Link to the code that reproduces this issue

https://github.com/laguagu/ppr-issue

To Reproduce

. Create a Next.js 16 app with cacheComponents: true:

// next.config.ts
const nextConfig = {
  cacheComponents: true,
};
export default nextConfig;

1. Create a route group with template.tsx:

   app/
   └── (home)/
       ├── template.tsx
       └── page.tsx

2. Add a simple template:

   // app/(home)/template.tsx
   export default function Template({
     children,
   }: {
     children: React.ReactNode;
   }) {
     return <main>{children}</main>;
   }

3. Add async Server Components with Suspense in page.tsx:

   // app/(home)/page.tsx
   import { Suspense } from "react";
   import { connection } from "next/server";
   
   async function AsyncContent() {
     await connection();
     const data = await fetch("https://jsonplaceholder.typicode.com/posts/1", {
       cache: "no-store",
     }).then((r) => r.json());
     return <div>Title: {data.title}</div>;
   }
   
   export default function Page() {
     return (
       <Suspense fallback={<div>Loading...</div>}>
         <AsyncContent />
       </Suspense>
     );
   }

4. Run locally with next build && next start - works correctly

5. Deploy to Vercel - streaming fails

Current vs. Expected behavior

Current vs. Expected behavior

Expected:

• Static shell renders immediately
• Dynamic content streams in as Suspense boundaries resolve
• Same behavior on Vercel as local production build

Actual on Vercel:

• Static shell renders correctly (template wrapper, layout)
• Suspense fallbacks never resolve - content remains empty
• No errors in console, logs, or Vercel function logs
• Build output shows ◐ (Partial Prerender) as expected

Provide environment information

Operating System:
  Platform: win32
  Arch: x64
  Version: Windows 11 Pro (10.0.26200)

Binaries:
  Node: v22.10.0
  pnpm: 10.24.0

Relevant Packages:
  next: 16.0.6
  react: 19.2.0
  react-dom: 19.2.0
  typescript: 5.9.3

Next.js Config:
  cacheComponents: true
  reactCompiler: true

Which area(s) are affected? (Select all that apply)

Partial Prerendering (PPR), cacheComponents, Use Cache, Loading UI and Streaming

Which stage(s) are affected? (Select all that apply)

Vercel (Deployed)

Additional context

• Only reproducible on Vercel - local next build && next start works correctly
• The issue seems to be specific to how Vercel's edge runtime handles template.tsx remounting behavior in combination with PPR streaming
• Build output shows the route as ◐ (Partial Prerender) in both cases
• No errors are thrown - the streaming simply doesn't occur
• Replacing template.tsx with layout.tsx is an immediate fix

Why this matters

template.tsx is documented as the way to handle:

• Page transition animations
• State reset on navigation
• Per-page layouts that remount

With PPR/Cache Components being the new default in Next.js 16, this incompatibility should either be:

1. Fixed to work correctly
2. Documented as a known limitation
3. Emit a build warning when template.tsx + cacheComponents are used together