Monthly electronic-material data strengthens: PCB-material price increases, optical-interconnect demand exceeds expectations, and silicon-wafer shipments improve
AI summary card
Monthly electronic-material data strengthens: PCB-material price increases, optical-interconnect demand exceeds expectations, and silicon-wafer shipments improve
BofA believes demand and pricing signals for PCB materials, micro-thin copper foil, optical cables, and optical components broadly improved in July, with AI servers and high-speed optical modules as key drivers. Silicon-wafer imports and sales data from certain manufacturers were also strong, although price pass-through remains uneven across end applications.
- Combined July sales of three major Taiwanese copper-clad laminate manufacturers rose 122.0% year over year.
- In 800GbE optical modules, 4–8 of 12–14 PCB layers use mSAP; in 1.6TbE products, 6–10 of 14–16 layers use mSAP, increasing micro-thin copper-foil usage.
- South Korean and Taiwanese silicon-wafer imports rose 24.9% year over year in July, including a 44.0% year-over-year increase in South Korea.
- Fujikura said optical-cable prices for a key customer project rose 25%, prompting it to raise first-quarter guidance.
- The report believes optical-cable and optical-component market conditions are stronger than previously expected, signaling positively for cable manufacturers.
Report interpretation
Overview
This monthly industry update reviews the latest operating and pricing indicators for PCB materials, micro-thin copper foil, optical fiber/optical components, and silicon wafers. The report’s core view is that high-speed optical-module and AI-related demand is driving volume and price improvements across multiple electronic-material categories, creating a broadly positive environment for relevant suppliers.
Core views
The PCB-material cycle remains strong. Combined July sales of three major Taiwanese copper-clad laminate (CCL) manufacturers rose 122% year over year, sustaining strong momentum, while sales at Nittobo subsidiary Baotek were also solid. Prices for Chinese electronic fiberglass cloth and fiberglass yarn continued to rise, while prices for Asahi Kasei’s low-dielectric fiberglass cloth and Nittobo’s low-dielectric fiberglass yarn and cloth also increased modestly. Copper-foil prices likewise strengthened: Mitsui Mining disclosed price increases for VSP copper foil, and Furukawa Electric benefited from higher copper-foil prices and a better product mix driven by rising HVLP4 copper-foil volumes. The report therefore considers these volume and price data positive signals for PCB-material suppliers. The demand case for micro-thin copper foil is primarily driven by high-speed optical modules. Mitsui Mining confirmed in its first-quarter earnings briefing that 800GbE optical-module applications significantly increased demand for micro-thin copper foil. Leading PCB maker Compeq indicated that 800GbE optical-module PCBs typically have 12–14 layers, of which 4–8 use modified semi-additive process (mSAP), while 1.6TbE products have 14–16 layers, of which 6–10 use mSAP. As this process increases micro-thin copper-foil consumption and demand from memory-packaging applications is also rising, the report expects demand for micro-thin copper foil to maintain strong growth. Supply and demand for optical fiber, optical cables, and optical components are stronger than expected. Fujikura said optical-cable prices for a major customer project rose 25%, contributing to an upward revision to its first-quarter earnings guidance; Furukawa Electric’s strong performance was also supported by optical-cable price increases. In laser products, Lumentum and Coherent said that the adoption of co-packaged optics (CPO) has not been delayed, customer inquiries continue to strengthen, near-packaged optics (NPO) creates additional market opportunities, and capacity for certain products remains constrained while prices have risen. Furukawa Electric also raised its optical-component business outlook on higher sales of high-margin semiconductor optical amplifiers (SOA). The report therefore concludes that market conditions for optical cables and components are stronger than previously expected and remains positive on cable manufacturers. Silicon-wafer data were strong in July. Silicon-wafer imports into South Korea and Taiwan rose 24.9% year over year, including a 44.0% increase in South Korea; imports of 300mm and 200mm wafers into Taiwan increased 16.8% year over year, while the chart-based measure for South Korean silicon-wafer imports showed 44.4% year-over-year growth. Shin-Etsu Chemical