Summary of Key Points
The PCB (Printed Circuit Board) industry has recently experienced a "second boom" due to the explosion in the AI sector: leading companies have seen soaring profits (Yibo Technology's net profit increased by 15 times, Xingsen Technology's by 2-3 times), driven by demand from high-end areas such as AI servers and optical modules. The industry is seeing a wave of capacity expansion (with over 20 companies investing more than 70 billion yuan, with the leading company Pengding Holdings investing over 30 billion yuan). However, concerns are also emerging: there is an external reliance on the stability of AI computing power investments, and there is a risk of internal overcapacity, which has been warned about by industry leaders.
1. Profits Soaring: AI as the Powerful "Engine"
The performance growth of PCB companies in the first half of the year was impressive:
- Yibo Technology's revenue increased by 41%, and its net profit soared by 15 times (from 3.9 million yuan last year to 63.8 million yuan this year), with non-recurring gains increasing by 30 times! There are two main reasons for this: first, AI has boosted demand for downstream products such as ATE testing equipment, robots, optical modules, and AI servers; second, the company's factories in Zhuhai and Tianjin have overcome their initial setup challenges (high initial investment with low profitability) and are now fully booked and profitable.
- Xingsen Technology also forecasted a 2-3 times increase in profits, attributing this to the improved industry conditions due to AI infrastructure development.
In short, AI requires more complex PCBs, leading to more orders and lower costs for companies, thus higher profits.
2. PCBs Moving to a Higher-Tech Segment
PCBs have evolved from being a "traditional manufacturing" product to a high-tech one:
- PCBs used in AI servers now typically have 20-30 layers or more, and manufacturers must address issues such as signal interference and speed limitations. TrendForce data predicts a 28% increase in global AI server shipments by 2026, indicating a surge in demand for these high-end boards.
- Prismark data shows even more clearly: the total global PCB market value is expected to grow by 15.8% in 2025, but the value of ultra-high-layer boards (used in AI servers) will increase by 72.8%, which is 11 times the growth rate of low-end boards (single/dual-sided boards, at 6.2%). The growth rate for high-density HDI boards is also 26%.
In other words, there is less demand for low-end boards, and companies are competing to produce high-end ones, shifting the industry focus from quantity to technology.
3. A Wave of Capacity Expansion
Faced with the AI opportunity, companies are investing heavily in capacity expansion:
- Leading company Pengding Holdings has made three investments in AI PCBs in the past year, with a total investment of over 30 billion yuan: it invested 8 billion yuan last August to build a manufacturing park in Huai'an and plans to invest another 12.7 billion yuan (9.6 billion yuan through a private placement) this July to develop high-density boards for AI servers and optical modules, adding 650,000 square meters of production capacity.
- Since the beginning of this year, over 20 companies in the industry have announced capacity expansions, with a total investment of over 70 billion yuan, all targeting high-end areas such as AI servers and high-speed optical modules.
4. Are We Overheating? Risk Signals Are Appearing
Although the industry is booming, some are already starting to exercise caution:
- External Risks: Dependence on the Stability of AI Investments: Guojin Securities notes that the current expansion logic is based on global investment in AI computing power and the timely mass production of new NVIDIA chips. If companies like Google or AMD reduce their AI investments or if new chip releases are delayed, the positive trends for high-end PCBs could be reversed.
- Internal Risks: Overcapacity Could Crush Profits: Hudian Co., Ltd. warned in May that the current surge in AI-related PCB demand has led many competitors to expand rapidly. Once all the additional capacity is released, the technical barriers will lower, making competition more intense and profit margins tighter.
In short, while expansion is currently beneficial, it may lead to reduced profits in the future due to increased competition.
Conclusion
The PCB industry has transformed from a "traditional sunset" sector into a "sunrise" one driven by AI. However, these opportunities come with risks. Investors should be aware that not all PCB companies will benefit from AI; only those capable of producing high-end boards and possessing strong technical capabilities will continue to make profits. Companies that expand too aggressively may face increased competition, and the industry's differentiation will become more pronounced.