According to a research report from CITIC SEC, multiple companies across various sub-sectors of the electronics industry have recently issued price increase notices, covering areas such as memory, CCL, BT substrates, wafer foundry, and packaging & testing. This trend is set against a backdrop of significantly rising upstream metal costs since 2025, compounded by the demand pull from the high-growth AI sector. Given that the current price hike cycle is driven by an AI super-boom, while demand from consumer electronics and automotive electronics faces temporary pressure, the report recommends focusing on segments like memory, CCL, BT substrates, wafer foundry, and packaging, which are poised to benefit most definitively from the upward pricing trend. The main viewpoints of CITIC SEC are as follows: Since the second half of 2025, a wave of price increases has emerged across multiple sub-sectors of electronic components, largely stemming from significant cost pressures due to substantial rises in upstream metal prices, with some segments also experiencing strong demand pull from AI. Metals are key raw materials for critical processes and materials in the electronics field, including wafer manufacturing, packaging interconnects, and copper-clad laminates, primarily consisting of gold, silver, and copper. In 2025, futures prices for gold, silver, and copper surged by over 50%, 150%, and 50% respectively. Looking ahead to 2026, against a backdrop of global liquidity easing and supply-side constraints for some metals, the price levels of major metal categories are expected to continue rising or remain elevated. Amid significantly higher costs—and for some segments, the additional boost from robust AI demand—multiple midstream electronic component sub-sectors have initiated a wave of price increases. Since the second half of 2025, price hike notifications have been observed from manufacturers in areas including memory, CCL, BT substrates, wafer foundry, packaging & testing, LEDs, power devices, analog chips, and passive components, with this trend gradually spreading to more players. Sub-sectors with high AI exposure or improved supply-demand dynamics demonstrate stronger beneficiary certainty. Historically, widespread price increases in the electronics industry often signal the arrival of a comprehensive upward cycle. However, considering the current demand landscape—characterized by sustained high growth in AI-related industries alongside temporary pressure on demand from consumer electronics and automotive electronics (partly due to memory shortages and price hikes)—this round of price increases is judged to reflect the overall sentiment of the electronics sector, albeit with varying degrees of benefit across different sub-sectors. Based on differences in downstream exposure, cost structure, and pricing power, the following segments are recommended for focus during this price hike cycle: Sectors with high AI exposure are positioned to benefit most strongly, such as memory, CCL, and BT substrates. 1) Memory: TrendForce forecasts that traditional DRAM contract prices will rise by 55%~60% in Q1 2026, while NAND Flash contract prices are expected to increase by 33%~38%. The current shortage cycle is anticipated to persist until the first half of 2027. 2) CCL: With a sharp rise in upstream copper prices, CCL manufacturers have successfully passed on cost increases to downstream PCB segments. A price increase of approximately 5%~10% is expected to be implemented in 2025, with a peak anticipated in the first half of 2026, potentially offering further upside of over 10%. 3) BT Substrates: Driven by strong memory demand, shortages and price hikes of raw materials, and significant gold price increases, and based on price adjustments by Taiwanese manufacturers like Unimicron, Kinsus, and Nan Ya Plastics, industry price increases in the second half of 2025 are estimated at around 30%, with an additional 15-20% rise projected for 2026. Sectors with improved supply-demand dynamics also show relatively high beneficiary certainty, such as wafer foundry and display panels. 1) Wafer Foundry: Overseas mature process capacity has seen some contraction, while leading domestic Chinese manufacturers maintain full utilization rates and successfully pass on higher costs. According to information from the Sci-Tech Innovation Board Daily, SMIC raised prices for its 8-inch BCD process by about 10% for some customers in December 2025. Furthermore, the advanced process business of domestic foundries is expected to benefit significantly from the release of domestic computing power demand in 2026. 2) Display Panels: With the fading impact of tariffs and increased demand for large sizes driven by major events like the Winter Olympics and the FIFA World Cup, the profitability of large-size LCD panels is set for a high-certainty improvement. Risk factors include upstream metal cost increases exceeding expectations; downstream demand falling short of expectations; midstream component manufacturers failing to fully pass on cost increases to downstream customers; intensified market competition; and slower-than-expected progress in domestic substitution. Regarding investment strategy, recent price increase notices from companies in various electronics sub-sectors, covering memory, CCL, BT substrates, wafer foundry, and packaging & testing, are driven by significantly higher upstream metal costs since 2025, combined with the demand boost from the high-growth AI sector. Considering the AI super-boom backdrop of this cycle and the temporary pressure on demand from consumer electronics and automotive electronics, the following are recommended for focus during this electronics price hike cycle: 1) Sectors with high AI exposure have the strongest beneficiary certainty, such as memory, CCL, and BT substrates. 2) Sectors with improved supply-demand dynamics also show relatively high beneficiary certainty, including wafer foundry and display panels.
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