Core Insights - Goldman Sachs has significantly raised the Total Addressable Market (TAM) for AI PCB and CCL, with projections for AI PCB increasing from $17.4 billion to $26.6 billion and CCL from $8 billion to $18.3 billion by 2027, indicating a compound annual growth rate (CAGR) of 140% and 178% respectively from 2025 to 2027 [1][2] Group 1: Market Dynamics - The growth is attributed to structural changes driven by NVIDIA's new architecture (VR200/300), which replaces traditional cabling with more complex PCB/CCL components, improving cost structures and increasing the value of PCBs [1][2] - The demand for new mid-boards and back-boards is expected to surge in the second half of 2026 and 2027, leading to a multiplicative increase in PCB/CCL value per GPU [2] Group 2: Industry Challenges and Opportunities - The transition to more complex PCBs is creating a "cleaning" effect in the industry, where only top manufacturers capable of handling lower yield challenges will dominate the market, as production yields are projected to decline from 73% in 2025 to 65% and 62% in 2026 and 2027 respectively [2][3] - The GPU-related PCB/CCL market is expected to grow nearly tenfold in two years, while the ASIC market is also projected to double, despite increased competition among PCB suppliers [3] Group 3: Investment Recommendations - Goldman Sachs maintains "buy" ratings for key Taiwanese suppliers such as TSMC, GCE, and TUC, raising target prices across the board, indicating that these companies are positioned to be the biggest winners in the ongoing AI infrastructure boom [3]

Summary of Conference Call Notes Industry Overview - **Industry**: Taiwan PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) - **Market Size**: The AI PCB/CCL Total Addressable Market (TAM) is revised to **US$26.6 billion** for PCB and **US$18.3 billion** for CCL by 2027, up from **US$17.4 billion** and **US$8 billion** respectively, indicating a **140% CAGR** for AI PCB and **178% CAGR** for AI CCL from 2025 to 2027 [1][2] Key Insights - **Demand Outlook**: Strong demand is expected for both PCB and CCL in 2026 and 2027, with YoY growth anticipated to accelerate in 2027 compared to 2026 [1] - **New Technology Impact**: The introduction of new PCB/CCL content in the VR200/300 rack is a significant factor in the upward revision of the TAM, which will enhance cost structures and computing performance [1] - **Production Yield Rate**: The overall AI PCB production yield rate is projected to decline from **73% in 2025** to **65% in 2026** and **62% in 2027**, due to increased complexity in PCB specifications and the entry of more second/third-tier suppliers [2] Company-Specific Insights GCE (Global Circuit Engineering) - **Revenue Projections**: Expected AI PCB revenue to reach **US$2.2 billion** in 2026 and **US$4.8 billion** in 2027, accounting for **68%** and **93%** of total revenue respectively [11] - **Market Share**: GCE's market share in AI PCB is projected to increase from **17% in 2025** to **22% in 2026** [11] - **Earnings Revision**: Revenue estimates for 2026/27 have been revised up by **3%/22%** due to a favorable outlook on the AI PCB industry [28] EMC (Electronics Manufacturing Company) - **Revenue Projections**: Expected AI revenue to reach **US$3.0 billion** in 2026 and **US$8.5 billion** in 2027, accounting for **63%** and **97%** of total revenue respectively [19] - **Market Share**: EMC's AI CCL market share is expected to remain around **50%** in the coming years [19] - **Earnings Revision**: Revenue estimates for 2026/27 have been revised up by **5%/36%** due to positive ASP outlook and solid AI CCL demand growth [32] TUC (Technology United Corporation) - **Revenue Projections**: Expected AI revenue to hit **~US$500 million** in 2026 and **~US$1.9 billion** in 2027, accounting for **32%** and **82%** of total revenue respectively [24] - **Market Share**: TUC's market share in the AI ASIC industry is projected to increase from **6% in 2025** to **27% in 2027** [37] - **Earnings Revision**: Revenue estimates for 2026/27 have been revised up by **4%/18%** due to solid market share gains [37] Financial Metrics - **GCE Financials**: - 2026 Revenue: **NT$96.017 billion** (up from **NT$93.344 billion**) - 2027 Revenue: **NT$154.762 billion** (up from **NT$131.608 billion**) [30] - **EMC Financials**: - 2026 Revenue: **NT$143.118 billion** (up from **NT$135.803 billion**) - 2027 Revenue: **NT$261.967 billion** (up from **NT$192.421 billion**) [35] - **TUC Financials**: - 2026 Revenue: **NT$46.101 billion** (up from **NT$45.081 billion**) - 2027 Revenue: **NT$68.097 billion** (up from **NT$59.937 billion**) [40] Conclusion - The Taiwan PCB and CCL industry is poised for significant growth driven by advancements in AI technology and increasing demand for high-performance computing solutions. Key players like GCE, EMC, and TUC are expected to benefit from this trend, with revised earnings estimates reflecting a more favorable market outlook.

