Morgan Stanley Greater China Tech Hardware: ABF Substrates - Risk to Nan Ya PCB and Unimicron ABF Supply Share?

Nan Ya PCB (8046.TW) dropped 12% over two sessions while the TAIEX rose 0.8%, after Broadcom's CEO told the latest earnings call the company is building substrate capacity at its Singapore plant with partners, raising investor concern that in-house substrates could erode ABF supply share at Nan Ya PCB and Unimicron (3037.TW). Morgan Stanley identifies the capacity as the AST joint venture developed with Toppan (7911.T, not covered) since March 2024 - Toppan's first overseas substrate plant, phase one of two targeted for production by end-2026 - and views it as locking in FC-BGA substrate supply rather than in-house manufacturing, so the impact on both companies' existing supply positions should be limited; both are current Broadcom BT-substrate suppliers. On BT substrates, price increases since 2H25 have been driven by rising T-glass, gold, and copper costs. Morgan Stanley expects T-glass tightness to peak in 2026 and ease from 2027 as more suppliers qualify. Because ABF substrate tightness is central to both Overweight theses (ratings effective February 23, 2026), BT price swings have limited bearing on the ratings. Shares closed September 4, 2026 at NT$1,055.00 (Nan Ya PCB) and NT$902.00 (Unimicron); the Greater China tech hardware view is In-Line. Residual-income valuations assume 9.2% cost of equity and 15% mid-term growth for Unimicron, and 9.3% and 17% for Nan Ya PCB, with 3% terminal growth.