CITIC Securities: Long-term demand for computing power continues + short-term valuation repair, leading PCB/CCL is expected to benefit deeply

According to the Zhitong Finance APP, CITIC Securities has released a research report stating that investment opportunities in the computing power industry surrounding the NVIDIA chain and ASIC chain remain highly prosperous. They are optimistic that leading companies in the domestic PCB/CCL industry are expected to benefit from the industrial opportunities arising from the tight supply and demand for high-end capacity, with performance growth still showing strong sustainability and high certainty. It is expected that manufacturers positioned at the core customer technology upgrade cycle and capable of collaborative development will continue to benefit deeply.

CITIC Securities' main viewpoints are as follows:

Short-term perspective: The release of marginal positive information in the industry alleviates market concerns, driving the overall valuation level of the sector to recover.

Recently, the AI sector in the US stock market has been boosted by positive sentiment from policy and demand sides, with NVIDIA's stock price nearing historical highs, Broadcom reaching a historical high, and the computing power leasing leader Coreweave seeing a weekly increase of over 30%. Recent favorable catalysts in the AI computing power industry include:

1. Manufacturing side: TSMC's CoWoS maintains full production and continues to expand. In addition to NVIDIA, the demand and outlook for ASICs such as AWS Trainium and Google TPU remain positive.

2. Material side: On June 2, Nitto Denko announced a 20% price increase for low-end glass fiber products. CITIC Securities believes this is mainly due to strong demand for AI-related glass yarn, which has squeezed the capacity of general products.

3. Chip side: NVIDIA's FY26Q2 revenue guidance slightly exceeded market expectations. The company expects GB300 to officially ship in Q3 2025, continuing to use the PCB solution of GB200, with the value of HDI and overall PCB expected to be higher than earlier solutions. CITIC Securities estimates that the PCB value of a single NVL72 server will exceed 200,000 yuan; at the same time, the upgraded AWS T2 is expected to be launched within the year, with smooth iteration progress, and there are still supply shortages for components such as PCB motherboards.

4. Network side: On June 3, Broadcom announced the delivery of the Tomahawk 6 switch chip, with a single chip switching capacity of 102.4 Tbps, capable of driving a GPU cluster of 100,000 cards to work together, providing fundamental support for the training and inference of trillion-parameter large models.

Overall, recent concerns about over-investment in AI computing power within the industry have eased. With the continued marginal improvement in the growth of the AI computing power industry, the overall valuation level of the industry is expected to see some recovery. AI PCBs, as a segment with tight supply and demand and continuous technological upgrades, are likely to benefit significantly.

Medium to long-term perspective: The growth of computing power demand continues, and the AI PCB market size is expected to expand rapidly in the short to medium term.

At the current stage, the cost-effectiveness of large models is rapidly improving, and the intrinsic capabilities of models, including inference and tool invocation, are advancing quickly. Against this backdrop, computing power investments in North America and China are both at high levels. It is expected that tech giants will maintain strategic determination and continue to invest in cloud and AI. There is optimism about the release of inference demand driven by the extension of AI into vertical applications and the acceleration of terminal deployment, with expectations for AI/computing power demand growth in the next 2-3 years.

From the PCB perspective, the structural demand for high-end HDI and high-speed high-layer PCBs in emerging sub-markets such as AI and high-speed networks is rapidly growing, leading to a supply-demand gap for high-end AI PCBs. AI PCBs are continuously improving in terms of higher multilayer counts and HDI levels (from 2/3 levels to 5/6 levels), jointly driving rapid expansion of the high-end PCB market space. According to estimates, the market space for cloud AI server PCBs is expected to grow to 49 billion yuan by 2026 The CAGR from 2024 to 2026 is expected to reach 70%; the market space for cloud AI-related data interaction PCB is projected to grow to 11.3 billion yuan by 2026, with a CAGR of 54% from 2024 to 2026. According to Prismark, the compound annual growth rate of global AI servers and HPC-related PCB products (excluding substrates) is expected to be approximately 40.2% from 2023 to 2028.

From the perspective of industry landscape, globally, leading manufacturers from Taiwan, South Korea, and the United States are the first beneficiaries of the AI computing power wave. However, as the demand for computing power extends from the NVIDIA supply chain to other tech giants' self-developed AI chips and domestic computing power, driving the upgrade of supporting data communication networks and traditional servers, mainland manufacturers' production capacity and strength are expected to gradually catch up. Among them, those who lead in customer layout, capacity investment, and technological research and development are likely to benefit deeply. In addition, the high-speed copper-clad laminate (CCL) driven by PCB upgrades is gradually upgrading from M6 level to M7/M8/M9 and PTFE, which is expected to bring industrial opportunities.

Risk factors:

Macroeconomic fluctuations and geopolitical risks, intensified competition in the PCB industry, significant fluctuations in raw material prices, overseas computing power leaders' new product releases falling short of expectations, AI market demand growth not meeting expectations, risks of technological changes and product iterations, regulatory and data privacy risks, and high customer concentration risks