Stocks in the printed circuit board (PCB) sector have maintained their recent positive momentum.

At the time of writing, KB LAMINATES (HKG: 01888) surged 14.71% to HK$7.525, while KINGBOARD HLDG (HKG: 00148) rose 10.58% to HK$9.875.

Victory Giant Technology(Huizhou) Co.,Ltd. (HKG: 02476) gained 7.5% to HK$40.72, and DELTON (HKG: 01989) increased by 6.35% to HK$17.26.

Market Drivers

Reports indicate that Nvidia and its major clients are bypassing copper-clad laminate (CCL) manufacturers to engage directly with suppliers of HVLP4 copper foil and T-glass fiberglass fabric.

They are reportedly using a direct consignment model to secure key production capacity more than a year in advance.

Industry sources also note that Nvidia is exerting greater procurement pressure on US cloud service providers.

In response to tight supply, CCL suppliers have implemented an unusual quota-based allocation system, requiring IC substrate and PCB manufacturers to collect materials based on actual usage, further highlighting the scarcity of upstream materials.

Analyst Perspective

A recent report from Citi highlighted that demand for PCBs from AI servers is shifting from volume growth to material upgrades.

The report suggests the current bottleneck in supply is no longer at the PCB manufacturing level but lies with upstream CCL and, even further upstream, with electronic-grade fiberglass cloth.

Citi's analysis indicates that production capacity is expanding fastest for PCBs, followed by CCL, and slowest for electronic-grade cloth.

However, pricing power follows the opposite pattern, with greater potential for price increases concentrated further upstream in the supply chain.