AI server demand drives continued supply tightness in Taiwan's PCB and CCL supply chain

Overview

This report is Citi's conference note on Taiwan's PCB and laminate industry from the Citi Taiwan Tech Conference 2026. The core conclusion is that demand related to AI servers, ASICs, and 800G continues to drive the PCB and CCL supply chain, but new CCL capacity is growing more slowly than PCB expansion, so the industry may continue to face tight supply and price increases. The report focuses on Elite Material (EMC), Gold Circuit Electronics (GCE), and TUC.

Core views

Citi believes strong AI demand is the main theme of this PCB and CCL upcycle. EMC and TUC both stated that CCL expansion is lagging PCB expansion, so CCL shortages and price increases may continue; GCE emphasized share gains among existing ASIC customers and said it may be able to support another new ASIC customer starting in 4Q26. Thailand expansion is an important variable for future growth and regionalized supply for both GCE and TUC, but equipment delivery, utilization ramp-up, and customer policy still need to be monitored.

Analysis framework

The report is primarily based on management feedback from the conference, combined with assessments of company expansion plans, customer demand, raw material supply, pricing strategy, and valuation multiples. Valuation mainly uses target P/E multiples on 2027E EPS, supplemented by 2026E/2027E P/B or EPS multiples to explain target price reasonableness.

Methodology notes

• Industry supply and demandCapacity expansion and supply-demand gap analysis

  Compare the pace of new PCB capacity with new CCL capacity to assess supply tightness and room for price increases.

  Both EMC and TUC observed that growth in CCL capacity is below the PCB industry's expansion pace, leading the report to conclude that CCL shortages may persist and support prices and margins.

• Company competitivenessAI server supply chain share analysis

  Assess growth quality through changes in customer share across AI GPU, AI ASIC, 800G, and server motherboard projects.

  GCE sees share gains among existing ASIC customers and believes it has a high probability of winning motherboard projects from additional ASIC customers; EMC and TUC benefit from AI server spec upgrades and rising CCL prices.

• Valuation methodsTarget P/E valuation

  Derive target price by multiplying 2027E EPS by the target P/E multiple.

  EMC's target price is based on 30x P/E on average 2027E EPS, GCE's target price is based on 26x P/E on 2027E EPS, and TUC's target price is based on 25x P/E on 2027E EPS.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Elite Material（EMC，2383.TW）

  CCL supplier related to AI GPU and AI ASIC, benefiting from specification upgrades, tight supply, and price increases.

  Strengths

  Management believes expansion efficiency in China is relatively high and customer demand is sufficient; the company holds an important position in AI GPU and ASIC CCL supply, and Citi believes specification upgrades and price increases will help expand margins.

  Weaknesses

  PTFE material adoption is still in early-stage evaluation, and certification results for ABF CCL used in ASIC projects are not expected to become clear until the end of 2026.

  Comparison

  Compared with TUC, EMC is regarded by TUC as the pricing benchmark for M8 CCL; compared with GCE, EMC is more upstream in the CCL materials segment.

  Risks

  CCL upgrades slower than expected, weaker-than-expected AI server demand, supply chain bottlenecks in glass fiber cloth or copper foil, share loss in key AI server projects, or stricter OOC policy enforcement by end customers.

• Gold Circuit Electronics（GCE，2368.TW）

  Beneficiary of PCB, MLB, and HDI capacity expansion, mainly driven by demand from AI servers and ASIC customers.

  Strengths

  Plans to add one greenfield plant each year from 2027 to 2029, while investing in HDI capacity; share gains among existing ASIC customers, with a high probability of winning motherboard projects from additional ASIC customers.

  Weaknesses

  Even with continued expansion, management still believes capacity may be insufficient to fully meet demand; profitability improvement at the Thailand plant depends on utilization ramp-up.

  Comparison

  Compared with the CCL supply-tightness logic of EMC and TUC, GCE more directly reflects PCB capacity, customer share, and the contribution of Thailand capacity.

  Risks

  Weaker-than-expected server recovery, slower ramp-up of new server platforms, AI demand below expectations, more PCB peers entering the AI supply chain, or customers enforcing China+1 policies more strictly due to geopolitics.

