Why is the PC supply chain under greater pressure?

  • Intel expects PC shipments to fall by more than 20% year on year in the second half of 2026: weakening end-market sales are prompting PC manufacturers to cut inventories aggressively, and the adjustment has accelerated over the past two months. Morgan Stanley previously forecast a decline of approximately 25%.
  • Shipment data already show a weakening market. According to IDC, global PC shipments in the third quarter of 2026 totaled 62.685 million units, down 20% year on year and 9% quarter on quarter.
  • Morgan Stanley believes this trend is more unfavorable for brands and contract manufacturers exposed to the lower-end consumer market, such as Acer and Compal.

Why is server demand moving in the opposite direction?

  • Intel expects server CPU shipments to grow by more than 30% in both 2026 and 2027; growth could be even higher if wafer and substrate supplies improve.
  • Intel believes AI agents will be a primary driver, increasing the potential market for server CPUs from approximately 40 billion US dollars today to more than 200 billion US dollars in five years.
  • Morgan Stanley believes strong growth in server CPU shipments benefits related hardware suppliers such as Wiwynn, Lenovo and Lotes.

Why might ABF substrates become scarcer?

  • Most of the previously discussed approximately 40% expansion in substrate capacity will not materialize until the second half of 2027; Intel expects procurement commitments for key components to increase significantly over the next several quarters.
  • Intel is prioritizing securing substrate capacity and improving EMIB-T yields. Complex designs may increase yield risks and reduce effective output, thereby worsening the ABF substrate shortage and supporting prices.
  • Morgan Stanley believes that tighter substrate supply and stronger prices would benefit Unimicron and NYPCB's revenue and profit margins.