison

  A key covered ABF supplier alongside Ibiden and Ajinomoto.

  Risks

  Competitor capacity expansion, slower HDI yield and gross-margin recovery, and weaker smartphone/PC utilization.

• Ibiden (4062.JP)

  Covered ABF-substrate supplier positioned for GPU, CPU and EMIB-T demand.

  Strengths

  Broad-based pricing improvement, higher product launch prices, high utilization and high ASPs; Bernstein forecasts 33% revenue CAGR over three years.

  Weaknesses

  Higher capex can increase depreciation burden.

  Comparison

  Part of the ABF group that showed meaningful sequential gross-margin expansion.

  Risks

  Industry oversupply and pricing pressure, faster-than-expected share loss in NVIDIA products, and a greater-than-expected capex burden.

• Ajinomoto (2802.JP)

  Covered ABF-film supplier benefiting from demand growth and specification upgrades.

  Strengths

  June-quarter ABF-film revenue and business profit grew 54% and 77%; management expects momentum into the September quarter.

  Weaknesses

  Operational leverage of 1.4x remains below the historic 1.5–1.7x range, and the report says price-increase benefits have not yet appeared.

  Comparison

  An upstream material supplier to the ABF-substrate ecosystem.

  Risks

  Single-site Functional Materials disruption, competitor capacity additions, substitution from packaging technology advances, Chinese MSG competition and value-destructive healthcare M&A.

Key data

• Top AI PCB supplier revenue growthc.45% YoY; 18% QoQ2Q26
• ABF substrate revenue growthnearly 50% YoY2Q26, supported by ASP increases and shipments
• Industry-wide PCB capex growth70%2026E
• Substrate-industry capex growthc.80%2026E
• Unimicron revenue and EPS CAGR33% and 117%2025–2028 forecast
• Ibiden revenue and operating profit forecast¥980bn revenue; ¥344bn operating profitFY29/3E; operating profit versus ¥62bn in FY26/3
• Ajinomoto ABF film revenue and business-profit growth+54% and +77%June quarter

Impact & implications

Bernstein argues that a combination of AI-led specification upgrades, rising ASPs, stronger order visibility and delayed capacity ramps favors PCB and ABF-substrate suppliers with relevant technology exposure. It expects supply tightness and the associated earnings support to extend through 2027, while recognizing that capex and material supply will eventually reshape the balance.

Risks

• Aggressive competitor ABF capacity expansion could slow the market recovery and create pricing pressure.
• MLPCB and HDI supply conditions could ease faster than expected as new capacity ramps.
• Material shortages, yield challenges and equipment constraints could disrupt production or alter margin outcomes.
• For Unimicron, the country-of-origin labelling investigation may create near-term selling pressure.
• For Ibiden, possible NVIDIA share loss, oversupply and higher depreciation from capex are explicit downside risks.
• For Ajinomoto, supply-chain disruption at its single Functional Materials site and increased Build Up Film competition are explicit risks.

What to watch

• Initial shipments of NVIDIA Vera Rubin and Google TPU v8 in 2H26 and their effect on 2027 PCB and substrate demand.
• The pace of MLPCB, HDI and mSAP capacity ramp-up, particularly whether tight supply persists until 2H27.
• ABF supplier contract liabilities and capacity commitments as indicators of customer order visibility.
• T-glass yield improvements and new capacity ramping in 1H27, as well as the persistence of high-end CCL shortages.
• Execution of major supplier capex plans, including Unimicron, Ibiden, Kinsus, Nan Ya PCB, SEMCO and AT&S.
• Further evidence of ABF-film demand, pricing and Ajinomoto’s production flexibility.