Driven by AI demand, the printed circuit board (PCB) industry continues to maintain high prosperity, with the PCB industry overall and leading companies delivering outstanding first-half performance.

With the conclusion of the interim report disclosure season, the report cards of printed circuit board (PCB) companies have all been released. According to Wind data statistics, in the first half of the year, the PCB industry achieved double-digit growth in both revenue and performance.

Among the 43 companies in the PCB industry, Dongshan Precision (002384.SZ) leads in revenue scale, while Shenghong Technology (300476.SZ) tops in net profit attributable to parent company. Five companies have profit scales exceeding 1 billion yuan: Shenghong Technology, Shengyi Technology (600183.SH), Avary Holding (002938.SZ), Shenzhen Nanshan Circuit (002916.SZ), and Shanghai Electric (002463.SZ).

**PCB Companies Achieve High Performance Growth**

According to Wind data statistics, in the first half of the year, 43 PCB companies achieved combined operating revenue and net profit attributable to parent company of 133.456 billion yuan and 12.465 billion yuan respectively, representing year-on-year growth of 25.17% and 58.51%.

Among these companies, Dongshan Precision's operating revenue reached 16.955 billion yuan, taking the leading position. Shenghong Technology, with net profit attributable to parent company of 2.143 billion yuan, became the only company in the industry with net profit exceeding 2 billion yuan. In terms of growth rate, Shengyi Electronics ranked at the forefront for both revenue and performance growth, reaching 91.00% and 452.11% respectively.

Notably, Shenghong Technology, which leads in net profit, ranks second in the industry for both operating revenue and net profit attributable to parent company growth rates, reaching 86.00% and 366.89% respectively.

Behind the high performance growth of PCB companies, AI (Artificial Intelligence) demand played a key role. Sinolink Securities pointed out in its latest research report: "Benefiting from strong AI cloud demand and cyclical recovery, the PCB sector's performance is brilliant. AI cloud has driven demand for AI servers, switches, optical modules, etc., with the PCB sector benefiting significantly, coupled with demand recovery in multiple downstream sectors. AI-PCB companies have strong orders, operating at full capacity and sales, and are aggressively expanding production. High performance growth is expected to continue in the second half, with cyclical demand recovery and strong AI demand driving price increase trends. The PCB sector's 2025 performance growth will be strong." Therefore, it is optimistic about AI-PCB, AI-driven, and independent controllable beneficiary industrial chains.

Alongside high performance growth, PCB manufacturers represented by Shenghong Technology and Shanghai Electric have announced expansion plans for high-end HDI (High Density Interconnect) capacity. For example, Shenghong Technology currently plans to invest over 6 billion yuan to expand high-end HDI and high multilayer board capacity in Huizhou's fourth-phase factory building. Shanghai Electric planned to invest approximately 4.3 billion yuan in Q4 2024 for a new artificial intelligence chip supporting high-end printed circuit board expansion project.

The high performance growth has attracted market funds' attention. Since the beginning of this year, among the 43 PCB companies, as many as 7 companies have seen their stock prices double or more: Shenghong Technology, Nanya New Material, King Board Electronics, Dongshan Precision, Shengyi Technology, Swift Technology, and Shenzhen Nanshan Circuit. Among them, Shenghong Technology's stock price rose 537.62% from January 1 to August 29.

**Shenghong Technology's Performance Exceeds Expectations, Thailand Factory Turns Profitable**

According to Shenghong Technology's semi-annual report, the company achieved operating revenue of 9.031 billion yuan and net profit attributable to parent company of 2.143 billion yuan in the first half. Although Shenghong Technology's operating revenue failed to enter the industry's 10-billion-yuan scale camp, its net profit attributable to parent company ranked first in the industry. Looking at quarters, its Q2 single-quarter net profit attributable to parent company was 1.222 billion yuan, up 390.14% year-on-year and 32.78% quarter-on-quarter.

A month ago, 18 institutions made predictions for Shenghong Technology's 2025 annual performance, with the consensus net profit prediction reaching 4.651 billion yuan. The latest interim report's net profit was 2.143 billion yuan, about 46.08% of the full-year prediction, failing to achieve over half the proportion. However, Shenghong Technology's Q2 net profit showed high quarter-on-quarter growth, and this growth momentum may continue into Q3. Recently, 21 institutions gave the latest full-year net profit prediction of 4.919 billion yuan, 268 million yuan higher than the previous value.

Alongside high performance growth, Shenghong Technology's gross margin and cash flow also improved significantly. In the first half, the company's sales gross margin was 36.22%, up 15.61 percentage points year-on-year; net margin was 23.73%, up 14.28 percentage points year-on-year. In Q2, the company's gross margin reached 38.83% and net margin was 25.91%, both hitting historical highs. In terms of cash flow, in the first half, the company's net cash inflow from operating activities was 1.19 billion yuan, up 81.86% year-on-year. Meanwhile, the company's investment activity cash flow was -2.147 billion yuan, mainly used for high-end PCB capacity expansion.

