Summary of Conference Call on PCB Industry Industry Overview - The PCB sector is benefiting from AI-driven demand, with multi-layer board growth expected to reach 40% in 2024 and overall growth between 10% and 20% [1][3] - The PCB index has increased by 57% year-to-date, with public fund holdings rising to 3.2% [1][4] - The political bureau meeting emphasized the importance of industry and technology during the "15th Five-Year Plan," indicating significant potential for the tech sector [1][6] Core Insights and Arguments - **Supply-Demand Dynamics**: The core issue in the PCB industry is the supply-demand gap, driven by unexpected growth in demand from GPU clients like NVIDIA and overseas cloud providers [1][7] - **Technological Advancements**: New technologies such as orthogonal backplanes and narrow board designs are enhancing PCB value. For instance, NVIDIA's GB200 72-card cabinet uses double the number of cards compared to traditional servers, increasing demand for high-density interconnect (HDI) products [1][8] - **Chip Process Improvements**: Advancements in chip manufacturing processes are leading to increased data transmission bandwidth, which in turn drives upgrades in high-speed materials and PCB architecture [1][9] - **Supply Chain Bottlenecks**: High-end PCB production relies on equipment from Japan and Germany, which has limited capacity. The construction of new facilities in Southeast Asia is progressing slower than expected, leading to a tight supply situation anticipated in 2026 [1][10] Financial Performance - PCB sector profits declined by 4% in 2023 but are expected to rebound to a 25% growth in Q1 2025, with net profit growth rising from -30% in 2023 to 56% in Q1 2025 [1][3] - Current valuations for leading PCB companies are generally below 20 times expected earnings for 2026, indicating strong growth potential and locked-in orders [1][11] Investment Opportunities - Companies with significant capacity flexibility, such as Jingwang Electronics, Zhongchuan Precision, and Shenghong Technology, are recommended for investment [1][12] - Notable performers in the AI equipment and consumables sector include Ding Tai Gao Ke and Zhong Wu Gao Xin, which have seen record revenues and profits [1][13][14] Market Trends - The global market for PB specialized equipment is projected to grow from $5.8 billion in 2020 to $7.085 billion in 2024, driven by increased demand for high-precision drilling and exposure equipment [1][15] - Domestic manufacturers like Dazhu CNC and New Flag Micro are making significant strides in the PB specialized equipment market [1][16] Upstream Material Trends - The PCB industry is experiencing a wave of upgrades in core materials such as copper-clad laminates (CCL), resins, and copper foil, driven by the higher performance requirements of AI servers [1][21] - Key suppliers for these materials include companies like Taiguang, Dou Shan, and Shengyi Technology [1][22] Recommendations for Material Configuration - Focus on companies with strong performance in the evolving material landscape, such as Lianrui New Materials and Shengquan, which are positioned well within the AI supply chain [1][25]