Despite the recent pullback in the AI semiconductor sector, the industry investment cycle has not yet peaked. According to a Nomura report, capital expenditures by cloud service giants are set to continue until 2027, with a gradual emergence of supply gaps for components. Ongoing price hikes and upward revisions to earnings forecasts have become the primary drivers pushing the market higher. The market is expected to face the most severe supply chain mismatch in history in the second half of 2026, with supply bottlenecks shifting to smaller components such as wafer-level substrates, printed circuit boards, and copper-clad laminates. Structural shortages will exacerbate short-term price volatility, further confirming the long-term sustainability of the cycle. Driven by strong demand and cost inflation, Nomura has significantly raised its global server market expectations, projecting AI server revenue to grow by 78% and 76% in 2026 and 2027, respectively. Meanwhile, Nomura reiterated its 'buy' ratings on nine Asian AI tech companies, including TSMC, ASE, and MediaTek, and raised their target prices, recommending buying on dips during market weakness. The semiconductor hardware supply chain is facing an unprecedented supply-demand imbalance, with shortages extending beyond known areas to include PCBs, CCLs, and IC substrates. The supply-demand situation is expected to further deteriorate in the second half of 2026, with supply chain price hikes likely to persist or expand. Global data center construction is accelerating, with an increase in new projects. It is expected that 32GW of new computing power will be deployed in 2027, with 23GW already visible for 2028. This demand is primarily driven by capital expenditures from hyperscale and emerging cloud service providers, while the Chinese government also plans to invest US$295 billion over the next five years to build a national AI computing power network, providing strong support for hardware demand. In the advanced packaging sector, TSMC is actively expanding its capacity, targeting 2 million CoWoS wafers by 2027, though actual output may reach 1.8 million due to bottlenecks. Intense capacity competition among AI chip giants is underway, with NVIDIA expected to secure about 55% of CoWoS capacity, Google's TPU share set to rise, and Intel's EMIB-T technology posing a potential threat. TSMC is accelerating the mass production of related technologies. The rise of agent-based AI has driven a surge in demand for server CPUs, with companies like NVIDIA, AMD, and Arm all optimistic about market opportunities. This will benefit outsourced semiconductor assembly and test (OSAT) providers and baseboard management controller demand. Based on strong expectations, Nomura has comprehensively raised its earnings forecasts and target prices for the Asian semiconductor hardware supply chain, with TSMC's profit forecasts revised upward and MediaTek set to benefit from the growth in Google's TPU share.