Summary of Global PCB and CCL Market for AI Servers Industry Overview - The global PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) market for AI servers is projected to reach **US$27 billion** and **US$19 billion** respectively by **2027E**, up from **US$17 billion** and **US$8 billion** in previous estimates, indicating a **140%** and **178% CAGR** from **2025-2027E** [2][8][40]. Key Drivers of Growth 1. **Demand Drivers**: - The demand is primarily driven by the rise of high-end AI servers, including GPU and ASIC servers, which require advanced PCBs and CCLs [1][40]. - High-end products such as **30+ layer multilayer PCBs**, **6L+ HDI**, and **M9+ CCL** are expected to account for **16%**, **23%**, and **14%** of total shipments for AI server applications by **2027E** [1][42]. 2. **Specification Upgrades**: - The transition to next-generation high-end AI servers is expected to significantly increase the value TAM (Total Addressable Market) [1][42]. - The adoption of **M9 materials** and **6L HDI** is anticipated to enhance product value and performance [42]. 3. **Capex Growth**: - Capex for PCB suppliers is expected to grow by **24%** YoY in **2025**, **23%** in **2026E**, and **15%** in **2027E**; for CCL suppliers, growth is projected at **38%**, **22%**, and **7%** respectively [1][57]. 4. **Utilization Rates**: - Utilization rates for PCB and CCL are expected to remain high despite capacity expansions, driven by the ramp-up of AI infrastructure [1][41]. Market Dynamics - **Shipment Growth**: - PCB shipments are projected to increase by **69% CAGR** to **2.5 million square meters** by **2027E**, while CCL shipments are expected to grow by **72% CAGR** to **78 million sheets** [2][41]. - **Average Selling Price (ASP) Increases**: - The ASP of AI server PCBs is expected to grow at **42% CAGR**, reaching **US$11,062** per square meter by **2027E**; CCL ASP is projected to increase by **62% CAGR** to **US$239** per sheet [43][40]. Gross Margins and Profitability - Major PCB and CCL companies are expected to see higher gross margins due to increasing sales of high-margin AI server products, tight supply, and rapid transitions to newer generations [44][40]. Investment Recommendations - Companies recommended for investment include **Shennan (002916.SZ)**, **GCE (2368.TW)**, **EMC (2383.TW)**, and **TUC (6274.TWO)**, which are positioned to benefit from the growth in the AI server PCB and CCL market [3]. Conclusion - The global PCB and CCL market for AI servers is poised for robust growth driven by technological advancements, rising demand, and significant increases in average selling prices. This presents a compelling investment opportunity in the sector, particularly for companies that are adapting to the evolving specifications and demands of AI infrastructure.

Summary of Conference Call Notes Industry Overview - The conference call focuses on the Taiwan PCB (Printed Circuit Board) and CCL (Copper Clad Laminate) industry, particularly companies TUC, EMC, GCE, and ZDT - There is a notable acceleration in capital expenditures (CAPEX) due to increasing demand for AI infrastructure investments Key Points and Arguments Capacity Expansion and Demand - TUC, EMC, GCE, and ZDT have announced new capacity expansion plans to meet the rising demand for AI infrastructure [1][4] - TUC's Thailand plant will see a capacity increase of 300k sheets per month by May/June 2026, with potential for further expansion of 1.0-1.2 million sheets per month [6][10] - ZDT plans to invest NT$30 billion annually in CAPEX for 2025/26, focusing on AI HDI products [10] - Overall capacity for the industry is expected to increase by 15% in both 2025 and 2026 [10] Profitability and ASP Trends - High-quality AI server PCB/CCL suppliers are expected to maintain good profitability due to high average selling prices (ASP) and increasing demand [2] - The gross margin for high-end CCL is projected to rise from 20-25% in M6 grade to 40-50% in M7/8 generation [2] - GCE's July financial performance showed a pre-tax margin of 23.25% and a net margin of 15.3%, exceeding both Goldman Sachs estimates and Bloomberg consensus [8][9] Earnings Revisions and Target Price Adjustments - Target prices for EMC, TUC, and GCE have been revised upwards to NT$1,400, NT$375, and NT$550 respectively, reflecting improved industry ASP and profitability outlook [3][22][27] - EMC's earnings estimates for 2025/26/27 have been increased by 1/4/4% due to better demand outlook and ASP growth [13] - TUC's earnings estimates for 2025 have been revised down by 4% due to unfavorable FX impacts, but 2026/27 estimates have been increased by 1% [19][20] - GCE's earnings estimates for 2025/26/27 have been revised up by 3/3/2% based on proactive industry demand and ASP growth [25][26] Financial Performance Highlights - GCE's July revenue was NT$5.646 billion, which is 33% of Goldman Sachs' estimate for Q3, indicating strong performance [9] - TUC's 2Q25 results showed a net income of NT$652 million, which was 15% lower than estimates due to FX impacts [11][12] Valuation Metrics - The target PE multiple for EMC has been increased to 22x for 4Q25-3Q26E, aligning with the AI component industry upcycle average valuation [15][16] - TUC's target PE multiple has been adjusted to 18x for 4Q25-3Q26E, reflecting a higher valuation compared to the past three years [22] - GCE's target PE multiple has been revised to 19x for 4Q25-3Q26E, indicating a strong valuation relative to its historical performance [27] Additional Important Insights - The industry is experiencing a significant shift towards higher quality and more complex PCB/CCL products, driven by advancements in AI technology [2] - The overall sentiment in the industry remains positive, with expectations of continued growth and profitability in the coming years [4][10]