According to reports, as AI chip demand continues to surge, ABF substrates are becoming one of the increasingly critical bottlenecks in the AI server supply chain.
Morgan Stanley noted in its latest research report released on October 14 that although major global semiconductor substrate suppliers are accelerating capital expenditure expansion, sustained growth in artificial intelligence (AI) demand and continuously increasing complexity of advanced chip packaging are expected to push the ABF substrate market into a persistent supply shortage starting from 2027. The bank expects ABF substrate prices to rise by more than 25% in 2027 and climb further in 2028, thereby driving continuous margin expansion for related manufacturers. On the pricing front, the bank forecasts that ABF substrate prices will increase by more than 25% in 2027, though this remains below some buy-side investors' expectations of approximately 50% price hikes. Morgan Stanley pointed out that ABF substrate price increases in 2026 will be mainly driven by raw material cost pass-through, while the pricing momentum in 2027 will come more from tightening supply-demand dynamics.
ABF substrates are the core base material for FCBGA packaging of AI GPUs, high-end CPUs, and HBM chips. Currently, the core reason driving continuously lengthening ABF substrate lead times is the rapid specification upgrades of next-generation ASIC and GPU platforms. As advanced packaging chip sizes continue to expand—reaching up to 9,000 to 14,000 square millimeters—and layer counts rise to 20 to 24 layers, the production line time consumed per single chip increases significantly, further compressing available capacity.
As early as late August this year, semiconductor research firm SemiAnalysis released a report showing that the ABF substrate supply chain has no remaining slack. The capacity of six major ABF substrate suppliers for 2026 has been fully booked, with overall lead times extended to 12 to 14 months—nearly double the industry lead times of approximately 6 to 8 months in early 2025, highlighting the intensifying supply-demand imbalance.
Another major root cause of ABF substrate scarcity lies in the extreme concentration of upstream ABF build-up film supply. The SemiAnalysis report noted that over 90%, or even 95%, of global ABF build-up film supply is controlled by a single company—Japan's Ajinomoto. Some of Ajinomoto's capacity has been booked through 2027, with prices rising and lead times exceeding 6 months. Although Ajinomoto has announced capacity expansion, the new plant is planned to break ground in 2028 and begin production in 2032, meaning no large-scale new capacity will be released before 2032.
Recent rumors that Ajinomoto has cut supply to the Chinese mainland market by 30% have further highlighted the contradiction of the mainland's ABF self-sufficiency rate being less than 5%, accelerating the substitution process by domestic manufacturers such as Huazheng New Material's CBF film and Shenzhen Newfis's NBF film.
Daiwa Securities' forecast in early 2025 still believed the ABF industry would enter a slight supply shortage around 2026; by 2026, some institutions' judgments on the supply-demand gap have become more aggressive. Goldman Sachs recently estimated that the ABF substrate shortage rates for 2026 to 2028 could reach 14%, 34%, and 51% respectively, and believes AI ASICs and server CPUs will become the main demand drivers.
Huafu Securities stated that ABF substrates have become a key material in the AI era. Since most chips have high wiring density but PCBs do not have high wiring density, chips cannot directly interconnect with PCBs, thus requiring substrates as a "bridge" product. Insulating build-up film is an ultra-thin solid insulating adhesive film material with low dielectric constant and low dielectric loss characteristics. It is used to construct high-performance packaging substrates through layer-by-layer hot pressing and stacking, providing interlayer and inter-line insulation support and physical protection for precision circuits on the substrate.
Related Concept Stocks:
Kingboard Laminates Holdings Ltd (01888): A globally leading vertically integrated enterprise in copper-clad laminates (CCL). Against the backdrop of exploding demand for AI servers and high-speed networks, its high-end electronic materials, specialty glass fiber cloth, and copper-clad laminate businesses are deeply benefiting from the industry chain transmission and demand growth of downstream ABF substrates and high-layer PCBs.
Kingboard Holdings Ltd (00148): The parent company of Kingboard Laminates Holdings, with businesses covering copper-clad laminates, printed circuit boards (PCBs), and upstream chemical raw materials across the vertical industry chain. It is also drawing market attention to ABF/PCB upstream materials amid the AI computing power and server upgrade wave.
Bosera HK-KR Semiconductor ETF (03516): This is an innovative cross-market fund (with an index jointly compiled by HKEX and KRX), which packages Hong Kong Stock Connect-eligible hard tech companies while heavily weighting global computing power/HBM memory giants (such as Samsung Electronics and SK Hynix). It is a benchmark product for capturing the core AI computing power supply chain (including AI chips, advanced packaging, and substrate transmission).
Global X China Semiconductor ETF (03191): Public information shows that the Global X China Semiconductor ETF aims to invest in companies engaged in semiconductor production in China, with holdings including Naura Technology, Cambricon, SMIC, Hua Hong Semiconductor, and others.
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