From Storage, MLCC, ABF to Indium Phosphide: Goldman Sachs' Latest View on the 'Bottlenecks' of the AI Computing Power Chain

Goldman Sachs believes that the explosive demand for AI servers is pushing the entire electronic components and materials industry chain into a new cycle of supply-demand shortages, with the severity of the shortage continuing to intensify.

According to Zaifeng Trading Desk, on April 22, the Goldman Sachs Daiki Takayama team released a research report stating that since the beginning of this year, the demand surge driven by AI servers is pushing an already tight supply chain at the start of the year into a more severe shortage.

This report covers 11 key links ranging from semiconductors, passive components, to special materials, with significant upward revisions in supply-demand forecasts for five of these areas.

From MLCC, ABF substrates, PCB/CCL, storage, to indium phosphide (InP) substrates, the supply-demand gap has continued to widen over the past four months, and this trend is unlikely to reverse before 2027.

MLCC: A Long-Awaited Price Hike May Be on the Horizon as Capacity Expansion is "Strangled"

Multilayer ceramic capacitors (MLCC) are one of the categories in this report where supply-demand changes have attracted the most market attention.

Goldman Sachs points out that demand for MLCCs from AI servers will grow approximately 4.3 times from 2025 to 2030. Coupled with sustained strong demand from automotive applications, the entire MLCC industry is entering a clear phase of tightening supply and demand.

Of particular note is that even customers with weaker demand, such as those in smartphones and PCs, are actively seeking to sign long-term supply contracts with MLCC manufacturers.

The reason is not their own strong demand, but rather concerns that after capacity is fully occupied by AI server orders, they will find it difficult to secure sufficient supply. This "defensive order grabbing" behavior itself is further exacerbating supply-demand tensions.

Regarding capacity, Goldman Sachs believes that the annual capacity growth ceiling for the MLCC industry is slightly above 10%, constrained by internal equipment and materials, making capacity expansion extremely limited.

If these limited new capacities are primarily absorbed by AI servers and automotive applications, the current tight supply-demand situation may persist throughout the cycle.

On the pricing front, media reports in mid-April 2026 from Taiwan mentioned an MLCC price hike. Although the authenticity remains to be confirmed during earnings season, Goldman Sachs believes that the price change rate for similar products in 2026 has been revised up from previous flat estimates to 0% to 5%.

If the average price increase reaches 5%, Goldman Sachs calculates this would bring upside impacts of 13% and 37% respectively to the operating profits of relevant top-tier manufacturers for fiscal year 2027.

ABF Substrates: Continuous Upgrades in AI Chip Design Specifications Mean No Significant Supply Expansion Expected Before 2027

Ajinomoto Build-up Film (ABF) substrates are core materials for AI chip packaging.

Goldman Sachs maintains a positive outlook on the supply-demand prospects for ABF substrates over the next 18 to 24 months, driven by two factors:

• First, the expansion of AI chip shipments;
• Second, the rapid upgrade in single-chip substrate area and layer count.

The price growth expectation for 2026 has also been revised up from 20-30% to 30-35%.

Current mainstream AI chip substrate design specifications are 75mm×85mm with 14/16 layers. Goldman Sachs predicts this will rise to 120mm×150mm with over 20 layers in 2027, and further increase to 200mm×250mm with over 20 layers by 2030.

The increase in size not only directly reduces production yield but also increases panel utilization loss, effectively reducing the actual available supply per unit of capacity.

Currently, the capacity of major Taiwan-based ABF substrate manufacturers is basically booked through the end of this year, and Goldman Sachs expects that ABF substrate suppliers will not see significant capacity expansion before the second half of 2027. Extended lead times mean continued strengthening of pricing power.

PCB/CCL: Continuous Technological Specification Upgrades Drive AI Servers to Push Average Selling Prices Up Over 30% Annually

Regarding demand for printed circuit boards (PCB) and copper-clad laminates (CCL) from AI servers, Goldman Sachs observes two parallel upgrade paths:

• First, the upgrade in CCL grades: from the mainstream M7 level in 2023 to M8 in 2025, with a projected upgrade to M9 by 2027;
• Second, the increase in PCB layer count: from the mainstream 22 layers in 2023 to 28 layers in 2025, expected to reach over 36 layers by 2027.

