The market for Printed Circuit Boards (PCBs) and IC substrates has fundamentally shifted into a 'materials-led' environment.
At the heart of this change is the unprecedented demand driven by the AI infrastructure buildout. Tech giants are racing to expand their data centers, and this has created a massive pull on the entire electronics supply chain. For instance, Nvidia's recent earnings showed record-breaking Data Center revenue of $75.2 billion in a single quarter. This validates the immense need for high-performance components like advanced substrates, which are essential for complex packaging technologies like CoWoS that remain supply-constrained.
This demand surge has collided with tight supply in two critical raw materials. First is high-end electronic glass cloth, a key insulator. The market is dominated by Japanese suppliers, particularly Nittobo, and bringing new capacity online is a multi-year process involving complex customer qualifications. This makes it impossible for the market to find quick substitutes. Second is copper, where prices have hit record highs. This directly increases the cost of copper foil, a primary component of PCBs, forcing suppliers to pass on the costs.
The combined effect of these material shortages is quantifiable and significant. A typical laminate (CCL), the base material for PCBs, has a cost structure of roughly 42% copper foil, 19% glass cloth, and 26% resin. With recent price hikes of around 30% for copper foil and 20% for glass cloth, the implied cost increase for a finished laminate is over 20%. This calculation clearly explains why end customers are now seeing price increases of 10% to 30% for specific high-end products.
Ultimately, this situation benefits large-scale, well-established players like Unimicron, Kinsus, and Kingboard. Their scale gives them better access to scarce materials and more leverage in price negotiations. This structural shift means that for the foreseeable future, securing raw materials will be just as critical as securing customer orders.
- PCB (Printed Circuit Board): A board that connects electronic components using conductive tracks, pads and other features. It's the foundation of most electronic devices.
- ABF (Ajinomoto Build-up Film) Substrate: A type of high-performance IC substrate using an insulating film developed by Ajinomoto. It is critical for high-end CPUs, GPUs, and AI accelerators.
- CCL (Copper Clad Laminate): The base material used to manufacture PCBs, consisting of a laminate sheet with a thin layer of copper on one or both sides.