Sinolink: AI copper-clad laminate/PCB performance in the second half of the year is expected to accelerate growth compared to the previous quarter.

Sinolink released a research report stating that strong demand for AI is driving both price and volume increases in PCBs. Currently, several AI-PCB companies have robust orders, operating at full capacity and actively expanding production, with high growth in performance expected to continue. Demand for AI copper-clad laminates is also strong. Due to the slow expansion of overseas copper-clad laminate manufacturers, the situation of shortages and price increases is ongoing, and leading mainland copper-clad laminate companies are likely to benefit significantly. Overall, we remain optimistic about AI copper-clad laminates/PCBs as well as core computing hardware, semiconductor equipment, and the Apple supply chain. Key views from Sinolink are as follows: Performance growth of AI copper-clad laminates/PCBs is expected to accelerate in the second half of the year. The firm remains optimistic about the development of AI PCBs. Although the order-loading pace slowed down in the first half of the year, this does not change the inherently high prosperity of the industry. While the peak order loading period for GPU/TPU-related boards will be in the second half of the year, demand for PCB related to broader AI hardware, such as switches, server CPU motherboards, and optical modules, has been booming in the first half of the year. Order loading for new products is ongoing, with value quantities multiplying, further increasing performance slope. Under the backdrop of continued rising demand for broader AI, the firm has observed that GPU/TPU has already initiated a surge in orders, core manufacturers are operating at high utilization rates, and in the second half of the year, the value quantities of GPU/TPU/ASIC related products are expected to increase significantly year-on-year. For instance, the value of the Rubin series single GPU has increased by over 100% compared to the GB series, and the TPU V8 series shows an increase of more than 400% compared to the previous series, indicating further enhancement of the PCB sector's value-added effect. AMD's Helios has notably improved in rack-level performance, with strong customer advances; OAI, Meta, Anthropic, and Microsoft are all set to deploy the companys products. Helios has already begun production, with the first shipments expected to start at the end of Q3 and a significant increase in volume anticipated in Q4. AMD has guided that the overall revenue for data centers will exceed 100% year-on-year growth by 2027, with an even higher growth rate for AI revenue. The demand for 800G/1.6T optical modules is explosive, entering a peak order-loading season in the second half of the year, while the supply chain capacity is significantly insufficient. Recently, several optical module manufacturers have actively secured upstream mSAP manufacturers' capacity. Companies such as Avary Holding, Shennan Circuits, Shenzhen Kinwong Electronic, and Jiangxi Redboard Technology have announced aggressive expansions in mSAP capacity for optical modules. Furthermore, demand for high multilayer PCBs in 1.6T switches is expected to open in the second half of the year, and the firm continues to see significant opportunities for accelerated development in the PCB sector in the latter half of the year. During the recent earnings season, among the four major CSP manufacturers in North America, three have raised their capital expenditure. Google has revised its 2026 CAPEX guidance from $180 billion to $190 billion up to $195 billion to $205 billion. On July 30, Meta Platforms announced its second-quarter earnings and adjusted its year-round capital expenditure expectations. Meta has adjusted its capital expenditures for fiscal year 2026 from a previously estimated $125 billion to $145 billion up to $130 billion to $145 billion. Microsoft stated that, excluding accounting impacts, actual investment expectations have not changed (with 2026 projected at $190 billion). The next quarter's capital expenditure is expected to exceed $50 billion, continuing to grow from the current quarter's $41 billion. The full-year capital expenditure forecast for FY2027 is also expected to increase year-on-year. The firm believes that major CSPs in North America are experiencing rapid growth in AI business, continuing to increase capital expenditure, and expressing optimism about future AI demand. They remain optimistic regarding the benefiting supply chain for AI hardware. They predict that key companies in AI computing hardware are likely to see accelerated sequential performance growth in the second half of the year and suggest focusing on trends that may exceed expectations. The explosive growth in token numbers has driven strong demand for ASICs, and the firm predicts that the ASIC numbers from Google, Amazon, Meta, OpenAI, and Microsoft will see explosive growth from 2026 to 2027. Overall, they continue to have a positive outlook on AI copper-clad laminates/PCBs as well as core computing hardware, semiconductor equipment, and the Apple supply chain. Investment Recommendation We are optimistic about AI copper-clad laminates/PCBs as well as core computing hardware, semiconductor equipment, and the Apple supply chain. Taiwan Semiconductor Manufacturing Company (TSMC) forecasts that the high demand for AI is expected to extend into 2029/2030. Google, Amazon, and Meta have all raised their 2026 capital expenditure forecasts and expressed optimism about future AI demand. Material shortages and price increases are continuing throughout the AI supply chain, with strong demand for Nvidia's next-generation Vera Rubin platform. Advanced process wafer foundry and advanced packaging are accelerating production expansion and price increases. Demand for AI in the short and medium term is very strong. The firm believes that with the order growth from TSMC's Rubin and the new products from Google and Amazon's ASIC companies, sequential growth in Q2 and Q3 is expected to accelerate, maintaining a positive view on core companies in the AI hardware industry. They anticipate that the number of ASICs from Google, Amazon, Meta, OpenAI, and Microsoft will experience explosive growth from 2026 to 2027. The firm believes that strong demand for AI is driving increases in both PCB price and volume, with several AI-PCB companies currently experiencing strong orders, operating at full capacity, and actively expanding production, with high growth in performance expected to continue. Demand for AI copper-clad laminates is also robust, and due to the slow expansion of overseas copper-clad laminate manufacturers, the shortage and price increase situation is ongoing, leading mainland copper-clad laminate leaders to likely benefit significantly. Sub-sector industrial prosperity indicators: Consumer Electronics (steady upward), PCB (accelerated upward), Semiconductor Chips (steady upward), Semiconductor Foundry/Equipment/Materials/Components (steady upward), Display (bottom stabilization), Passive Components (accelerated upward), Packaging and Testing (steady upward). Risk Warning: Risks of demand recovery being lower than expected; risks of AIGC advancements falling short of expectations; risks of further escalation of external sanctions.