AI-Driven PCB Expansion Creates Favorable Conditions for Domestic Equipment Substitution
AI summary card
AI-Driven PCB Expansion Creates Favorable Conditions for Domestic Equipment Substitution
Surging AI computing power has led to severe supply shortages of high-end upstream PCB materials (HVLP copper foil and electronic glass fabric), resulting in insufficient supply from Japanese and Korean equipment manufacturers; domestic equipment suppliers for HVLP copper foil and electronic glass fabric are poised to benefit significantly.
- Capital expenditures by nine leading PCB companies rose 111% year-on-year in 2025; the year-on-year growth rate accelerated further to 182% in Q1 2026.
- Kingboard Laminate, since 2025, has implemented seven price increases, reflecting acute upstream raw material shortages.
- Surface treatment machines for HVLP copper foil represent the largest technological gap and constrain domestic capacity expansion.
- Toyota’s JAT910 air-jet loom monopolizes over 90% of global high-end electronic glass fabric production capacity, with order backlogs extending to 2028–2030.
- Key recommended equipment suppliers: Hongtian Co., Ltd. and Taijin New Energy for copper foil equipment; Titan Co., Ltd. and Saurer Intelligent for electronic glass fabric equipment.
Report interpretation
Overview
This report provides an in-depth analysis of the restart of the capital expenditure cycle in the PCB industry amid the AI computing power construction wave, highlighting significant supply-demand gaps in upstream high-end materials (HVLP copper foil and high-end electronic glass fabric) due to slow capacity expansion by Japanese and Korean suppliers. The report argues that this gap will accelerate domestic material manufacturers’ capacity expansion and supply chain integration, thereby creating substantial domestic substitution opportunities for core production equipment in bottleneck ('chokepoint') segments—such as copper foil surface treatment machines and electronic glass fabric air-jet looms.
Core views
Demand Side: AI computing power is driving the PCB industry into a new high-visibility cycle. IDC forecasts that the global server market will grow at a CAGR of 18.8% from 2024 to 2029, with spending on acceleration-optimized servers growing at over 20%. Driven by this trend, the global PCB market has rebounded since 2024 and is expected to achieve a CAGR of 5.17% from 2024 to 2029. Downstream manufacturers demonstrate strong expansion intentions: capital expenditures by nine leading PCB companies reached RMB 26.7 billion in 2025, representing a 111% year-on-year increase; in Q1 2026, capital expenditures totaled RMB 12.5 billion, with the year-on-year growth rate accelerating further to 182%. Supply Side: Upstream raw material supply-demand tensions have intensified, pushing prices upward. Due to extreme low-loss material requirements in AI computing infrastructure, HVLP copper foil and Low Dk electronic glass fabric have become essential. However, major suppliers (e.g., Mitsui Mining & Smelting, Furukawa Electric, Nittobo) exhibit weak willingness and slow pace in expanding capacity, exacerbating supply-demand imbalances. Kingboard Laminate raised prices seven times consecutively between 2025 and 2026; Honghe Technology’s electronic glass fabric average selling price surged 117% year-on-year in Q1 2026—confirming acute material-side tightness. Equipment Side: Critical equipment segments face 'chokepoint' constraints, offering broad scope for domestic substitution. In the copper foil segment, domestic penetration rates for cathode rollers and foil-making machines are already relatively high, but surface treatment machines—which determine HVLP copper foil performance—remain heavily reliant on imports (e.g., from Japan’s Mitsuwa and Nurol), and are currently in short supply. In the electronic glass fabric segment, Toyota’s JAT910 air-jet loom—the only machine capable of stably mass-producing ultra-thin electronic glass fabric—has order backlogs extending to 2028–2030. Domestic equipment suppliers Titan Co., Ltd. and Saurer Intelligent are undergoing validation for their respective machines, with potential to break this monopoly.
Analysis framework
The report adopts a top-down industry chain analysis framework: 'downstream demand transmission → midstream material bottlenecks → upstream equipment opportunities'. First, it validates AI-driven incremental demand using IDC data and capital expenditure trends among leading PCB manufacturers. Second, it quantifies material-side supply-demand imbalances using official price adjustment notices and pricing data. Finally, it dissects manufacturing processes to identify specific equipment segments with the highest technical barriers and strongest import dependence (surface treatment machines and air-jet looms), thereby pinpointing equipment suppliers with genuine domestic substitution potential.
