Guosen Securities has released a research report outlining investment opportunities in the foundational materials sector, particularly those linked to the advancement of high-end copper-clad laminate (CCL) technology driven by new AI server architectures.
The firm suggests focusing on several key companies. Jinan Shengquan Group Share Holding Co.,Ltd. (SHSE: 605589)
This company has achieved certification from major domestic industry leaders for its independently developed polyphenylene ether (PPO) resin. It also possesses production capacity for hydrocarbon resin (ODV), which is undergoing rapid expansion.
Sichuan Em Technology Co.,Ltd. (SHSE: 601208)
The company has independently developed a range of electronic-grade resin materials, including hydrocarbon resin, polyphenylene ether resin, benzoxazine resin, and specialty epoxy resin. Multiple products are already being used by leading downstream CCL manufacturers.
Looking ahead, polytetrafluoroethylene (PTFE), due to its extremely low dielectric loss (Df) value, is anticipated to enter the M10 material system. Investors are advised to monitor DONGYUE GROUP (HKG: 00189), a domestic leader in PTFE production.
The core viewpoints from Guosen Securities are detailed below.
Demand Drivers for High-End CCL Markets
The rapid adoption of AI applications and increased capital expenditure by tech giants on AI are fueling a surge in AI server shipments. Within these servers, the GPU board assembly represents a significant addition compared to standard servers. Taking NVIDIA's servers as an example, this assembly includes the GPU components and the NVSwitch module board, all of which require high-grade CCL boards.
Furthermore, the CCL used in standard servers is at a critical juncture for upgrades. Post-iteration servers demand CCL boards with a markedly higher layer count. The expanding need for high-performance servers is driving continuous growth in demand for high-speed CCL materials.
NVIDIA's Rubin Architecture Reshapes PCB Role
NVIDIA's Vera Rubin architecture fundamentally transforms the role of the PCB within the AI rack. It evolves from a passive carrier primarily responsible for intra-board connections to an active medium handling high-speed interconnections within the rack. This shift transfers value previously held by copper cables, connectors, and backplane systems to the PCB itself, effectively "semiconductor-izing" the PCB.
Consequently, this leads to a significant increase in the value of the upstream CCL material. It necessitates a major upgrade to the M8-M9 material systems, with the future Rubin Ultra platform expected to advance to the M10 system and substantially increase PCB usage. This highlights the rapid demand growth and product iteration for upstream materials.
Specialty Electronic Resins: A Key Upgrade Path
Electronic resin is the only organic material in CCL fabrication that offers design flexibility. Factors affecting dielectric loss include molecular polarity and the density and mobility of polar groups, making the reduction of dielectric constant (Dk) and dielectric loss (Df) a critical focus.
Current high-end CCLs commonly use resins such as polyphenylene ether (PPO), hydrocarbon resin (CH), and polytetrafluoroethylene (PTFE). Hydrocarbon and PTFE resins offer superior electrochemical performance. With the progression of NVIDIA's material systems, demand for these resins is projected to grow rapidly.
Electronic Glass Fabric: A Critical Supply Constraint
The glass fabric used in CCL for NVIDIA's AI servers, corresponding to M8 & M9 materials, requires low dielectric constant, low dielectric loss, and low thermal expansion characteristics. However, supply constraints due to limited production capacity and weaving equipment have led to sustained price increases, making this the most critical bottleneck among upstream materials.
Silica Micro Powder: From Filler to Core Functional Material
In the AI server material upgrades driven by NVIDIA's Rubin platform, silica micro powder has ascended from a supplementary filler to a core material determining CCL performance. Its usage volume, price, and technical specifications are undergoing a generational leap, pushing the product towards higher fill rates, lower dielectric loss, and finer particle sizes, resulting in a clear enhancement in product value.
Investment Risks to Consider
The report concludes by highlighting several potential risks, including intensifying market competition, slower-than-expected technological iteration, weaker-than-anticipated downstream demand, and delays in planned capacity expansions.
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