Nan Ya PCB's recent guidance for a record capital spending plan in 2026 confirms that a powerful up-cycle is underway for advanced semiconductor substrates, driven by relentless AI demand.
The core of this story is the explosive growth in AI accelerators. Chips like Nvidia's Blackwell GB200 require sophisticated advanced packaging technologies like CoWoS to function, which in turn depend on larger and more complex ABF substrates. With cloud giants and sovereign AI initiatives locking in orders for millions of these chips, demand visibility is exceptionally clear. This is confirmed by memory makers like SK hynix and Micron, who have already sold out their high-bandwidth memory (HBM) supply for years to come, signaling a sustained, multi-year need for the entire AI packaging ecosystem.
This strong demand is meeting a constrained supply chain, creating significant pricing power for substrate makers. There are three key factors at play. First, Ajinomoto, the dominant supplier of essential ABF film, announced a roughly 30% price hike effective in the third quarter of 2026. Second, the cost of other key raw materials, like copper, has surged over 37% in the past eight months. Third, a weaker New Taiwan Dollar provides a tailwind for Taiwanese exporters. This confluence of rising input costs gives substrate makers the justification to raise their own average selling prices (ASPs) by an estimated 3-6%, making new investments in capacity expansion far more attractive.
Therefore, Nan Ya's decision to ramp up its capex is a direct and logical response to these market signals. It's not an isolated move but part of a synchronized industry-wide push. Upstream, foundries like TSMC are aggressively expanding their advanced packaging capacity. Downstream, memory companies are pouring billions into HBM production. Nan Ya is positioning itself to capture this wave of demand, de-risked by long-term customer commitments and a favorable pricing environment.
In essence, Nan Ya's investment signal highlights a critical shift in the semiconductor value chain. The bottleneck for AI hardware is no longer just about leading-edge silicon, but increasingly about the advanced packaging and substrates needed to connect everything. This suggests the substrate sector is moving from a cyclical industry to one with structural, long-term growth drivers.
- ABF Substrate: Ajinomoto Build-up Film substrate is a high-performance circuit board component essential for connecting advanced chips like CPUs and GPUs to the rest of a system.
- Capex: Capital expenditure, or the money a company spends to buy, maintain, or upgrade physical assets like factories and machinery.
- CoWoS: Chip-on-Wafer-on-Substrate is an advanced packaging technology developed by TSMC that stacks multiple chips together to improve performance and efficiency, widely used in AI accelerators.