AI momentum remains strong, and semiconductor equipment is favored

UBS’s 2026 Q3 Asia-Pacific technology survey visited 40 companies across China, Hong Kong, Taiwan, South Korea, and Japan. Its core view is that AI industry strength will remain intact, semiconductor equipment is bullish, and forecasts for PC and smartphone shipments have been cut.

The AI semiconductor segment remains in a strong cycle. Nvidia’s 2026 rack forecast has been raised to 80,000 units, and 2027 remains at 95,000 units. CPU demand is rising, and Vera is performing well. Demand for MLCCs used in AI servers is expected to double in 2026-2027. IC substrate prices rose 20% quarter over quarter in 3Q26, and are expected to maintain high-single-digit to low-double-digit growth in 4Q. TSMC’s visibility for AI/HPC orders extends to 2029-2030. CoWoS capacity is estimated at 160,000 wafers per month by the end of 2026 and 270,000 wafers per month by the end of 2027. MediaTek’s TPU V8t could generate more than US$2 billion in revenue in 2026 and US$12 billion to US$16 billion in 2027. Domestic AI accelerator localization is advancing, but HBM supply remains the main bottleneck.

The outlook for memory and semiconductor equipment is positive. Hyperscale cloud providers have raised 2027 procurement demand for server DDR5 and enterprise SSDs. Mobile DRAM prices rebounded in 3Q26, and lower HBM specifications have not dampened demand. Orders for wafer equipment makers have risen sharply since midyear, extending visibility. Samsung and SK Hynix are accelerating memory cleanroom construction and increasing capital expenditure. Orders for advanced logic equipment are also strengthening. Domestic demand for memory and logic equipment is robust, and test equipment is benefiting from demand for AI ASIC and CPU testing.

End-market consumer electronics are under pressure. Notebook ODM shipments fell 17% quarter over quarter in 3Q26. Due to rising memory prices, PC shipment growth for 2027 has been cut to -4%, and 2026 to -11%. Smartphone shipments are expected to decline 10% in 2026 and have been lowered to -3% for 2027. Compared with the Android ecosystem, Apple’s supply chain is more resilient.

AI power and custom ASICs have opened up significant growth potential. The potential market size for AI power is US$91.1 billion in 2030, with a 2025-2030 CAGR of 69%. The shift toward 400V/800V DC power architectures is becoming a trend. Rack shipments of custom ASICs from Google, Amazon, OpenAI, Meta, and others are scaling rapidly. Traditional servers are also benefiting from Agent AI, with unit shipments expected to maintain double-digit growth in 2026-2027.

Utilization rates at mature-node wafer fabs are rising, IC design is benefiting from AI demand, and OSATs are aggressively expanding advanced packaging capacity. Memory makers continue to raise DRAM and HBM prices, and domestic memory localization is progressing steadily. MLCCs, IC substrates, and PCBs are benefiting from higher per-server value in AI servers, supporting price increases.