Shenghong Technology stated in its 2025 semi-annual report that the company's first-half performance was mainly attributed to forward-looking AI computing power layout and continuous technological breakthroughs. In the first half, the company took the lead in breaking through core technical barriers combining high multilayer and high-end HDI, possessing manufacturing capability for over 100-layer high multilayer boards. It is among the first global companies to achieve large-scale production of 6th-order 24-layer HDI products and technical capabilities for 8th-order 28-layer HDI and 16-layer any-layer HDI, accelerating layout of next-generation products supporting cutting-edge artificial intelligence products and autonomous driving platforms. Currently, the company holds leading global market share in AI computing cards and AI DataCenter UBB & switch markets. According to Prismark data, the company ranks 6th globally among PCB suppliers.

Regarding capacity, Shenghong Technology disclosed in its semi-annual report that the company invested in building production lines in Thailand and Vietnam, steadily laying out high-end PCB capacity in Southeast Asia. Shenghong Technology acquired a Thai company in 2024, completing strategic layout of its Thailand manufacturing base. The company's August 29 "Investor Relations Activity Record" showed: "The Thailand factory completed Phase I upgrade and renovation in March this year, and Phase II upgrade and renovation is also nearing completion. Recently, major North American technology clients have been conducting factory audits, and some clients have begun product introduction for the Thailand factory, with some orders already scheduled. Therefore, it is expected that in the second half of this year, the Thailand factory's product structure will improve significantly, with high-end products expected to increase volume. Regarding profitability, since the Thailand factory was still in the upgrade and renovation stage in Q1 this year, it posted slight losses in the first quarter, but has now achieved turnaround to profitability, with profitability expected to improve significantly in the second half. In the medium to long term, with production line optimization, automation upgrades, and management optimization, the Thailand factory's profitability is expected to match headquarters levels."

Shenghong Technology expects: "First, with continuous improvement in yield rates, profitability is expected to further strengthen. Second, for clients' new products and newly introduced clients, the company will select orders with better profitability advantages from volume and price perspectives. Third, continuous upgrades in processes and materials can also bring new profit growth points for the company."

**Dongshan Precision Focuses on High-end PCB and Acquires Major Optical Module Manufacturer**

Looking at Dongshan Precision, which leads in revenue scale, in the first half, the company achieved total operating revenue of 16.955 billion yuan, up 1.96% year-on-year, and net profit attributable to parent company of 758 million yuan, up 35.21% year-on-year.

With single-digit revenue growth, Dongshan Precision achieved double-digit performance growth. From main business composition, Dongshan Precision's printed circuit board contributed 65.23% of revenue, up 1.93% year-on-year; communication equipment components and others contributed 13.93% of revenue, up 11.87% year-on-year; LED and modules contributed 1.69% of revenue, down 34.73% year-on-year; touch panel and LCM modules contributed 17.98% of revenue, down 2.35% year-on-year; other business contributed 1.17% of revenue, up 86.45% year-on-year.

After the semi-annual report release, Dongshan Precision's profit forecasts also changed. Wind data shows that a month ago, 18 institutions' consensus prediction for Dongshan Precision's 2025 annual report net profit was 2.847 billion yuan, while the interim report net profit was 758 million yuan, about 26.62% of the full-year prediction. The latest situation shows 19 institutions' latest full-year net profit prediction for the company is 2.822 billion yuan, slightly less than the previous value.

According to Prismark research report data, calculated by revenue scale, Dongshan Precision has ranked second globally in flexible printed circuits (FPC) for consecutive years and third globally in PCB. Currently, the company is advancing high-end PCB projects. Dongshan Precision announced on July 25 that it plans to have its wholly-owned subsidiary Multek Group (Hong Kong) Limited or its subsidiaries invest in building high-end printed circuit board projects, with investment amount not exceeding $1 billion.

Dongshan Precision's August 27 "Investor Relations Activity Record" shows that the Multek high-end PCB project investment process is expected to last 2-3 years. Currently, about $200 million has been invested in upgrading high-layer high-speed circuit board related equipment at existing bases, with this portion of new capacity planned to be gradually released in the first half of next year. "This PCB business investment decision stems from management consensus formed since the second half of last year, based on two core dimensions: on one hand, the company ranks steadily in the global top three in both flexible boards (FPC) and rigid boards (PCB), but in rigid board business, capacity in other categories besides HDI is relatively weak, and this investment aims to fill this gap; on the other hand, there is market demand for high-speed interconnection and ultra-high difficulty products."

Additionally, Dongshan Precision disclosed in its semi-annual report that the company is actively advancing the acquisition of Source Photonics, entering the optical module market. In 2023, Source Photonics was the ninth largest optical module manufacturer globally by market share. Dongshan Precision announced on June 13 this year that it plans to acquire 100% shares of Source Photonics for no more than 5.935 billion yuan.

Regarding this acquisition, when investors asked about the company's strategic layout, the company replied: "Since the second half of last year, the company began planning development direction after 2025. The previous 'consumer electronics + new energy' dual-wheel drive strategy has completed its phased mission. Based on the judgment that 'the next era is the artificial intelligence (AI) era,' the company focuses on AI high-speed interconnection and transmission areas where the industrial chain has comparative advantages (including high-speed PCB, optical communication, etc.). The June announcement of acquiring Source Photonics advances layout and expansion in the optical interconnection field under AI strategy, and the project is currently progressing smoothly."

(Individual stocks mentioned in the article are for illustrative analysis only and do not constitute investment advice.)