[E-Daily Reporter Shin Ha-yeon ] On the 24th, Meritz Securities projected that SamsungElectroMechanics(009150)would see both its market share and valuation premium rise, driven by aggressive expansion of production capacity (CAPA), as the shortage of high-specification ABF substrates intensifies due to the trend toward larger-area artificial intelligence (AI) accelerators.

Yang Seung-soo, an analyst at Meritz Securities, stated, “In a scenario where structural increases in substrate area and supply shortages are becoming prolonged, we believe there is a high likelihood that SamsungElectroMechanics’ valuation premium will continue to widen, driven by its aggressive expansion of production capacity (CAPA).”

Recently, at the OCP APAC Summit, TSMC noted that ABF substrate shortages—driven by the increase in CoWoS package sizes and growing AI demand—are emerging as a major bottleneck in advanced packaging.

This is because, as package areas grow and interconnection structures become more complex with CoWoS-based 3DFabric, even minor defects or material variations are having a greater impact on yield. Compared to conventional flip chips, package area has increased by more than five times and the number of pins by up to 100 times, while connection pitch is shrinking from 90 micrometers (μm) to 40 μm.

Researcher Yang explained, “Since simply diversifying suppliers is insufficient to resolve the ABF shortage, we expect that the value of companies capable of stably supplying high-specification ABF substrates—as well as their bargaining power and pricing power within the supply chain—will further strengthen.”

A shortage of ABF materials themselves is also exacerbating supply constraints for substrate manufacturers. According to a channel check by Meritz Securities, Japan’s Ajinomoto recently notified its customers of a strategy to prioritize allocations for AI and high-specification demand, citing an absolute supply shortage.

Analysts note that since ABF production lines were already operating at full capacity as of the second quarter of this year, and it will take considerable time for the effects of new capacity expansions to fully materialize, the potential for supply expansion in the short term is limited.

Researcher Yang stated, “As limited ABF supplies are prioritized for major AI customers and high-specification products, the concentration of supply toward leading substrate manufacturers—which have secured mass-production references for high-specification ABF substrates and stable yields—is expected to intensify.”

He added, “This could lead to an increase in the leading companies’ bargaining power within the supply chain and their ability to raise prices, and Ajinomoto’s strategy of prioritizing AI and high-specification demand will serve as a factor that further widens the gap between leading and trailing companies.”

The firm projected that this supply shortage would present an opportunity for SamsungElectroMechanics to expand its market share. In particular, the area of next-generation AI accelerators—including NVIDIA’s “Feynman,” scheduled for release in 2028—is expected to increase by approximately 3 to 5 times compared to 2026 levels.

Researcher Yang explained, “Even if, based on a simple calculation, demand for AI systems were to remain at half of current projections, demand based on ABF substrate area could still increase by 1.5 to 2 times compared to 2026 levels.” He added, “Furthermore, as yield pressures rise due to larger areas and higher layer counts, actual CAPA demand is expected to expand even further.”

Regarding the capital expenditure (CAPEX) outlook for ABF substrate manufacturers, he predicted that SamsungElectroMechanics would undertake the largest expansion, in line with broader industry-wide investment growth.

He noted, “In this environment, companies that proactively undertake large-scale capacity expansion are positioned to receive a growth premium,” adding, “We expect SamsungElectroMechanics’ future ABF substrate capacity expansion to exceed that of its major competitors, and we anticipate the company will increase its market share in the high-specification AI substrate market based on this aggressive capacity expansion.”