said its July shipments of 300mm wafers reached a monthly record; Formosa SUMCO’s July sales rose 28.8% year over year. SUMCO noted that spot markets for silicon wafers in applications with demand growth have begun to show price pass-through, but applications where demand has not yet recovered have not achieved pass-through, indicating that wafer-market recovery and pricing improvement remain uneven. Other monthly indicators also point to an active supply chain, including GlobalWafers sales growth of 19.6% year over year, Wafer Works growth of 18.9%, and Taiwanese PCB-supplier growth of 34.4%. The report also provides valuation bases for related Japanese companies. Nittobo’s target price is ¥5,480, based on 38x FY3/28 earnings forecasts, the upper end of its historical 4–38x P/E range; Asahi Kasei’s ¥1,960 target price uses segment valuation, assigning 6.0x, 7.0x, and 8.0x EV/EBITDA to its materials, homes, and healthcare businesses, respectively, implying 7.1x overall. SUMCO’s ¥6,500 target price is based on 22x FY12/28 EPS, below the midpoint of its historical 6–47x range; Resonac’s ¥22,500 target price corresponds to 30x FY12/27 P/E, with the report applying a valuation above the midpoint of the 10–42x range since IFRS adoption in 2023 due to stronger and more durable AI-server materials demand; Shin-Etsu Chem’s ¥7,900 target price is based on 23x FY3/28 EPS, near the upper end of its 8–28x range over the past decade. Furukawa Electric and Fujikura have target prices of ¥7,300 and ¥8,000, respectively, both based on 40x FY3/28 EPS, reflecting the report’s view of structural earnings improvement in AI-data-center-related materials.
Analysis framework
The report first tracks high-frequency July indicators including monthly sales, imports, exports, inventories, and prices, then combines these with company earnings-briefing commentary on demand, capacity, product mix, and price pass-through to assess supply-demand changes in PCB materials, micro-thin copper foil, optical interconnects, and silicon wafers. Finally, it uses P/E, EV/EBITDA, and segment valuation to support target prices for each covered company.
Methodology notes
Assessing the electronic-material cycle through monthly sales, imports, shipments, prices, inventories, and capacity constraints.
The report evaluates demand strength and price pass-through through combined changes in volume, price, and supply constraints, such as constrained optical-component supply and differing progress in spot-price increases for silicon wafers across applications.
Deriving a target price by multiplying forecast EPS by a P/E multiple.
The report uses forecast-year EPS and P/E multiples for Nittobo, SUMCO, Resonac, Shin-Etsu Chem, Furukawa Electric, and Fujikura, referencing their respective historical valuation ranges.
Segment valuation for Asahi Kasei.
The report assigns EV/EBITDA multiples to the materials, homes, and healthcare businesses separately, then aggregates them to derive the target price.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Nittobo（3110 / NBCLF）Prices for low-dielectric fiberglass yarn and cloth have risen modestly, subsidiary Baotek sales are solid, and the company benefits from PCB-material demand.
- Strengths
- Pricing for low-dielectric fiberglass-related products is improving, and Baotek is its subsidiary.
- Risks
- Slowdown in demand from the electronics industry, smartphones, base stations, or servers; a sharp yen appreciation; or a sharp rise in crude-oil prices.
- Asahi Kasei（3407 / AHKSF）Low-dielectric fiberglass-cloth prices have risen modestly, making it a beneficiary of improving PCB-material conditions.
- Strengths
- Its materials, homes, and healthcare businesses can be valued on a segment basis.
- Comparison
- EV/EBITDA multiples for the materials, homes, and healthcare businesses are 6.0x, 7.0x, and 8.0x, respectively.
- Risks
- Weak petrochemical prices, deterioration in automotive or electronics markets, declining housing orders, slower growth in pharmaceuticals and medical devices, or a significant yen appreciation.
- SUMCO（3436 / SUMCF）Silicon-wafer demand is improving, and spot markets in applications with demand growth have begun to show price pass-through.
- Strengths
- The report expects stable earnings growth through FY12/29.
- Weaknesses
- Price pass-through has not yet been achieved in applications where demand has not recovered.
- Comparison
- The target valuation of 22x P/E is below the midpoint of the historical 6–47x range.
- Risks
- Sharp yen appreciation, a sudden slowdown in the semiconductor market, and a large impairment of polysilicon inventories.
