HK Stock Concept Tracker | Huge Supply-Demand Gap in ABF Substrates, Domestic Substitution Expected to Accelerate (with Concept Stocks)

Title context: HK Stock Concept Tracker | Huge Supply-Demand Gap in ABF Substrates, Domestic Substitution Expected to Accelerate (with Concept Stocks) Text: As demand for AI chips continues to surge, ABF substrates are becoming one of the increasingly critical bottlenecks in the AI server supply chain. In its latest research report released on October 14, Morgan Stanley pointed out that although major global semiconductor substrate suppliers are accelerating capital expenditure expansion, sustained growth in artificial intelligence (AI) demand and ever-increasing complexity of advanced chip packaging are expected to push the ABF substrate market into a state of 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 expects ABF substrate prices to increase by more than 25% in 2027, though still below some buy-side investors' expectations of around 50% price hikes. Morgan Stanley noted that 2026 ABF substrate price increases will mainly be driven by the pass-through of raw material costs, while the 2027 price momentum 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 the continuous lengthening of ABF substrate lead times is the rapid specification upgrades of next-generation ASIC and GPU platforms. As advanced packaging chip sizes continue to expandreaching up to 9,000 to 14,000 square millimetersand layer counts rise to 20 to 24 layers, the production line time consumed per chip increases significantly, further squeezing available capacity. As early as late August this year, semiconductor research firm SemiAnalysis's latest report showed that the ABF substrate supply chain has no slack left. Capacity at six major ABF substrate suppliers has been fully booked for 2026, with overall lead times extended to 12 to 14 monthsnearly double the industry lead times of about 6 to 8 months in early 2025, highlighting the intensifying supply-demand imbalance. Another major root cause of the ABF substrate shortage lies in the extreme concentration of upstream ABF build-up film supply. The SemiAnalysis report pointed out that over 90%, or even 95%, of global ABF build-up film supply is controlled by a single companyJapan's Ajinomoto. Part 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, with no large-scale new capacity release 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 local self-sufficiency rate being below 5%, accelerating the substitution process by domestic manufacturers (such as Zhejiang Wazam New Materials' CBF film and Shenzhen Newflex's NBF film). Daiwa Securities' forecast in early 2025 still held that the ABF industry would enter a slight supply shortage around 2026; by 2026, some institutions' assessments of 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 that 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. Through layer-by-layer hot-press stacking, it is used to construct high-performance packaging substrates, providing interlayer and line-to-line insulation support and physical protection for precision circuits on the substrate. Related concept stocks: KB LAMINATES (01888): A globally leading vertically integrated copper-clad laminate (CCL) leader. Against the backdrop of explosive demand for AI servers and high-speed networks, its high-end electronic materials, specialty fiberglass cloth, and copper-clad laminate businesses are deeply benefiting from the industrial chain transmission and demand growth of downstream ABF substrates and high-multilayer PCBs. KINGBOARD HLDG (00148): The parent company of KB LAMINATES, with business covering copper-clad laminates, printed circuit boards (PCBs), and upstream chemical raw materials across the vertical industrial chain. It is similarly drawing market attention for ABF/PCB upstream materials amid the AI computing power and server upgrade wave. Bosera HKEX KRX Semiconductor Index ETF (03516): This is an innovative cross-market fund (with an index jointly compiled by HKEX and KRX), which packages eligible hard-tech companies under Stock Connect and heavily weights global computing power/HBM storage 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). GlobalX China Semiconductor (03191): Public information shows that the GlobalX China Semiconductor ETF aims to invest in companies engaged in semiconductor production in China, with holdings including NAURA Technology Group, Cambricon, Semiconductor Manufacturing International Corporation, Hua Hong Semiconductor, and others.