From storage, MLCC, ABF to indium phosphide, regarding the "bottlenecks" in the AI computing power chain, this is Goldman Sachs’ latest view.

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

According to ZF Trading Desk, on April 22, Goldman Sachs' Daiki Takayama's team released a research report stating that since the beginning of this year, an AI server-driven demand boom is pushing an already-tight supply chain into more severe shortages.

This report covers 11 key segments from semiconductors and passive components to specialty materials, with supply and demand forecasts significantly revised upward in five areas.

From MLCC, ABF substrates, PCB/CCL, memory, 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 increase may be coming, capacity expansion faces "bottlenecks"

Multilayer ceramic capacitors (MLCC) are among the categories with supply-demand changes attracting the most market attention in this report.

Goldman Sachs pointed out that AI server demand for MLCCs will increase by about 4.3 times from 2025 to 2030, combined with consistently strong automotive application demand, the MLCC industry is entering an obvious supply tightening phase.

Notably, even clients with weaker demand, such as smartphones and PCs, have started proactively seeking long-term supply contracts with MLCC manufacturers.

The reason is not strong self-demand, but concerns that future capacity will be fully occupied by AI server orders, making it difficult to secure adequate supply. This "defensive order grabbing" behavior itself is further worsening the supply-demand tension.

In terms of capacity, Goldman Sachs believes the annual capacity growth ceiling for the MLCC industry is just over 10%, limited by constraints in internal equipment and materials, so expansion speed is extremely restricted.

If this limited new capacity is mainly absorbed by AI servers and automotive applications, the current supply-demand tension may persist throughout the cycle.

On pricing, in mid-April 2026, Taiwanese media reported MLCC price increases. Although authenticity remains to be verified during earnings season, Goldman Sachs believes the 2026 price change rate for similar products is now revised upward from previous estimates of flat to 0%-5%.

If the average increase reaches 5%, Goldman Sachs calculates this would raise the operating profit for leading companies in fiscal year 2027 by 13% and 37% respectively.

ABF Substrates: Continuous specification upgrade for AI chip design, no significant supply expansion before 2027

Ajinomoto Build-up Film (ABF) substrate is a core material for AI chip packaging.

Goldman Sachs maintains a positive outlook for ABF substrate supply and demand in the next 18 to 24 months, driven by two factors:

First, the expansion in AI chip shipments;Second, the rapid upgrade in substrate area and layer count per chip.

The expected price increase for 2026 is also raised from 20-30% to 30-35%.

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

Size expansion not only directly lowers production yield, but also increases panel utilization loss, so actual effective output per unit capacity declines.

Currently, major ABF substrate makers in Taiwan have their capacity fully booked until year-end, and Goldman Sachs expects ABF substrate suppliers will not significantly expand production before the second half of 2027. Lengthened lead times mean sustained pricing power.

PCB/CCL: Continued technological upgrades, AI servers drive over 30% annual increases in average price

In terms of AI server demand for printed circuit boards (PCB) and copper clad laminates (CCL), Goldman Sachs observes two parallel upgrade paths:

First is CCL grade improvement: from mainstream M7 in 2023, up to M8 in 2025, and expected to upgrade to M9 in 2027;Second is PCB layer increase: from mainstream 22 layers in 2023, to 28 in 2025, and expected to reach over 36 layers in 2027.

Goldman Sachs believes these trends are mainly driven by data transmission speed needs and performance improvement, and expects the average selling price for AI CCL/PCB will sustain over 30% year-on-year growth in the foreseeable future.

On supply-demand balance, Goldman Sachs expects top-tier PCB/CCL suppliers will expand capacity by about 20%-30% annually, but this pace significantly lags AI server demand growth, as TSMC previously projected over 50% annual compound growth rate.

Excess demand will spill over to second- and third-tier suppliers, but as per 2025 data, yield rates for these lower-end suppliers are about 20% lower than top-tier, so even price wars can't truly seize market share.

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

Memory: 2026 supply-demand gap expands sharply, Goldman Sachs raises DRAM/NAND price forecasts substantially

Memory is the category with the largest forecast adjustments in this report, and one of the most far-reaching impact segments for the entire supply chain.

Goldman Sachs has revised up its 2026 DRAM price increase forecast from about 150% to 250%-280%; NAND price increase forecast from about 100% up to 200%-250%.

The three main drivers of supply-demand tension are:

Strong demand for server applications;Limited new capacity across the industry, with new capacity prioritized for high bandwidth memory (HBM), squeezing traditional memory supply increase;Extremely low inventory levels across the entire industry, further restricting supply flexibility.

Even more concerning, Goldman Sachs has extended the supply-tightness expectation from 2026 to 2027.

Previously, Goldman Sachs expected memory supply-demand to return to balance in 2027, but now believes the tight supply situation will not ease in 2027, and the overall supply-demand will remain tight.

Indium Phosphide (InP) Substrate: Core material for AI optical interconnect, tight supply continues, capacity expansion will take years

Indium phosphide (InP) substrate is an emerging material receiving significant attention for shortages in this report.

Goldman Sachs expects the tight supply situation for InP substrate will persist into 2026, and prices are expected to rise by about 15%.

In terms of expansion, major suppliers have announced expansion plans multiple times in July, October 2025, and February 2026, continuing to increase investment.

Despite clear willingness to expand, Goldman Sachs notes that effective new capacity will not be phased in until around fiscal year 2028, so bottlenecks cannot be fundamentally resolved in the short- and mid-term.

Meanwhile, industry feedback is that market demand for InP substrates is strong, supply from multiple firms cannot meet downstream demand, and the supply shortage is expected to persist into the next fiscal year.

Foundry: TSMC's advanced process supply shortage to persist until 2027 and beyond

In foundry, Goldman Sachs' judgment on TSMC is: driven by continued AI inference demand growth, advanced process supply will remain tight at least until 2027.

New capacity brought on by TSMC's current capital expenditure cycle is expected to be realized as early as 2028-2029. Goldman Sachs forecasts TSMC's dollar revenue will grow 35%, 30%, and 29% year-on-year in 2026, 2027, and 2028 respectively.

For mainland Chinese foundries, Goldman Sachs' view differs.

Although current utilization is high, Chinese foundries are continuously expanding capacity, and supply-demand is not tight.

Goldman Sachs expects that, driven by high capacity utilization, recovery in industrial equipment end-markets, AI-related product demand growth, rising raw material costs, and healthy competition, China foundry prices in 2026 will rise about 10%.

Summing up all of Goldman Sachs’ judgments in this report, for investors: expectations of substantial memory price rises, sustained tightness in ABF/BT substrates, and multi-year expansion cycles for InP substrates all point in one direction—the physical constraints on the supply side will support the profitability and pricing power of the entire computing hardware supply chain for quite some time.

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