Fubon (under Fubon Securities) is one of Taiwan’s stronger research teams on the AI hardware supply chain. They’ve been consistently early on this theme since 2024 (“AI as the main melody”), and just weeks ago they won the CMoney Golden Friday Award double crown for best target price accuracy and best return accuracy (quantitative backtest across thousands of reports). Their work is worth paying attention to.
Why this shortage cycle looks structural — not cyclical:
US policy is now the primary driver. The OBBA bill (tax cuts + full immediate expensing of capex and domestic R&D) plus the America’s AI Action Plan are removing bottlenecks and actively accelerating AI infrastructure buildout. CSP capex is expected to surge +92% YoY in 2026 (Amazon contributing heavily). This isn’t just hype — it’s policy-backed.
At the same time, AI is evolving from pure LLM training/inference (GPU-heavy) to AI Agents. Agents require far more complex orchestration, sensing, planning, and tool use — workloads that shift heavily onto CPUs and sophisticated multi-layer boards. Result: server boards are getting thicker, layer counts are rising fast (mainstream already 20-30L, heading toward 30-50L+), and material specifications are upgrading aggressively (M8 → M9 CCL, HVLP4 copper foil, LowDK Gen2 glass cloth, T-Glass, quartz cloth).
Fubon’s key shortage predictions for H2 2026 and beyond:
Glass fiber cloth: E-Glass prices heading to new highs. LowDK Gen2 shortage gap 60%+ in H2 2026. T-Glass gap expanding toward 50%+ by 2028. Sustained price-up cycle.
Quartz cloth: Expected shortage 40%+ as major customers qualify new suppliers — producers running at full capacity.
Copper foil & CCL: HVLP4 copper foil facing a 33% supply-demand gap in 2026. Major CCL makers already raised prices 20-30% in H1 2026; further quarterly hikes expected through 2027.
PCB drill bits (one of the most under-appreciated bottlenecks): Higher-grade materials drastically reduce drill life (from ~600-800 holes down to 100-200 on M9). Thicker AI boards + high aspect-ratio requirements mean more pre-drill bits per board. Overall drill bit consumption 6x+ higher than before, with pricing 3-16x depending on specs. PCB makers are expanding capacity faster than drill bit suppliers — tight supply expected into 2027-2028.
IC substrates: Capacity fully sold out. Supply-demand gap projected at 20%+ in 2026 and 40%+ in 2027. Customers are paying premiums to secure both capacity and materials.
Bottom line from the report: Shortages are the dominant theme. AI spec upgrades are only making the structural tightness worse. This creates sustained pricing power and margin expansion potential for upstream material suppliers and high-end PCB makers.
Fubon’s highlighted names worth watching: 4958 Zhen Ding, 8046 Nan Ya, 3037 Unimicron, 3189 Kinsus, 1303 Nan Ya Plastics, 8021 Apex (drill bits), plus glass cloth players like 1802 Taiwan Glass and 1815 Formosa Plastics (Fu Qiao).
This report reinforces their long-running “you need materials to have compute power” thesis. For anyone tracking the AI hardware supply chain — especially materials, substrates, and high-layer PCB — it’s a useful framework.