AI servers and automotive electronics are driving growth in the PCB market and fostering technological upgrades, with high-end products moving towards higher density, thinner profiles, and high-frequency, high-speed base materials. The demand for key materials required for core copper-clad laminates, such as high-end copper foil, electronic glass fabric, and specialty resins, is increasing. Currently, domestic manufacturers are accelerating technological breakthroughs and supply chain penetration.
AI is driving PCB upgrades, with market expansion raising requirements. PCBs are indispensable electronic components in modern electronic information products, often called the "mother of electronic products." With the development of AI technology and the boost from new energy vehicles, the demand for PCBs related to AI servers and automotive electronics has increased significantly. The PCB industry is expected to see further expansion, with the global PCB market size projected to reach $96.8 billion by 2025. Simultaneously, PCBs are gradually evolving towards higher density, smaller apertures, larger capacity, and thinner profiles. The trend towards high-frequency and high-speed core substrate copper-clad laminates is evident, raising the requirements for upstream materials.
The three main materials—copper foil, electronic glass fabric, and resin—are expanding and upgrading as demand for high-end copper-clad laminates grows. The firm believes copper foil is moving upscale, with HVLP-type copper foil set to become mainstream. Foreign companies like Mitsui Kinzoku dominate the high-end copper foil market, while domestic players are gradually entering the supply chain. Electronic glass fabric is becoming thinner and lighter, and the firm is optimistic about the upgrade trend towards Q-glass fabric. Japanese companies lead in high-end electronic glass fabric, with domestic enterprises gradually increasing their efforts. The physical, chemical, dielectric, and environmental properties of copper-clad laminates are primarily determined by the resin formulation, whose main components include base resins and other materials. Electronic resins are upgrading from epoxy resin systems to bismaleimide resin, cyanate ester, polyphenylene ether, hydrocarbon resin, and polytetrafluoroethylene systems.
Filler silica micro powder is moving upscale, and specialty chemicals are catching up. PCB upgrades are driving product iteration for silica micro powder, with spherical silica micro powder potentially better meeting high-end demands. As of 2024, China's silica micro powder market size was 1.73 billion yuan, with demand reaching 418,000 tons. The market size for high-performance spherical silica micro powder was 852 million yuan, accounting for 49.22% of the total. Additionally, the firm expects the market for PCB specialty chemicals to continue expanding alongside PCB development, with foreign companies dominating the market and domestic players accelerating their catch-up efforts.
Investment recommendations: AI-driven PCB upgrades present a development opportunity for materials. It is recommended to focus on: Copper Foil - Tongguan Copper Foil, Defu Technology, Nuode Shares, Zhongyi Technology, Longyang Electronic; Electronic Glass Fabric - Feilihua, Ping'an Electrician, Laite Optoelectronics, Quartz Corp., Honghe Technology, Zhongcai Technology, International Composites, China Jushi, Changhai Shares, Shandong Fiberglass, Bofei Electric; Resin - Dongcai Technology, Shengyuan Group, Tongyu New Materials, Shiming Technology, Hongchang Electronic; Silica Micro Powder - Lianrui New Materials, Yake Technology, Guoci Materials, Lingwei Technology; PCB Chemicals - Guangxin Materials, Guanghua Technology, Sanfu Xinke, Jiuri New Materials, Yangfan New Materials, etc.
Risk warnings: Macroeconomic and demand fluctuation risks; risks associated with the industrialization of new technologies and products; risks related to raw material supply and price fluctuations; safety and environmental protection risks; risks from trade conflicts and exchange rate fluctuations.