An underappreciated #ABFsubstrate# name is the Japanese company Toppan ($7911.TYO). The real profitability story here is somewhat masked (pun intended) by the photomask business they recently spun off. And this comment from $AVGO yesterday is definitely a positive sign.

ABF substrate S/D gap is expected to become progressively worse year over year, reaching a S/D gap of 46% in 2028. Up from just 1% in 2026. Hello ABF substrate department? Yes, please send us more ABF we need it desperately!

ABF substrate supply is tight, and key suppliers are looking to expand capacity globally. One interesting read through is MEC ($4971.TYO), a Japanese specialty chemicals company with an effective monopoly on the CZ series adhesion promotion chemistry used in ABF substrate manufacturing. The chemistry is critical. It enables copper circuitry to bond to the build up film and is applied at every layer of the substrate. MEC’s latest disclosures show sales to China growing far faster than to any other region. This looks like an important signal that Chinese substrate makers are investing aggressively to build the technical expertise and capacity needed to compete in ABF. Some of the increase may come from non Chinese suppliers manufacturing in China, such as AT&S and Zhen Ding. But it is hard to see that alone explaining the magnitude of the increase. The takeaway: China’s push into ABF substrates looks increasingly real, and MEC’s chemistry sales may be one of the better ways to track it.

Morgan Stanley sees ABF substrate prices rising at least 25% in 2027, with supply shortages persisting through 2030. New capacity will not ramp until 2028-2030, limiting near-term supply relief.

▶ Ajinomoto Raises ABF Substrate Film Prices by 30% - Japan’s Ajinomoto has decided to raise prices for its core ABF build-up film by 30%, with the new prices set to take effect from Q3 2026. - Taiwanese package substrate makers said they have officially received notice of the price increase, at a time when cost pressures remain elevated across the IC substrate supply chain. - Specific new pricing is still under negotiation with suppliers, but in the near term, the hike is expected to increase production costs before being gradually passed through to product ASPs. - Despite the ABF price increase, the largest cost burden is still understood to come from repeated price hikes in upstream raw materials, particularly CCL. - With urgent demand from AI chip customers continuing, quarterly price increases for ABF and BT substrates are expected to persist through year-end. The magnitude of price hikes could widen further in the second half. - Ajinomoto holds more than 95% share of the global ABF market, giving it strong pricing power across the supply chain. IC substrate makers noted that the previous price increase took place around early 2025, roughly a year ago, and said the latest 30% increase is also a “reasonable level” given strong customer demand. - Unlike Nittobo, whose conservative capacity expansion stance has deepened the shortage of T-Glass fiberglass for IC substrates, Ajinomoto had already anticipated changes in ABF supply-demand dynamics three years ago and moved ahead with proactive capacity expansion. - As a result, despite its near-monopolistic market position, the supply bottleneck is viewed as relatively limited. Ajinomoto recently announced plans to build a third ABF plant in Gifu Prefecture, Japan, in order to address demand beyond 2030. - The company has secured land for the project with an investment of around JPY 12 billion, or approximately USD 76 million, and plans to begin construction in 2028, with mass production targeted for 2032. The new Gifu plant is expected to be much larger in scale than Ajinomoto’s existing production sites in Kanagawa and Gunma prefectures. - In addition, as AI chip packaging layer counts are expected to expand from the current 3+3 level to 11+11 layers, and potentially to 13+13 layers after 2030, ABF demand is likely to sustain structural growth. - According to the industry, as the AI CPU, GPU, and ASIC upgrade cycle accelerates, demand is rising for larger substrate area and higher layer counts. As a result, ABF substrates are understood to have re-entered a supply shortage phase from 1H 2026. - Shortages are also emerging simultaneously across the upstream value chain, including fiberglass, copper foil, and drill bits. Therefore, the ABF supply-demand imbalance in 2027–2028 is more likely to intensify than ease. - The industry expects the IC substrate sector to enter a so-called “Super Expansion Cycle” over the next two to three years, which should improve order visibility across the sector.

So Samsung and SK hynix are leading the charge to push ABF substrate prices back down… Did memory companies just look around and say, “Wait… why is everyone else making money from AI capex too? Nope. We’re taking that margin back.” Come on… don’t be so greedy lah…

Expert call covering Advanced Packaging & ABF Substrates — EMIB-T vs CoWoS-L capacity dynamics, Glass Core feasibility & roadmap, 2027 ABF substrate price hikes & equipment bottlenecks, and hyperscaler ASIC adoption. $INTC $TSM $NVDA $GOOGL $AMZN

Eternal Precision, an equipment supplier to ABF substrate makers, now has delivery slots booked into 2031, according to Goldman Sachs. Some customers are even willing to pay a premium for earlier delivery. Most of those offers are coming from Chinese substrate makers. Even so, the company continues to prioritize larger, long-standing customers and those that have already secured ABF film supply. Eternal Precision plans to increase annual equipment capacity by 50% to 396 units by mid-2027. For substrate makers, who gets new capacity online first may increasingly come down to access to both equipment and materials.