- Resonac Holdings（4004 / SHWDF）AI-server-related materials demand is considered stronger and more durable.
- Strengths
- AI-industry expansion supports a higher valuation; high HBM growth at customers represents an upside scenario.
- Weaknesses
- Low-profit businesses could incur large impairments.
- Comparison
- FY12/27 P/E of 30x, above the midpoint of the 10–42x range since IFRS adoption in 2023.
- Risks
- Technological advances such as hybrid bonding leading to a sharp decline in AI-material sales, large impairments, and equity financing.
- Shin-Etsu Chem（4063 / SHECF）July shipments of 300mm silicon wafers reached a monthly record, representing a positive data point.
- Strengths
- The report believes earnings-growth potential has strengthened.
- Comparison
- A 23x P/E on FY3/28 EPS is near the upper end of the 8–28x range over the past decade.
- Risks
- A sudden decline in semiconductor demand or global PVC resin demand, as well as rapid yen appreciation.
- Furukawa Electric（5801 / FUWAF）Supported by optical-cable price increases, higher HVLP4 copper-foil volumes, and growth in high-margin SOA sales.
- Strengths
- High growth in AI-server-related materials is viewed as a structural earnings improvement.
- Weaknesses
- Thermal-management components may face greater competition and share loss due to technology changes.
- Comparison
- A 40x P/E on FY3/28 EPS is above the midpoint of the 6–45x range over the past decade.
- Risks
- A sharp drop in data-center investment, rapid yen appreciation, intensifying competition in thermal-management components, and equity financing.
- Fujikura（5803 / FKURF）Optical-cable price increases and structural growth from AI data centers support its investment case.
- Strengths
- Optical-cable prices for a major customer project rose 25%, prompting the company to raise first-quarter guidance.
- Comparison
- A 40x P/E on FY3/28 EPS is above the midpoint of the historical 5–55x range.
- Risks
- Rapid yen appreciation, a sharp decline in optical-communications demand, and a rapid slowdown in smartphone and PC markets.
Key data
- Sales of major Taiwanese CCL manufacturersJuly year-over-year growth of 122.0%Combined sales of three major copper-clad laminate manufacturers, maintaining strong momentum.
- South Korean and Taiwanese silicon-wafer importsJuly year-over-year growth of 24.9%Including 44.0% year-over-year growth in South Korea.
- Taiwan imports of 300mm and 200mm wafersJuly year-over-year growth of 16.8%Indicating improving wafer demand.
- Formosa SUMCO salesJuly year-over-year growth of 28.8%Strong monthly sales performance.
- GlobalWafers salesJuly year-over-year growth of 19.6%Monthly sales growth.
- Fujikura optical-cable pricesUp 25% for a major customer projectPrompted the company to raise first-quarter earnings guidance.
- Sales of Taiwanese PCB suppliersJuly year-over-year growth of 34.4%Reflecting improved demand in the PCB supply chain.
- Japanese optical-fiber and optical-cable productionYear-over-year growth of 22.7%Inventories declined month over month.
- Japanese laser-diode productionYear-over-year growth of 54.9%However, inventories increased month over month.
Impact & implications
The report believes demand for high-speed optical modules, AI servers, and related optical interconnects is flowing through to electronic-material suppliers’ revenue, product mix, and earnings expectations via mSAP foil usage, optical-component supply constraints, optical-cable price increases, and sales of high-margin products. Improving silicon-wafer data further support a recovery in semiconductor-material conditions, but price pass-through still depends on whether demand recovers in each end application.
Risks
- Demand for the electronics industry, semiconductors, optical communications, or data-center investment could suddenly slow, weakening material volumes and pricing.
- Price pass-through for silicon wafers currently appears only in applications with growing demand, while recovery in other applications remains insufficient.
- A significant yen appreciation is a common earnings risk for several Japanese companies.
- Technology changes could affect existing material demand or product share, such as the impact of hybrid bonding on AI-material sales and intensified competition in thermal-management components.
- Some companies also face risks from changes in crude-oil or petrochemical prices, weaker PVC demand, inventory or goodwill impairments, and equity financing.