The crafting recipe to upgrade a shard of laputa's shard power accepts any shard power value in the recipes for each level, and when I tried upgrading one, it defaulted to Shard Power III, and the crafting output for combining that with another Gaia Spirit results in it still giving you Shard Power III.

I think this is due to the flattening, and the fact that the crafting recipes for each Shard Power tier accepts any Shard of Laputa, ignoring what the previous Shard Power value was.

Steps to reproduce:
Put a Shard of Laputa with any Shard Power into a crafting grid with a Gaia Spirit