Ibiden "Tailwinds for package substrate growth are likely to strengthen further"

Research evidence excerpt

Ibiden "Tailwinds for package substrate growth are likely to strengthen further"

Ibiden UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Are package substrate unit prices likely to rise as the AI market expands?

Yes. For AI GPUs and ASICs, substrate layer counts and area increase with each generation, and this

trend is accelerating. As supply-demand tightens, the discounting pressure seen previously has eased.

While Ibiden does not raise prices for existing products, we expect unit price increases associated with

the roll-out of new products to be higher than before.

Q: Will growth be constrained by bottlenecks for materials such as T-Glass?

That possibility exists, but we expect bottlenecks to gradually ease. T-Glass supply is likely to remain

tight throughout FY3/27. However, in FY3/28, capacity is set to double and supply to rise 1.7-fold

versus FY3/25, and shipments from second-source suppliers are gradually ramping up.

Q: Can EMIB-T deliver returns in line with large-scale investment?

Yes. Unlike first-generation EMIB, sales can be expanded beyond US CPU manufacturers, with mass

production for AI ASIC customers starting in FY3/28 and full-fledged contributions to earnings from

FY3/29 onward. CPU demand for AI inference applications is increasing, and sales to US CPU

manufacturers are likely to expand.

UBS VIEW We are bullish on the stock because 1) alongside AI expansion, ABF package substrates for GPUs, AI

ASICs, and CPUs are set to grow as footprints and layer counts increase, 2) the company has strong

technological capabilities in the high-end segment and is expanding its customer base, and 3) pricing

conditions are improving as supply-demand tightens for high-end ABF substrates.