Shanxi Securities: Rapid development of AI servers drives demand for high-frequency high-speed PCBs

The Zhitong Finance App learned that Shanxi Securities released a research report saying that according to Prismark's forecast, domestic PCB output will increase from US$41,213 billion to US$49.704 billion in 2024-2029, with a CAGR of 3.8%. Server/data storage is the fastest growing downstream area of PCB, with a CAGR of 11.6% in 2024-2029. Currently, demand for computing power is exploding. AI servers and switches are increasing in volume. Ordinary servers and AI servers simultaneously place higher demands on PCB performance, driving the PCB to high-frequency high-speed upgrading. PCB requirements for CCL dielectric performance continue to increase, and resin, glass fiber cloth, and copper foil as PCB/CCL core raw materials need to develop in the direction of low DK\ Df.

The main views of Shanxi Securities are as follows:

PPO and hydrocarbon resins have excellent comprehensive properties and are ideal choices for high-frequency and high-speed resins. Domestic companies have supplied them in batches

PPO resin and hydrocarbon resin have excellent Dk/DF performance, can meet the low signal transmission loss and delay requirements of M6-M8 level CCL, and are the core high-frequency high-speed electronic resins of the future. Global demand for electronic grade PPO/ hydrocarbon resins is expected to reach 4558/1216 tons in 2025, an increase of 41.89%/41.62% year-on-year. In terms of the supply pattern, global PPO and hydrocarbon tree core suppliers are still dominated by foreign companies such as Shabik, Asahi Kasei, Mitsubishi Gas, and Shadoma. Leading companies such as Dongcai Technology and Shengquan Group are catching up at an accelerated pace. Product performance is rapidly improving, production layout is gradually improving, downstream customer partnerships are further deepening, and the gap between domestic and foreign companies is expected to continue to narrow.

Low-DK electronic cloth is an essential material for CCL M7 and above, and domestic companies are speeding up the layout

Low-Dk electronic cloth can be roughly divided into three generations of products, which are suitable for M7-M9 grade copper-clad plates. The upgrade of each generation of copper-clad panels requires the performance of Low-Dk electronic cloth to be improved along with the improvement. With the rapid advancement of 5G+/6G and AI, the continuous upgrade of copper-clad plates to high frequency and high speed is expected to be gradually rolled out and rapidly iteratively upgraded. According to market size and trends, the global low dielectric electronic cloth market will reach 2.3 billion US dollars by 2033, and the CAGR will be 7.50% in 2024-2033.

In terms of the competitive landscape, the global supply of low dielectric electronic cloth is concentrated on three parties: Japanese companies, Taiwanese Chinese companies, and domestic enterprises. Overseas manufacturers are more cautious about expanding production, while domestic companies are speeding up their layout. Companies such as Sinoma Technology and Honghe Technology have achieved stable supply of generation/second-generation low-DK and low-CTE products and rapidly expanded production to respond to AI computing power construction needs. The industry is showing a pattern where global production capacity is concentrated domestically and domestic replacement in the high-end market is accelerating.

HVLP copper foil is the core raw material for high-frequency high-speed PCBs, and import substitution is progressing smoothly

The surface roughness of HVLP copper foil is less than 2m. It has the five major advantages of low signal loss, high density integration, excellent conductivity, strong thermal stability, and good interlayer adhesion, which can significantly improve the skinning effect in high-frequency signal transmission. It is a mainstream product used in high-frequency high-speed PCBs. According to Credence Research's forecast, from 2024-2032, the global HVLP copper foil market will increase by US$2 billion to US$5.950 billion, with a compound growth rate of 14.6% during the period.

Currently, most patents related to the high-end copper foil market such as HVLP are held by Japan and South Korea. The market has long been dominated by companies such as Mitsui, Furukawa, and Solus. In 2024, the share of foreign manufacturers in the domestic high-end copper foil market will exceed 90%, and the import price will be more than double that of domestic production. Domestic companies have accelerated their deployment. Companies such as Telford Technology, Copper Crown Copper Foil, and Longyang Electronics have completed the development of HVLP 4-5 products, and have already begun product samples and verification for downstream end customers. It is expected that they will gradually replace international brands such as Japan and South Korea in the future.

Aspect of the target

Key companies focus on: Shengquan Group (605589.SH), Dongcai Technology (601208.SH), Sinoma Technology (002080.SZ), Honghe Technology (603256.SH), International Composites (301526.SZ), Telford Technology (301511.SZ), Copper Crown Copper Foil (301217.SZ), and Longyang Electronics (301389.SZ).

Risk Alerts

Downstream demand falls short of expectations; risk of technology research and development falling short of expectations; risk of increased industry competition; risk of macroeconomic fluctuations.