According to well-known analyst Ming-Chi Kuo's latest survey, the product items of low and medium end (below M4) CCL (copper-clad laminate) have generally increased in price, with an average increase of nearly 10%; there is currently no sign of high-end CCL (above M4) price increase.

CCL is the main raw material of PCB. The performance, quality, manufacturability, manufacturing level, manufacturing cost and reliability of the latter depend largely on the CCL used.

In the past year, the surge in AI server demand has prompted CCL manufacturers to upgrade production lines to cope with high-end product demand. This indirectly backlog the M4 and below production capacity, resulting in reduced supply.

In addition to reduced supply, according to Kuo, there are two major supports on the demand end of CCL.

First, in the AI boom, PCs have upgraded to AI PCs, and components and materials naturally need to be upgraded too, including CCL: Qualcomm's AI PC motherboard material has been upgraded from standard-loss to mid-loss, and unit price has increased by 15%-20%. Intel and AMD's AI PC motherboards also use mid-loss CCL proportionally more, while some models continue to use standard-loss.

Secondly, several companies including Broadcom have given optimistic expectations that general server demand is expected to recover from the second half of this year, and demand for low and medium-end CCL is expected to grow together.

Over the past few months, raw material costs of CCL have continued to rise, eroding manufacturers' profits. Kuo said that the other reason for this round of price increases is to respond to the upstream raw material price increases, and after the price increase, the raw material costs can be fully passed on to customers, and profits are expected to increase significantly.

In fact, in late May, many CCL manufacturers have issued price increase notices: among them, the world's largest CCL supplier, Kingboard Holdings, increased prices in March and May, with a cumulative increase of 10%-20%; Meizhou Weilibang increased prices by 8%-10%; Tenghui's some low-priced products have already increased prices, with an increase of 1%-2%.

The CCL industry has strong cyclical properties. The first two cycles started in 2016-2017 and 2020-2021 respectively, with a peak of about 1-2 years, followed by a downward cycle.

China International Capital Corporation's report on June 13 pointed out that the profitability of the CCL industry and the stock price changes of core companies are related to the trends of major raw materials such as copper and glass fiber. Historically, there have been major price increase cycles for CCL that often coincide with upstream cost increases of the three major raw materials and good demand for downstream PCB products, thus achieving smooth price transmission.

Analysts further stated that with the growing demand for high-end PCB products in infrastructure systems such as AI servers, HPCs, switches, and storage, as well as the gradual resumption of normal inventory in downstream consumer, industrial, and auto sectors, CCL prices and profit levels are expected to continue to recover.

Guosen Securities previously believed that CCL will usher in a round of price increase cycle, upstream material prices rise plus downstream replenishment, constitute the PCB manufacturers' operating rate increase and price process, and then further enhance the scale and profitability of PCB manufacturers.

In A shares, CCL-related companies include Shengyi Technology, Zhejiang Wazam New Materials, Nanya New Material Technology, etc.