Guosheng Securities: AI demand explodes, PCB industry chain benefits significantly.

Guosheng Securities released a research report stating that PCB is a carrier for the electrical interconnection of electronic components, benefiting from the development drive of industries such as AI. It is expected that the global PCB output value will reach $94.661 billion by 2029. AI servers and HPC systems have become important drivers for the development of low-loss high-layer and HDI boards. The explosion in demand for high-end PCBs has driven up the demand and prices of high-end materials. Under the explosion of AI PCB demand, the current supply of the corresponding industry chain is in a tense state. In addition to the scarcity and tension of high-layer and high-end HDI production capacity, the upstream high-end material supply is also scarce. It is necessary to pay attention to the opportunity for explosive performance of the PCB industry chain in the AI cycle. Guosheng Securities' main points are as follows: The explosion of AI demand drives up the quantity and price of the PCB industry chain. PCB is a carrier for the electrical interconnection of electronic components, benefiting from the development drive of industries such as AI. By 2029, the global PCB output value is expected to reach $94.661 billion. AI servers and HPC systems have become important drivers for the development of low-loss high-layer and HDI boards. The explosion in demand for high-end PCBs has driven up the demand and prices of high-end materials. For example, the price of CCL for AI products has increased 2-2.5 times compared to the CCL unit price for Whitley servers. The rapid development of applications such as AI, high-performance computing, and high-speed communication has led to increasing demand for new generations of high-speed copper-clad laminates (M7, M8, M9). AI servers have evolved from GB200 to GB300 and to the next generation products, with switches increasing from 400Gb to 800Gb and up to 1.6Tb. The copper foil substrate material is also elevated from M7 and M8 to M9. Panasonic has launched MEGTRON8s, which have lower dielectric constant and transmission loss compared to MEGTRON7. From the perspective of the PCB industry chain, the upstream of PCB includes copper foil, copper balls/copper oxide powder, semi-cured slices (bond slices), glass fiber cloth, wood pulp, ink, resin, etc., among which electro-deposited copper foil, resin, and glass fiber cloth are three main materials. The midstream base material is mainly copper-clad laminate, processed from raw materials such as copper foil, epoxy resin, and glass fiber yarn. Material costs account for approximately 63% of PCB production costs, including materials such as copper-clad laminate, copper foil, phosphorous copper balls, ink, etc. Copper-clad laminate is the core material for making PCBs, mainly composed of copper foil (39%), glass fiber cloth (18%), and epoxy resin (26%). Copper-clad board used in the AI field is evolving towards high frequency, high speed, lightweight, and lead-free. The upgrade of copper-clad boards will inevitably drive the requirements for upstream materials. For example, high-end glass fiber cloth is a key material for manufacturing high-performance AI servers. One of its main uses is as an electrical insulation base material, which is developing towards lower dielectric constant and thermal expansion coefficient. Currently, the supply of high-end glass fiber cloth is tight, with the global leading special glass fiber cloth manufacturer Nippon Electric Glass announcing a price increase for composite materials produced by its composite materials division, which will be implemented from August 1, 2025. The supply of AI PCB materials is tight. Guosheng Securities believes that under the explosive demand for AI PCBs, the current supply of the corresponding industry chain is in a tense state. In addition to the scarcity and tension of high-layer and high-end HDI production capacity, the supply of high-end materials in the upstream of the industry chain is equally scarce. It is necessary to pay attention to the opportunity for explosive performance of the PCB industry chain in the AI era. Xiaomi held the Smart Family Ecosystem Launch Event, officially releasing the Xiaomi YU7, Xiaomi MIX Flip 2, and Xiaomi AI Glasses. In terms of cars, a total of 3 configured models were launched, with a price range of 253,500-329,900 yuan. As Xiaomi's first SUV, the Xiaomi YU7 has been upgraded in overall design and configuration, including standard 800V silicon carbide platform, laser radar, double-layer soundproof glass, four-piston calipers, continuous damping variable shock absorbers, and Xiaomi Sky Screen panoramic display. The car sold 289,000 units within 1 hour of its release. The Xiaomi AI Glasses combine glasses, first-person camera, headphones, and a portable AI assistant. They weigh 40g, are relatively lightweight, have a battery life of 8.6 hours, and are priced at 1,999 yuan. The Xiaomi glasses have full functionality, and the AI assistant is expected to facilitate life. The lightweight design improves comfort, while the high battery life enhances usability, further perfecting Xiaomi's ecosystem. Related subjects: PCB: Victory Giant Technology (300476.SZ), Suzhou Dongshan Precision Manufacturing (002384.SZ), Wus Printed Circuit (002463.SZ), Shengyi Electronics (688183.SH), Shennan Circuits (002916.SZ), Shenzhen Kinwong Electronic (603228.SH), Avary Holding (002938.SZ), Founder Technology Group (600601.SH). CCL and materials: Shengyi Technology (600183.SH), Nanya New Material Technology (688519.SH), Sinoma Science & Technology (002080.SZ), Zhejiang Wazam New Materials (603186.SH), Grace Fabric Technology (603256.SH), Jiujiang Defu Technology (301511.SZ). SoC: Bestechnic (Shanghai) Co., Ltd. (688608.SH), Espressif Systems (688018.SH), Actions Technology (688049.SH), Rockchip Electronics (603893.SH), Telink Semiconductor (Shanghai) Co., Ltd. (688591.SH), Allwinner Technology (300458.SZ), Shenzhen Bluetrum Technology (688332.SH). CIS & ISP: Hawei Group (603501.SH), SigmaStar Technology (301536.SZ), Hunan Goke Microelectronics (300672.SZ). AI Glasses industry chain: CONANT OPTICAL (02276), SUNNY OPTICAL (02382), Zhejiang Crystal-optech (002273.SZ), Goertek Inc. (002241.SZ), AAC TECH (02018), Q TECH (01478), OFILM Group Co., Ltd (002456.SZ), Jiangsu Gian Technology (300709.SZ). Risk Warning: Lower-than-expected downstream demand, lower-than-expected capacity construction, geopolitical risks.