The AI computing power revolution is driving a surge in demand for high-end printed circuit boards (PCBs), creating structural growth opportunities for its upstream key base material – Copper Clad Laminate (CCL). Some high-grade categories have become hot commodities. A person from a domestic CCL factory stated, "Demand has recovered in the first half of the year, but whether it's supply falling short of demand depends on the product. There is indeed very strong demand for some products, while others are experiencing steady growth." Through multiple interviews, a CLS reporter recently learned that many CCL companies have raised product prices several times within the year, and dynamic adjustments are still ongoing. Cost pressures and demand dividends are major drivers behind the price increases. Optimistic about the future growth potential of high-end products like high-frequency & high-speed and high thermal conductivity CCL, domestic manufacturers are also accelerating related capacity layout.
It is understood that CCL constitutes a major part of PCB cost structure, and copper foil, as the main raw material for CCL, accounts for over 30% of the cost. The rise in copper prices directly impacts CCL production costs. International copper prices have continued to rise this year, with LME copper hitting a high of $11,200 per ton by the end of October. Regarding the main reasons for high copper prices, Zhuochuang Information analyst Tang Zhihao mentioned in an interview with a CLS reporter that AI computing centers, copper foil for chips, and grid upgrades are driving copper consumption. China's new energy and power sectors maintain high prosperity, offsetting the drag from the real estate downturn, while low inventories amplify price elasticity. "Looking ahead, declining mine grades and deep-level mining lead to continuously rising sustaining CAPEX. The average annual growth rate of mine production from 2025-2030 is estimated to be only about 1.5%, far lower than the demand growth rate. Supply shortage expectations will provide hard support for copper prices," Tang Zhihao believes. In the short to medium term, the core LME copper trading range is $10,000-$11,000/ton. In the medium to long term, if mine-side investment still lags and green demand exceeds expectations, the average price is expected to gradually move up to $10,750-$11,200/ton.
On the consumer side, some copper-using enterprises are implementing hedging operations to cope with rising copper prices. Others are more direct, achieving cost pass-through by raising the prices of sheet materials. Just in the first half of this year, due to the "sharp rise in copper prices", leading major manufacturer Kingboard Laminates (01888.HK) issued price increase notices in March and May, which triggered other manufacturers in the industry to follow suit.
The price hikes are not only driven by costs; structural growth on the demand side also contributes to the increase in CCL product prices. "PCB is a mature manufacturing industry that constantly updates according to downstream demand. The market changes fast, demand is fast, and as material suppliers, we must also change accordingly," an industry practitioner told CLS, adding that "AI computing power, robotics, drones, new energy vehicles' electronic control systems all require CCL and circuit boards, and the usage volume is relatively large."
CLS reporters recently posed as investors calling listed CCL companies. A staff member from the securities department of Nanya New Material (688519.SH) stated that the current capacity utilization rate is over 90%. Prices are already rising, and regarding the timing of increases, they revealed "there was an increase in October." Additionally, there were price hikes in the first half of the year. A staff member from Huazheng New Material (603186.SH) also said that the current capacity utilization rate is high, showing an increase compared to the first half of the year and last year. Mentioning price increases, they said, "We are making corresponding adjustments. We started adjusting in October, making dynamic adjustments based on products and customers." Regarding whether product prices would be adjusted due to high copper prices, the staff member indicated a need to comprehensively consider the extent and sustainability of the raw material price increase. A staff member from Jin'an Guji (002636.SZ) stated that the company's pricing follows the market, and price and demand complement each other. Product prices can only rise when market demand is strong.
Furthermore, some industry manufacturers stated that they are still adjusting prices for different CCL products in batches. A person from a domestic CCL factory told the CLS reporter that overall market demand is increasing. The company's sales volume maintained double-digit year-on-year growth in 2023 and 2024. While sales volume increased, profitability was poor, and non-GAAP net profit was still in the red, due to previously low prices. Domestic competition is fierce, and downstream players have their own cost requirements, meaning upstream materials cannot be too expensive, preventing CCL prices from being very firm. The person admitted that CCL product prices started falling in 2022 and continued until last year. Although currently recovering, they are far from the levels seen in 2021.
