AI-PCB TAM revised up to Rmb562bn by 2028E; Citi raises WUS/VGT target prices

Overview

This report updates the China AI-PCB total addressable market forecast, incorporates CPU and optical module PCB demand into the model, and introduces a 2028E forecast. Citi believes AI computing demand, Google TPU, NVDA GPU, and upgrades in switches and optical modules will drive sustained high growth in AI-PCB during 2026-2028E and may lead to tightness in materials and mSAP capacity. Based on higher earnings visibility and a valuation rollover to 2027E, Citi raises the target prices for WUS Printed Circuit and Victory Giant Tech.

Core views

The core view is that AI-PCB demand remains in a strong upcycle, with TAM expected to reach Rmb152bn, Rmb307bn, and Rmb562bn in 2026E-2028E, respectively. ASIC remains the largest application category, but optical module and switch PCB driven by network upgrades are growing the fastest. Google TPU demand is expected to become one of the largest drivers of PCB procurement in 2028E. Leading PCB companies are expected to gain stronger 2027E earnings visibility thanks to material lock-in, mass production execution, and capacity expansion capabilities.

Analysis framework

Based on the original AI-PCB TAM model, the report adds CPU and optical module PCB demand and breaks down market size by applications such as ASIC, NVDA, CPU, switches, optical modules, and Google TPU; at the stock level, it adjusts earnings forecasts by combining capacity expansion, product complexity, gross margin improvement, and differences versus BBGe consensus, and derives target prices using 2027E P/E.

Methodology notes

• Market size forecastAI-PCB TAM model

  Application-segmented TAM forecast

  The model adds CPU and optical module PCB demand and introduces a 2028E forecast to estimate the market size and growth rate of AI-PCB across different application scenarios.

• Valuation methodP/E valuation

  Target price derivation

  WUS uses 30x 2027E P/E to derive a target price of Rmb189.0; Victory Giant Tech uses 25x 2027E P/E to derive a target price of Rmb456.0.

• Earnings forecastCitiE vs BBGe

  Comparison of earnings forecast versus consensus

  The report compares Citi's earnings forecasts with BBGe consensus to reflect differentiated judgments on capacity release, product mix, and the impact of Rubin delays.

Asset mapping & comparison

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

• WUS Printed Circuit (002463.SZ)

  Beneficiary of AI server and data center switch PCB

  Strengths

  A leader in data communications PCB with strong mass production capability, margin performance, and delivery track record; Citi believes its customer mix is more balanced and therefore assigns it a higher P/E valuation.

  Weaknesses

  Growth depends on capacity release, yield of complex products, and realization of AI-related demand.

  Comparison

  Target price raised from Rmb119.0 to Rmb189.0, with valuation increased from the previous 23x to 30x 2027E P/E; 2026E-2028E earnings CAGR is expected to be 86%.

  Risks

  Lower-than-expected share in GenAI-related PCB, price competition in the automotive supply chain, cuts in CSP capital expenditure, rising material costs, and China-US geopolitical risks.

• Victory Giant Tech (300476.SZ)

  Beneficiary related to AI PCB and the Nvidia ecosystem

  Strengths

  A leading PCB manufacturer in China with strong HDI capacity and a deep relationship with Nvidia built since the gaming graphics card era; benefits from GenAI-related PCB demand, improving product mix, and opportunities in data center switches and ASIC.

  Weaknesses

  2026E net profit was revised down mainly due to lower-than-expected Rubin revenue contribution; the ramp-up pace of overseas capacity remains a potential variable.

  Comparison

  Target price raised from Rmb415.0 to Rmb456.0, based on 25x 2027E P/E; 2026E-2028E earnings CAGR is expected to be 71%.

  Risks

  GenAI PCB share or yield falling short of expectations, competitive pressure in the automotive supply chain, lower CSP capital expenditure, rising material costs, and China-US geopolitical risks.

Key data

• AI-PCB TAM2026E/2027E/2028E: Rmb152bn/Rmb307bn/Rmb562bnCorresponding YoY growth rates are 86%/102%/83%.
• 2027E application mixASIC 34%, NVDA 24%, CPU 16%, switches 14%, optical modules 12%ASIC remains the largest AI-PCB application, but network-related demand is growing faster.
• Optical module PCB growth2026E/2027E: 135%/178% YoYMainly driven by network upgrades and the ramp-up of 1.6T optical modules.
• Google TPU demand2028E PCB procurement approximately US$16bnCiti expects Google TPU PCB procurement to exceed NVDA in 2028E.
• Victory Giant Tech earnings forecast2026E/2027E/2028E NP: Rmb8.0bn/Rmb17.9bn/Rmb23.2bn2026E net profit is cut by 8%, mainly due to lower Rubin revenue contribution; target price raised to Rmb456.0.
• WUS earnings forecast2026E/2027E/2028E NP: Rmb6.7bn/Rmb12.1bn/Rmb23.2bn2026E/2027E net profit raised by 16%/22%, respectively; target price raised to Rmb189.0.
• WUS revenue and margin assumptions2026E/2027E/2028E revenue Rmb30bn/Rmb49bn/Rmb88bn, NPM 22%/25%/26%Based on announced capacity expansion, a higher mix of complex PCB products, and operating leverage.

Impact & implications

If AI-PCB demand, 1.6T network upgrades, and Google TPU procurement materialize as expected in the report, the PCB sector's valuation horizon may further roll from 2027 to 2028; meanwhile, upstream materials and process capacity such as AI-CCL and mSAP may become constraints, and leading PCB manufacturers with material lock-in capability and mass production execution are more likely to benefit.

Risks

• GenAI-related PCB share allocation or yield may come in below expectations.
• Rising pricing and competitive pressure in the automotive supply chain.
• CSP capital expenditure cuts or macroeconomic weakness may lead to demand below expectations.
• Rising material costs, especially tightening supply of key materials such as AI-CCL.
• China-US geopolitical risks may affect the supply chain and customer demand.
• Delays in capacity expansion, overseas capacity ramp-up, or the timing of Rubin-related demand.

What to watch

• Whether a new round of PCB capacity expansion announcements emerges in 2H26, and whether the announced scale is sufficient to support 2028E demand.
• Whether AI-CCL, glass fiber, and mSAP capacity become tight, and the material lock-in capability of leading PCB manufacturers.
• The volume ramp-up pace of 1.6T optical modules and switches.
• Whether Google TPU PCB procurement exceeds NVDA in 2028E.
• WUS's 2027 capacity release pace, 1.6T switch margins, and further expansion plans.
• Victory Giant Tech's overseas capacity ramp-up, the impact of Rubin delays, and opportunities in data center switch/ASIC business.