ABF载板迈向卖方市场，AI驱动供需缺口持续扩大

market with a wider S/D gap driven by AlPrice Objective Change Server CPU strength widens S/D gap again Asia-PacificTech Hardware 2026/27/28 for the ABF substrate industry (see Exhibit 4-8), as we note (see reports) afurther raised CPU TAM whose benefits are also shared by Ibiden. By application, we expectserverCPUtoaccountfor17%/21%/21%ofABFsubstratedemand in2026/27/28,after we (see report) raised the forecast to 13%/14%/14% last time in June2026.On the supply side, we tweak theprojections and nowexpect 12%/22%/19%growth in 2026/27/28 (without considering the figures for EMIB-T by Ibiden in Gamaplant given the different substrate structure), after baking in the capacity transfer byUnimicron and debottleneck by NYPCB.At industry level, we also learnt positives fromAT&S'raised revenue/marginguidanceforFY26/27,aswell asthecommentsby(seereport) SEMCO. Re-it. Buy on Unimicron/NYPCB/Kinsus, in view of the robust EPSgrowth outlook aided by further price hike and margin improvement. Please refer to p.2forthe sectionsof NYPCBandthe2O30EPSpowerupdates,whichwe introduced (seereport) in the industry report back in April 2026Unimicron: on track capacity addition & enhanced value Mike Yang >>Research AnalystMerrill Lynch (Taiwan) mike.c.yang@bofa.comMasashiKubota>>Research AnalystBofAS Japan +81 36225 7138masashi.kubota@bofa.comCathy Hsu >Research AnalystMerrill Lynch (Taiwan) +886 2 2376 3726cathy.hsu3@bofa.com Unimicron is the most aggressive supplier to add the ABF substrate capacity (30+%each in 2027/28), which in our view will support its faster share gain amidst the S/D tightness in high-end area. We also note that projects with "high-value" (5O+% GM) willlikely account for50+% revenue mix in theABF substrate business in2H26,while thecompany will also bemore focused on selling the"value"to its customers, whichincorporates the upfront R&D investment/effort for high-end products.We raise 2028EEPSby21%afterpencilingintheassumptionsofstrongerrevenuegrowth&GM,whichalso makes us lift P/E multiple to 35x (from 33x), and our PO goes to NT$1,400 (fromNT$1,200) with unchanged valuation period of 2H27-1H28E. S/D supply/demand TAM - total addressable market Kiinsus will benefit from rising revenue contribution from AI CPU/GPU, and ASIC projects (with 35+% GM), and specifically for Al CPU we expect ~15% revenue mix in 2027 (vs~5% in2026).Looking ahead wealso expect its GM inABFsubstratebusiness to reach35-40%/40-45% in2027/28, supportedby 1)~10% QoQASP hike throughout 2027; and2)the funded equipment capex (by customers) of NTs60-8Obn with 7-8ppts GMboostfrom 2028.We also flag the upside from optical module with main customers includingLITE/AA0l, which will likely account for 20% of its BT substrate revenue in 2027, thanksto the edge in finer L/S to address the spec migration from 800G to 1.6T/3.2T. We raise2027/28EEPSby12%/26%mainly reflectingtheupdatedassumptions inpricing/GM,and our PO goes toNT$1,250(fromNT$1,070)samebasedon35x2H27-1H28EP/E NYPCB in our view will also benefit from the share gain in BT substrate, yet this is primarily due to the capacity transfer and/or gradual exit of the business by its industrypeers. On ABF substrate side, we expect the firm to boast a sustainably dominant share(50+%) in high-end networking switch, thanks to the solid relationship with customersand limited competition. We raise 2026-28E EPS by 18-21% after reflecting theassumptions of stronger GM and operating leverage, and the company in our view is theprime beneficiary of price hikes, as we note its GM expanded by 89Obps QoQ (vs680/490bpsbyUnimicron/Kinsus)in2Q26whichbeatstheBofAe/consensusby330bpsOur PO goes to NT$1,700 (from NT$1,430) same based on 35x2H27-1H28EP/E. In Exhibit 9-16, we update our sensitivity analysis of 2030 EPS power for Unimicron/NYPCB/Kinsus. For both top-down and bottom-up approaches, we adoptconservative GM/opex assumptions for2030 byhaving the numbers fixed at4Q28/2028-level, which could surprise on the upside given a more complex substratestructure and potentially stronger operating leverage. In top-down scenarios, we 1) fix the ASP (per mmsq) at USs0.0008 which in our view isalso conservative; and 2)havethe variablesbeing demand CAGR (10-3O%)andmarketshare (20-24%/6-10%/8-12% for Unimicron/NYPCB/Kinsus respectively), and theresulted 2030 net income upside (vs prior estimate for2028) willbe39%/27%/96% forUnimicron/NYPCB/Kinsus respectively under the base case scenario. We also note theupside will become 80%/83%/155% for respective firms under the bull case scenario. In bottom-up approach, we 1) fix the demand/shipment CAGR at 15% which in our viewis conservative as well; and 2) have the variables being ASP CAGR (ranging at 5-25%),and these lead to 78%/71%/39% 2030 net income upside (vs prior estimate for 2028)for Unimicron/NYPCB/Kinsus respectively. We also note the upside will become112%/101%/55% for respective names under the bull case scenario. Exhibit 2: Summary of changes in PO and val