Goldman Sachs believes the above trends are driven jointly by the need for higher data transmission speeds and improved computing performance. It is estimated that the Average Selling Price for AI CCL/PCB will maintain an annual year-over-year growth of over 30% in the foreseeable future.

Regarding supply-demand balance, Goldman Sachs expects first-tier PCB/CCL suppliers to expand capacity by about 20% to 30% annually, but this speed is significantly slower than the growth rate of AI server demand, which TSMC previously forecast could exceed 50% compound annual growth.

Excess demand will spill over to second and third-tier suppliers, but according to 2025 data, the production yields of these lower-end suppliers are generally about 20% lower than those of first-tier manufacturers, making it difficult for them to truly capture market share even if they engage in price wars.

Therefore, first-tier PCB/CCL suppliers will continue to enjoy dual advantages in both supply-demand and pricing.

Storage: Sharp Expansion of Supply-Demand Gap in 2026, Goldman Sachs Significantly Raises DRAM/NAND Price Forecasts

Storage memory is the category with the largest forecast adjustment in this report and one of the most far-reaching links for the entire industry chain.

Goldman Sachs has significantly revised up its 2026 DRAM price growth forecast from approximately 150% previously to 250% to +280%; NAND price growth forecasts have been revised up from approximately 100% to +200% to +250%.

The three driving factors for supply-demand tightness are:

• Strong demand from server applications;
• Limited new capacity additions across the industry, with new capacity prioritized for high-bandwidth memory (HBM), compressing the supply increment for traditional memory;
• Extremely low inventory levels across the entire industry, further limiting supply elasticity.

More alarmingly, Goldman Sachs has extended its expectation of supply-demand tightness from 2026 into 2027.

Previously, Goldman Sachs expected storage supply and demand to recover balance in 2027, but the latest assessment suggests that supply tightness will remain difficult to alleviate in 2027, with overall supply and demand maintaining a tight pattern throughout 2027.

Indium Phosphide (InP) Substrates: Core Material for AI Optical Interconnects, Supply-Demand Tightness Persists, Capacity Expansion Requires Multiple Years

Indium phosphide (InP) substrates are an emerging scarce material receiving considerable attention in this report.

Goldman Sachs expects the supply-demand tightness for InP substrates to persist in 2026 and forecasts prices to rise by approximately 15%.

Regarding capacity expansion moves, relevant major suppliers have announced expansion plans multiple times in July 2025, October 2025, and February 2026, continuously increasing investment.

Despite clear willingness to expand among all parties, Goldman Sachs points out that the substantial realization of new capacity will likely begin phased release no earlier than fiscal year 2028, meaning capacity bottlenecks will remain difficult to fundamentally alleviate in the medium to short term.

Meanwhile, industry feedback indicates strong market demand for InP substrates, with supply from multiple companies unable to meet downstream needs. The situation of excess demand over supply is expected to continue into the next fiscal year.

Wafer Foundry: TSMC Advanced Process Shortage to Persist Until 2027 and Beyond

In the wafer foundry sector, Goldman Sachs's assessment of TSMC is that driven by continuously growing AI inference demand, advanced process supply will remain in a state of shortage at least until 2027.

New capacity brought by the current TSMC capital expenditure cycle is not expected to come online until 2028 to 2029. Goldman Sachs predicts that TSMC's US dollar revenue for 2026 to 2028 will grow year-over-year by 35%, 30%, and 29% respectively.

For Chinese mainland wafer foundries, Goldman Sachs's assessment differs.

Although current capacity utilization rates are high, Chinese wafer foundries are continuously expanding capacity, so supply and demand are not tight.

Goldman Sachs expects that driven by factors such as high utilization rates, recovery in terminal market demand for industrial equipment, growth in demand for AI-related products, rising raw material costs, and a relatively healthy competitive landscape, prices for similar products at Chinese mainland wafer foundries will rise by approximately 10% in 2026.

Synthesizing all judgments in this Goldman Sachs report, for investors, the significant upward revision in storage price expectations, the continued tightness of ABF/BT substrates, and the multi-year capacity expansion cycle for InP substrates all point in the same direction—physical constraints on the supply side will support the profitability and pricing power of the entire computing hardware industry chain for a considerable period.