However, further improvement in market conditions and the benefits from earlier price increases have significantly boosted manufacturers' performance. In the first three quarters of this year, industry companies such as Shengyi Technology (600183.SH), Jin'an Guji (002636.SZ), and Ultrasonic Electronic (000823.SZ) achieved growth in both revenue and net profit, with net profit increasing year-on-year by 20% to 78% respectively. Regarding the performance change, Jin'an Guji pointed out in its third-quarter report that it was mainly due to increased gross profit from its main products.
As demand for high-grade CCL in application scenarios like AI servers climbs, domestic manufacturers are also accelerating the layout of technology for products above M6 grade. For example, Shengyi Technology's very low-loss products are already in mass supply; Chaoying Electronic (603175.SH) revealed on an interactive platform that the company is closely cooperating with several customers on M9 CCL technology. Nanya New Material's General Manager Bao Xinyang recently stated at an earnings conference that in the high-speed material field, the company has proactively initiated the R&D layout for M10 grade CCL products. The technical focus for the next-generation products will be on achieving even lower dielectric loss to further enhance signal transmission quality, lower Coefficient of Thermal Expansion (CTE) to improve packaging interconnect reliability, and higher heat resistance to meet growing heat dissipation demands. Regarding the progress of M10 grade CCL products, a staff member from the company's securities department said, "Lab products are already out."
Industrial Research believes that AI CCL is becoming the engine driving a new round of industry growth. According to their estimates, the AI CCL market (for AI servers, switches, optical modules) will reach $2.2 billion in 2025, a year-on-year increase of 100%. It is estimated that in 2026, due to ASIC volume shipment and NVIDIA's new products upgrading CCL to M9, the AI CCL market will reach $3.4 billion, a year-on-year increase of 60%. By 2028, it is expected to reach $5.8 billion. The compound annual growth rate (CAGR) for AI CCL from 2024 to 2028 is projected to be 52%.
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Source: CLS
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The AI computing power revolution is driving a surge in demand for high-end printed circuit boards (PCBs), creating structural growth opportunities for its upstream key base material – Copper Clad Laminate (CCL). Some high-grade categories have become hot commodities. A person from a domestic CCL factory stated, "Demand has recovered in the first half of the year, but whether it's supply falling short of demand depends on the product. There is indeed very strong demand for some products, while others are experiencing steady growth." Through multiple interviews, a CLS reporter recently learned that many CCL companies have raised product prices several times within the year, and dynamic adjustments are still ongoing. Cost pressures and demand dividends are major drivers behind the price increases. Optimistic about the future growth potential of high-end products like high-frequency & high-speed and high thermal conductivity CCL, domestic manufacturers are also accelerating related capacity layout.
It is understood that CCL constitutes a major part of PCB cost structure, and copper foil, as the main raw material for CCL, accounts for over 30% of the cost. The rise in copper prices directly impacts CCL production costs. International copper prices have continued to rise this year, with LME copper hitting a high of $11,200 per ton by the end of October. Regarding the main reasons for high copper prices, Zhuochuang Information analyst Tang Zhihao mentioned in an interview with a CLS reporter that AI computing centers, copper foil for chips, and grid upgrades are driving copper consumption. China's new energy and power sectors maintain high prosperity, offsetting the drag from the real estate downturn, while low inventories amplify price elasticity. "Looking ahead, declining mine grades and deep-level mining lead to continuously rising sustaining CAPEX. The average annual growth rate of mine production from 2025-2030 is estimated to be only about 1.5%, far lower than the demand growth rate. Supply shortage expectations will provide hard support for copper prices," Tang Zhihao believes. In the short to medium term, the core LME copper trading range is $10,000-$11,000/ton. In the medium to long term, if mine-side investment still lags and green demand exceeds expectations, the average price is expected to gradually move up to $10,750-$11,200/ton.
On the consumer side, some copper-using enterprises are implementing hedging operations to cope with rising copper prices. Others are more direct, achieving cost pass-through by raising the prices of sheet materials. Just in the first half of this year, due to the "sharp rise in copper prices", leading major manufacturer Kingboard Laminates (01888.HK) issued price increase notices in March and May, which triggered other manufacturers in the industry to follow suit.