Methodology notes
Industry Chain Transmission Mechanism
The report’s logic follows the chain from downstream AI server demand surges, to midstream PCB and material shortages, ultimately benefiting specific upstream equipment suppliers—helping readers understand why material shortages translate into earnings expectations for equipment stocks.
Technical Barriers and Chokepoint Segments
The report specifically emphasizes the technical difficulty of 'surface treatment machines' and 'air-jet looms' (e.g., nanoscale micro-roughening, micron-level precision), identifying these segments as those with the greatest technology gap between domestic and international players—and thus the highest-value 'moat-breaking' opportunities for domestic substitution.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Hongtian Co., Ltd.Beneficiary in Copper Foil Equipment Segment
- Strengths
- Held 48% domestic market share in foil-making machines in 2024; electrolytic copper foil equipment contributed over 50% of revenue; possesses industrialization capability for oversized equipment.
- Weaknesses
- Parent company net profit declined sharply by 87.58% year-on-year in 2025, primarily due to subsidiary divestiture.
- Comparison
- Holds higher market share than Taijin New Energy in the foil-making machine segment.
- Risks
- Raw material price volatility affecting gross margin; industry cyclical fluctuations.
- Taijin New EnergyBeneficiary in Copper Foil Equipment Segment
- Strengths
- Led domestic cathode roller market with 45% share in 2024; electrolytic complete equipment accounted for over 60% of revenue; achieved import substitution for cathode rollers.
- Weaknesses
- Net profit declined 34.06% year-on-year in Q1 2026, impacted by high prior-year base.
- Comparison
- Demonstrates clear advantage in cathode rollers and is advancing domestic substitution for HVLP 4th–5th generation surface treatment machines.
- Risks
- Intensifying competition; slower-than-expected commercialization of cutting-edge technologies.
- Titan Co., Ltd.Beneficiary in Electronic Glass Fabric Equipment Segment
- Strengths
- TQ600 air-jet loom currently under validation, with potential to replace imported equivalents; Q1 2026 revenue rose 27.45% year-on-year, with robust overseas sales growth.
- Weaknesses
- Parent company net profit fell 46.65% year-on-year in 2025, with uncertainty surrounding new product development.
- Comparison
- Jointly advancing domestic validation of electronic glass fabric weaving machines with Saurer Intelligent.
- Risks
- Macroeconomic volatility; underperformance in new product development.
- Saurer IntelligentBeneficiary in Electronic Glass Fabric Equipment Segment
- Strengths
- Volkmann looms under validation; German Volkmann twisting machines already hold high market share; Q1 2026 revenue rose 23.02% year-on-year.
- Weaknesses
- Incurred substantial losses in 2025, with parent company net profit at -RMB 614 million.
- Comparison
- Benefits from international brand recognition and deep technical expertise.
- Risks
- Technology iteration risk; intensifying overseas competition.
Key data
- 2025 Capital Expenditures by Leading PCB CompaniesRMB 26.7 billionYear-on-year +111%
- 2026 Q1 Capital Expenditures by Leading PCB CompaniesRMB 12.5 billionYear-on-year growth rate of 182%
- Number of Price Increases by Kingboard Laminate7 timesConsecutive price hikes since 2025
- Honghe Technology Electronic Glass Fabric Average Price in Q1 2026RMB 9.8 per meterYear-on-year +117%
- Toyota JAT910 Loom Order Backlog2028–2030Monopolizes over 90% of global high-end capacity
- Taijin New Energy Cathode Roller Market Share in 202445%Top domestic player
- Hongtian Co., Ltd. Foil-Making Machine Market Share in 202448%Leading domestically
Impact & implications
The report concludes that, against the backdrop of constrained Japanese and Korean equipment capacity, domestic PCB material manufacturers—seeking supply chain security—will accelerate adoption of domestic equipment. For equipment suppliers such as Hongtian Co., Ltd., Taijin New Energy, Titan Co., Ltd., and Saurer Intelligent, this represents not merely short-term order growth, but a critical window to transition from 'functional' to 'high-performance' solutions and expand market share. Companies achieving breakthroughs in HVLP 4th–5th generation copper foil surface treatment or ultra-thin electronic glass fabric weaving stand to command higher valuation premiums.
Risks
- Macroeconomic volatility risk
- Risk of slower-than-expected PCB process advancement
- Risk of weaker-than-expected AI server demand