Guosen Securities released a research report stating that the PCB industry is experiencing a long-term trend of simultaneous growth in volume and pricing, driven by the AI cycle. While mid-to-low-end products improve profitability through cost pass-through, high-end products expand their competitive edge via technological upgrades. Over the next two years, the industry will enter a new phase characterized by "technology-driven growth and regional rebalancing," with leading companies possessing advanced manufacturing capabilities, overseas delivery networks, and material synergy systems being the key focus. The key insights from Guosen Securities are as follows:
**AI-Driven New Cycle Brings Fundamental Demand Shift** The construction of AI server clusters has led to simultaneous upgrades in computing boards, switches, and optical modules, driving both demand and unit prices for PCBs higher. As computing architectures evolve from GPU servers toward orthogonal and cable-free designs, signal chains become shorter and more sensitive to material losses, positioning PCBs as one of the most critical interconnect and power supply carriers in AI hardware. Unlike the "peak-decline" pattern of the 5G cycle, this AI cycle exhibits a long-term trend of "continuous penetration driven by technological iteration." The firm believes AI will be the dominant growth driver for the PCB industry over the next 3–5 years. Projections indicate that the wired communication PCB market will reach RMB 206.9 billion by 2027, with a two-year CAGR of 20%. The tight supply of high-end PCBs is expected to persist until 2027.
**Global Expansion and Regional Rebalancing** In recent months, multiple A-share PCB-listed companies have announced aggressive expansion plans, surpassing last year's scale. Regionally, major PCB manufacturers are accelerating their presence in Southeast Asia, establishing new bases in Thailand and Vietnam to meet overseas demand while expanding high-end domestic production. This creates a short-term strategy where "domestic capacity focuses on high-end R&D, while overseas factories serve as entry tickets." Guosen Securities estimates that the combined output of 10 leading A-share PCB firms and three overseas PCB manufacturers will reach RMB 186 billion by 2027, with a 2025–2027 CAGR of 54%. The global PCB supply-demand gap is projected to hit RMB 20 billion by 2026, with tight conditions persisting in 2027, though the gap may narrow.
**Process and Material Upgrades Accelerate High-End Trends** Recent technological advancements include the rapid adoption of mSAP processes in AI server and switch motherboards to accommodate 10–15μm line widths/spacing. Server racks are expected to transition toward pseudo-orthogonal architectures, increasing signal transmission density and demanding materials with lower dielectric constants, reduced loss, and smoother surfaces. Material systems are also evolving, with electronic fabrics shifting from E-glass to L/Q-glass, resins upgrading toward low Dk/Df and high Tg, and copper foils adopting HVLP3/4 and ultra-thin variants to minimize losses. The firm predicts that high-end PCBs will follow a "material-process-architecture" iterative cycle, where AI-driven signal frequency increases will spur further material and process innovations, leading to greater differentiation in technology and profitability among companies.
**Surge in Demand and Profit Recovery Boost Domestic Material Substitution** Driven by reduced copper mine output and expectations of U.S. interest rate cuts, copper prices have risen significantly since April, lifting prices for mid-to-low-end copper-clad laminates (CCLs). With CCLs enjoying better competitive dynamics than downstream PCB manufacturers, companies like Shengyi Technology and Kingboard Laminates have swiftly passed costs downstream, improving profitability. However, high-frequency, high-speed CCLs for AI face limited short-term pricing power due to strong buyer negotiation. Meanwhile, sudden demand spikes for materials like hydrocarbon resins, Low-DK second-gen fabrics/quartz fabrics, HVLP copper foils, and silica powder have created supply gaps, with Low-DK second-gen fabrics seeing a 10–20% shortage and notable price increases. Domestic suppliers are making strides in resin and silica powder production, accelerating localization of second-gen fabrics and quartz fabrics, rapidly expanding substitution opportunities in high-end CCL supply chains.
**PCB Reshapes High-Density Connectivity with Rising Rack Density** At GTC 2025, NVIDIA showcased its new Kyber rack architecture concept, replacing copper backplanes with PCBs and using a pseudo-orthogonal design to directly connect computing and switching trays via PCB backplanes. Additionally, the Vera Rubin CPX, unveiled at September’s AI Infra Summit, employs midplanes instead of overpasses to address space constraints and reliability issues in GB-series assembly. Given midplanes' critical signal transmission role and higher value, Guosen Securities estimates that a fully configured VRNVL144 CPX rack could entail PCB costs of RMB 8,000 per Vera Rubin GPU (excluding CPX), while NVL144 GPUs alone may reach over RMB 5,000 per unit—doubling the value compared to GB200/300 models.
**Risk Factors:** AI computing investment may fall short of expectations; PCB capacity expansion could lag; AI server architecture upgrades may not meet projections.
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