AI Drives the Demand for High-speed PCB Materials

Industry insiders are optimistic that withthe growth in shipments of AI servers and 800G switches, copper foil substrate suppliers such as EMC, TUC, and ITEQ will continue to benefit from the trend of high-speed PCB material upgrades.

Copper foil substrate (CCL) is an upstream material for printed circuit boards (PCBs). Taiwan's factory has a high market share in the high-speed transmission copper foil substrate market. With the increasing volume of higher-level 800G switches, the market share will continue to rise and benefit from continuous sales to drive performance growth.

The 800G switch is a high-speed transmission specification in the field of optical communication. With the expansion of large data centers and the extensive computing and data processing required by AI, the demand for 800G switches is increasing.

According to Prismark's estimation, the compound annual growth rate of PCB shipments for AI and HPC servers from 2023 to 2028 is 32.5%; Among them, the growth rate of PCBs with 18 or more layers is 13.6%, and the proportion will increase by 3 percentage points to 18% by 2028.

ITEQ stated that its revenue in the third quarter increased by nearly 20% annually, mainly due to the continued growth in demand for general-purpose servers and AI servers; However, due to weak market demand, automotive electronics have experienced a short-term decline. As the inventory of high priced raw materials is depleted and capacity utilization continues to improve, the overall gross profit margin is expected to gradually rebound in the future.

With the improvement of AI server specifications, such as the Nvdia Blackwell series GPU redesign, it will drive the acceleration of advanced electronic material upgrades. ITEQ pointed out that its high-speed materials of M6, M7, and M8 grades continue to increase in quantity, providing multiple AI GPU and ASIC acceleration card end customers.At the same time, M9 grade materials corresponding to 1.6T transmission speed switches have been sent to major terminal and PCB factory customers for certification.

EMC's revenue growth in the third quarter was mainly due to the continued strength of European and American automotive customers, low orbit satellites, and AI servers; However, EMC still needs to observe the market share of GB200 in its server business next year, and is optimistic about the increase in penetration rate of high-end 800G switches.