TAIPEI (Taiwan News) — Taiwan’s major substrate makers are expected to see stronger pricing momentum in the second half of the year, supported by tight high-end supply and continued demand from AI servers.
Supply chain sources said the Ajinomoto Build-up Film substrate market is already showing signs of tighter supply. Conditions include longer delivery times, rising spot prices, and increasing efforts by manufacturers to pass higher material costs to customers, according to CTEE.
ABF is a key insulating layer used in semiconductor substrates. It separates and supports fine circuit connections, helping chips handle faster signals while improving heat resistance and reducing electrical interference, according to Pocket Securities.
Japan’s Ajinomoto Co., a major supplier of ABF materials, is reportedly considering price increases of at least 30%. Market sources estimate that finished ABF substrate prices could rise by around 3–6%.
Supply chain participants expect the ABF substrate supply-demand imbalance to persist through 2027, driven by sustained expansion in AI server infrastructure and longer-term structural demand growth. The outlook is seen as supportive for Taiwan’s major substrate manufacturers, including Unimicron Technology, Kinsus Interconnect Technology, and Nan Ya Printed Circuit Board, all of which reported strong April revenue.
Institutional investors said the combination of improved product mix and rising pricing trends is expected to lift sector profitability. Average gross margins across the ABF substrate industry are projected to reach 22–30% this year and could further rise to 30–35% next year.
Market data shows ABF substrate prices have already increased by around 5–10% since the second quarter. Some spot transactions have climbed more than 30% in tighter supply conditions.
Long-term contract customers have also reportedly agreed to additional capacity-related payments to secure supply, reflecting concerns over the availability of high-end substrates amid AI-driven demand.
Analysts said Nan Ya PCB may benefit the most from the latest pricing cycle due to its larger exposure to high-end substrates and ABF products. A portion of its output is not locked into long-term contracts, giving it more flexibility to reflect higher market prices.
Kinsus is also expected to benefit from rising AI adoption and steady operations at its subsidiary Pegavision. This combination is seen as supportive of its efforts to expand its share in the high-end ABF substrate market.
Meanwhile, Unimicron currently ships around 70% of its ABF products under long-term contracts, limiting short-term pricing flexibility. However, market expectations remain that pricing will continue to trend upward in the coming quarters as demand strengthens for co-packaged optics and next-generation AI server platforms.
