ABF price hikes to outpace our estimates, with solid GM expansion from 2Q26; revise up TPs for all our TW ABF substrate players by 81% to 112%

Research evidence excerpt

ABF price hikes to outpace our estimates, with solid GM expansion from 2Q26; revise up TPs for all our TW ABF substrate players by 81% to 112%

Goldman Sachs Asia Technology

ABF substrate suppliers.

All the above industry signs and data-point suggests to us that the ABF substrate

shortage could last for more than 30 months, and our supply demand analysis

suggests the shortage ratio of ABF substrates could reach 14%/34%/51% in

2H26/2027/2028, indicating potential for an even faster pace of price increases for

ABF substrates. We expect the market to eventually recognize that substrate supply

constraints could impact the overall AI server ramp up speed. Overall, we expect

substrate LTA/spot prices to increase 10-15%/20%+ QoQ from 3Q26 through to the

end of 2027, suggesting a solid upside potential to our GM estimate for all 4 ABF

substrate players in Taiwan.

AI ASIC servers and general server CPUs are the key drivers of stronger than expected

demand growth

We now see the overall ABF substrate TAM expanding at a 62% 2025-28E CAGR vs. our

original expectation of a 33% 2025-28E CAGR, with the stronger than expected demand

growth mainly driven by (1) the stronger than expected AI ASIC substrate

volume/pricing growth, and (2) much more favorable than expected server CPU

substrate demand growth. We expect AI server demand (25% of ABF demand in

2026E) to grow at a 101% 2025-28E CAGR, benefiting Ibiden/Unimicron the most, as

the two companies together still account for 74% of the AI server share in 2026. We also

expect general server demand (15% of ABF demand in 2026E) to grow at a 47%

2025-28E CAGR, benefiting Kinsus the most, as server CPUs could account for 40%+ of

the company’s total ABF revenue in 2028, thanks to rising demand for high computing