The price hikes are not only driven by costs; structural growth on the demand side also contributes to the increase in CCL product prices. "PCB is a mature manufacturing industry that constantly updates according to downstream demand. The market changes fast, demand is fast, and as material suppliers, we must also change accordingly," an industry practitioner told CLS, adding that "AI computing power, robotics, drones, new energy vehicles' electronic control systems all require CCL and circuit boards, and the usage volume is relatively large."
CLS reporters recently posed as investors calling listed CCL companies. A staff member from the securities department of Nanya New Material (688519.SH) stated that the current capacity utilization rate is over 90%. Prices are already rising, and regarding the timing of increases, they revealed "there was an increase in October." Additionally, there were price hikes in the first half of the year. A staff member from Huazheng New Material (603186.SH) also said that the current capacity utilization rate is high, showing an increase compared to the first half of the year and last year. Mentioning price increases, they said, "We are making corresponding adjustments. We started adjusting in October, making dynamic adjustments based on products and customers." Regarding whether product prices would be adjusted due to high copper prices, the staff member indicated a need to comprehensively consider the extent and sustainability of the raw material price increase. A staff member from Jin'an Guji (002636.SZ) stated that the company's pricing follows the market, and price and demand complement each other. Product prices can only rise when market demand is strong.
Furthermore, some industry manufacturers stated that they are still adjusting prices for different CCL products in batches. A person from a domestic CCL factory told the CLS reporter that overall market demand is increasing. The company's sales volume maintained double-digit year-on-year growth in 2023 and 2024. While sales volume increased, profitability was poor, and non-GAAP net profit was still in the red, due to previously low prices. Domestic competition is fierce, and downstream players have their own cost requirements, meaning upstream materials cannot be too expensive, preventing CCL prices from being very firm. The person admitted that CCL product prices started falling in 2022 and continued until last year. Although currently recovering, they are far from the levels seen in 2021.
However, further improvement in market conditions and the benefits from earlier price increases have significantly boosted manufacturers' performance. In the first three quarters of this year, industry companies such as Shengyi Technology (600183.SH), Jin'an Guji (002636.SZ), and Ultrasonic Electronic (000823.SZ) achieved growth in both revenue and net profit, with net profit increasing year-on-year by 20% to 78% respectively. Regarding the performance change, Jin'an Guji pointed out in its third-quarter report that it was mainly due to increased gross profit from its main products.
As demand for high-grade CCL in application scenarios like AI servers climbs, domestic manufacturers are also accelerating the layout of technology for products above M6 grade. For example, Shengyi Technology's very low-loss products are already in mass supply; Chaoying Electronic (603175.SH) revealed on an interactive platform that the company is closely cooperating with several customers on M9 CCL technology. Nanya New Material's General Manager Bao Xinyang recently stated at an earnings conference that in the high-speed material field, the company has proactively initiated the R&D layout for M10 grade CCL products. The technical focus for the next-generation products will be on achieving even lower dielectric loss to further enhance signal transmission quality, lower Coefficient of Thermal Expansion (CTE) to improve packaging interconnect reliability, and higher heat resistance to meet growing heat dissipation demands. Regarding the progress of M10 grade CCL products, a staff member from the company's securities department said, "Lab products are already out."
Industrial Research believes that AI CCL is becoming the engine driving a new round of industry growth. According to their estimates, the AI CCL market (for AI servers, switches, optical modules) will reach $2.2 billion in 2025, a year-on-year increase of 100%. It is estimated that in 2026, due to ASIC volume shipment and NVIDIA's new products upgrading CCL to M9, the AI CCL market will reach $3.4 billion, a year-on-year increase of 60%. By 2028, it is expected to reach $5.8 billion. The compound annual growth rate (CAGR) for AI CCL from 2024 to 2028 is projected to be 52%.
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Source: CLS
Disclaimer: We respect originality and also focus on sharing; the copyright of text and images belongs to the original author. The purpose of reprinting is to share more information, does not represent the position of this account, and if your rights are infringed, please contact us promptly, we will delete it as soon as possible, thank you.