• TUC（6274.TWO）

  CCL supplier benefiting from AI ASIC servers, 800G, and Thailand expansion.

  Strengths

  Management plans to adopt a more aggressive pricing strategy for M7 and below CCL, while M8 CCL pricing remains aligned with EMC's strategy; AI ASIC servers, 800G, and tight supply support margin expansion.

  Weaknesses

  Revenue contribution from the Thailand plant has been delayed to the end of 3Q26, mainly due to delayed equipment delivery.

  Comparison

  Like EMC, TUC benefits from CCL shortages and price increases, but TUC places more emphasis on aggressive pricing for M7 and below products and on U.S. customer OOC demand driven by Thailand expansion.

  Risks

  CCL upgrades slower than expected, weaker-than-expected demand for AI servers or 800G, production bottlenecks in the AI supply chain, share loss in key AI server projects, flexibility in customer OOC policy execution, or slow development of the Southeast Asian PCB industry.

Key data

• Report date2026-06-07The report is 13 pages long.
• EMC current price and target priceNT$4,885.0 / NT$5,100The target price is based on a 30x target P/E on average 2027E EPS.
• GCE current price and target priceNT$1,315.0 / NT$1,650The target price is based on a 26x target P/E on 2027E EPS.
• TUC current price and target priceNT$1,610.0 / NT$1,600The target price is based on a 25x target P/E on 2027E EPS.
• GCE Thailand plant monthly revenue contributionabout NT$600mn rising to NT$1.3bnManagement guidance indicates quarter-on-quarter growth from 2Q26 to 3Q, with profitability gradually improving as utilization rises.
• GCE greenfield plant planone new plant per year in 2027, 2028, and 2029Management still believes planned capacity may be insufficient to fully meet customer demand.
• TUC Thailand plant revenue contribution timingend of 3Q26Later than previously expected, mainly due to delayed equipment delivery.
• TSMC AI-related demand referenceclose to 50%+ CAGR over the next five yearsThe report uses this growth outlook to support the view that high-growth AI-related names can command higher P/E multiples.

Impact & implications

If demand for AI servers, ASICs, and 800G continues, leading Taiwan PCB and CCL players may continue to benefit from tight supply and demand, product specification upgrades, and price increases. For investors, whether valuations can be realized will hinge on GCE's new ASIC customers, EMC and TUC's CCL pricing power, and the ramp-up of Thailand expansion. At the same time, if AI server specification upgrades fall short of expectations, or if bottlenecks emerge in key materials or foundry links, or if customer OOC or China+1 policy changes, target price realization could be weakened. The precious metals tag in the classification information is more likely due to a misreading of the Gold Circuit name, while the actual report text focuses on the PCB and CCL supply chain.

Risks

• AI server, AI ASIC, or 800G demand comes in below expectations.
• CCL specification upgrade progress is slower than expected, leading to weaker-than-expected ASP improvement and margin expansion.
• Production bottlenecks emerge in AI supply chain links such as glass fiber cloth, copper foil, wafer foundries, or OSAT.
• Share loss occurs in key AI server or ASIC projects.
• End customers enforce supply chain policies such as OOC and China+1 either more strictly or more flexibly, affecting orders and the pace of regional capacity expansion.
• Thailand expansion is delayed by equipment delivery, utilization ramp-up, or customer certification progress, postponing revenue and profit contribution.

What to watch

• Whether GCE can start supporting a new ASIC customer from 4Q26.
• Whether GCE's Thailand plant monthly revenue rises as guided from about NT$600mn in 2Q26 to about NT$1.3bn in 3Q.
• Whether subsequent CCL price increases by EMC and TUC can smoothly pass through raw material costs and supply-demand premiums.
• Whether tight supply of Low-Dk2, E-glass, and copper foil affects production in 2H26 to 2027.
• Certification results for EMC's ABF CCL used in ASIC projects, which are not expected to become clear until the end of 2026.
• Whether TUC's Thailand plant can begin contributing revenue by the end of 3Q26.
• Whether AI server specification upgrades and customer OOC demand continue to support high valuation multiples.