ABF Substrate Makers Set for Another Round of Price Hikes in Second Half, With Supply Gap Widening Into Next Year

Why Are ABF Substrate Prices Rising Again in the Second Half?

According to a report from Liberty Times Net (ec.ltn.com.tw), strong demand from AI servers and AI ASICs, combined with a shortage of upstream raw materials, has left supply of high-end ABF substrates tight. The report states that a new round of price increases began this year and that prices are expected to be raised again every quarter in the second half, with the market said to be entering what the report calls a "new super cycle" [E1].

This tightness is not new to the second half alone. A supply-chain survey by Morgan Stanley (大摩), reported by United Daily News (udn.com), found that in the second quarter Nan Ya PCB's (南電) BT substrate prices had already risen 20% to 30%, while its ABF substrate prices rose about 10% [E8]. The two reports together show that the price-hike cycle described for the second half is a continuation of increases that were already underway in Q2.

What Are the Expected Price Hike Ranges for Taiwan's Substrate Makers in Q3 and Q4?

Liberty Times Net (ec.ltn.com.tw) cites a U.S. investment bank's forecast that Nan Ya PCB's (南電) ABF and BT substrate prices are expected to rise 15% to 20% in the third quarter, driven by AI peak-season demand, customers' higher willingness to pay, and continued growth in demand for high-end products. The same forecast expects prices to rise a further 10% to 15% quarter-on-quarter in the fourth quarter even as the industry enters its traditional off-season, because supply and demand remain tight [E4].

How Are Kinsus's Nvidia Orders Expected to Lift Capacity and Market Share Next Year?

Liberty Times Net (ec.ltn.com.tw) reports that Kinsus (景碩) has recently secured large orders from NVIDIA for its latest server CPU and GPU substrates. The report states that Kinsus's CPU substrate market share could rise to 45%, while its GPU substrate market share is expected to reach around 20%. Kinsus is said to be actively expanding capacity, with total ABF substrate capacity forecast to increase by about 25% next year, which the report links to profit potentially doubling year-on-year [E5].

This order win sits within a broader industry backdrop: the same report notes that Taiwan's four major substrate makers — Unimicron (欣興), Nan Ya PCB (南電), Kinsus (景碩) and Zhen Ding Technology (臻鼎-KY) — are all seen posting favorable profits this year and next [E2], suggesting Kinsus's capacity expansion is occurring alongside a sector-wide earnings upswing rather than in isolation.

How Have Taiwan's Four Major Substrate Makers Performed Operationally in Recent Months?

According to Liberty Times Net (ec.ltn.com.tw), all four companies — Unimicron (欣興), Nan Ya PCB (南電), Kinsus (景碩) and Zhen Ding Technology (臻鼎-KY) — are expected to see favorable earnings this year and next as ABF substrate shipments grow [E2].

At the company level, the report states that Unimicron's (欣興) revenue has hit new highs for four consecutive months, driven by growth in ABF substrate shipments; the company is scheduled to hold its investor conference on July 29 [E3]. Separately, Zhen Ding Technology (臻鼎-KY) has indicated that its server and optical module businesses are set to show sequential quarterly growth this year, benefiting from customers' adoption and ramp-up of high-end AI products [E6].

Where Does Nan Ya PCB Stand on Pricing Compared With Its Peers?

Morgan Stanley (大摩), as cited by United Daily News (udn.com), notes that with supply remaining tight, further price hikes are expected in the second half, and Nan Ya PCB's (南電) third-quarter gross margin is expected to improve. The bank states that while the price-hike momentum should benefit the entire substrate industry, Nan Ya PCB (南電) has historically been the most aggressive in executing price increases and may therefore continue to lead the sector on pricing [E12].

This characterization is consistent with the same bank's supply-chain survey showing Nan Ya PCB's (南電) BT substrate prices already up 20% to 30% and ABF substrate prices up about 10% in the second quarter — among the larger increases cited across the sector [E8].

How Does Morgan Stanley View the Investment Case for Unimicron, Nan Ya PCB and Zhen Ding Technology?

United Daily News (udn.com) reports that Morgan Stanley (大摩) has raised its target prices for Unimicron (欣興), Nan Ya PCB (南電) and Zhen Ding Technology (臻鼎-KY) to NT$1,465, NT$1,550 and NT$690 respectively, maintaining an "Overweight" rating on all three [E7].

The report breaks down the basis for each target: Unimicron's (欣興) target was raised from NT$1,285 to NT$1,465, based on a 25x price-to-earnings multiple applied to projected 2028 profit, implying 50% upside [E9]. Nan Ya PCB's (南電) target was raised from NT$1,275 to NT$1,550, also on a 25x multiple, implying 35% upside [E10]. Zhen Ding Technology's (臻鼎-KY) target was raised from NT$666 to NT$690, on a 20x multiple, implying 15% upside [E11].

What This Means

Taken together, the reporting from Liberty Times Net (ec.ltn.com.tw) and United Daily News (udn.com) points to a substrate-price cycle that Morgan Stanley (大摩) had already flagged in its Q2 supply-chain survey — with Nan Ya PCB's (南電) BT substrate up 20-30% and ABF substrate up about 10% — and which the later report extends into forecasts of a further 15-20% Q3 rise and 10-15% Q4 rise. Morgan Stanley's (大摩) largest upside estimate, 50% for Unimicron (欣興), and its description of Nan Ya PCB (南電) as the sector's most aggressive price-setter, line up with the same period's operational signals: Unimicron's (欣興) four straight months of record revenue, Zhen Ding Technology's (臻鼎-KY) sequential growth in server and optical module business, and Kinsus's (景碩) NVIDIA-driven capacity expansion. Whether the Q3 and Q4 price forecasts materialize as projected is not addressed in the cited reports and would depend on developments beyond what has been reported so far.