Sinolink: The second half of the year will see dual benefits for PCBs with the arrival of new products and profit recovery.

Sinolink released a research report stating that, on the whole, the fundamentals of upstream materials in the PCB industry chain were significantly better than those of downstream PCBs in the first half of this year. In the second half of the year, the PCB sector is expected to see a dual marginal change with new products triggering demand and profit recovery, with a strong certainty of accelerated fundamental slope. The current configuration value in this sector is relatively high and deserves attention. Upstream materials accelerated first in the first half of the year. The performance acceleration of upstream materials began in Q1 2026, with revenue/net profit attributable to the parent company/non-recurring net profit growth rates showing significantly stronger changes compared to Q2 2026/Q1 2026 than those in Q2 2025/Q4 2025. The changes in quarter-on-quarter growth rates of upstream materials in Q2 2026/Q1 2026 significantly narrowed; however, the peak of quarter-on-quarter growth rate changes for the CCL segment occurred only in Q2 2026. According to the data, the point change for revenue/net profit attributable to the parent company/non-recurring net profit in Q1 2026/Q4 2025 was -3pct/-428pct/-433pct, while the point change for revenue/net profit attributable to the parent company/non-recurring net profit in Q2 2026/Q1 2026 was 37pct/188pct/157pct, showing an acceleration point in Q1 2026. The PCB segment did not show an accelerating trend in the first half of 2026, with changes in quarter-on-quarter growth rates of revenue/net profit attributable to the parent company/non-recurring net profit for Q1 2026/Q4 2025 at -10pct/163pct/57pct and for Q2 2026/Q1 2026 at 31pct/4pct/18pct, remaining overall stable. The reasons for this phenomenon are: 1) High-end AI new products did not see large-scale shipment in the first half of the year. High-end AI new products, such as NVIDIA's Rubin new line, Amazon's next-generation Trainium3 products, and Google's TPU V8 series, are set to ship in the second half of 2026, creating a shipment vacuum in the first half. This factor has a greater impact on the A-share PCB sector than on the midstream and upstream segments. 2) AI stockpiling is squeezing out mid- to low-end products. Although the demand from AI new products was insufficient to drive shipments in the first half of this year, clients began notifying limited stockpiling in late March and full stockpiling across the industry chain in May. Additionally, most manufacturers in the industry chain are optimistic about AI's forward planning and have ample motivation to shift production capacity for the R&D testing of AI products, which has led to a severe shortage in production capacity for mid- to low-end products, inciting frequent price increases. The second half of the year is expected to bring dual benefits of new product demand and profit recovery for PCBs. Sinolink believes that starting from the third quarter, the performance slope of PCB is expected to accelerate, making PCBs one of the most prominent sectors. The core reasons are: 1) High-end AI new products have started shipping. According to industry chain tracking, Sinolink has observed that some high-end AI new products achieved shipments by the end of July, with the latest part also achieving large-scale mass production by mid-August, maintaining a full capacity status through the end of this year. As the largest exposure segment for AI, PCBs will significantly benefit; 2) PCB prices are beginning to be transmitted. After the price increases in the first half reached the PCB end, PCB has not fully transferred the price increases to customers; however, Sinolink has observed that this situation is actively improving, and from the perspective of industry chain tracking, PCB profit levels are expected to further increase in the second half of the year, pushing up the acceleration slope. In data terms, Sinolink notes that the monthly revenue of Taiwanese PCB manufacturers has shown significant changes, with the year-on-year growth rate of monthly revenue reaching 39% in July 2026, marking the highest growth slope this year, with a month-on-month growth of 13%, indicating signs of a change in momentum. Technological innovation continues, supporting growth in the PCB industry. Even with fluctuations in AI, the growth of value in the PCB industry can ensure the sustainability of industry performance as long as technological innovation continues. Therefore, whether technological iteration continues will become an important judgment anchor. The technological iteration of AI PCBs continues to be observed: 1) PCB orthogonal backplanes. Currently, interconnections between Compute Trays and NVLink Switch Trays under NVIDIA's Rack architecture are completed using copper cables, but these cables have issues with poor heat dissipation and significant assembly difficulty. The industry is also researching new solutions for better mass production outcomes. Sinolink observes that previously used PCB orthogonal backplanes in the communications field may be one important direction to solve this issue. Once adopted, the value of PCBs is expected to see further upgrades, thus supporting long-term growth in the PCB industry. 2) CoWoP transfers substrate value to PCBs. The CoWoP design omits the packaging substrate stage, connecting directly to the PCB, which increases the complexity of PCBs. It is currently uncertain when such products will become mainstream, but from this solution, Sinolink sees that overseas terminal manufacturers continue to place significant emphasis on PCB technology in their future design plans, serving as a long-term support for PCB technological iteration.