Guangfa Securities: Technological iteration drives a surge in AIPCB demand, with both the quantity and price of domestic equipment/supplies rising

According to the Zhitong Finance APP, GF Securities has released a research report stating that as AI applications continue to expand, the global AI infrastructure is ushering in a wave of development, leading to a significant increase in demand for PCBs. The global server/data storage market is expected to reach USD 291 billion in 2024, a year-on-year increase of 45.5%, with a projected growth rate of 36.1% in 2025. The continuous expansion of AIPCB has a direct impact on PCB processing, resulting in both a direct increase in quantity and an expansion of the impact of process iteration. Currently, there is still a gap in supply and demand for high-end drilling needles, with domestic manufacturers leading in both expansion actions and capabilities compared to overseas counterparts, as domestic manufacturers develop their own equipment and are ahead of foreign manufacturers in the pace of expansion. The main points of GF Securities are as follows: The global AI computing power construction is heating up, and technological iteration drives a surge in AIPCB demand With the continuous expansion of AI applications, the global AI infrastructure is experiencing a wave of development. Due to the significantly increased demand for PCB layers in AI servers and high-end switches compared to traditional servers, as well as the expansion of GPU board areas, the demand for PCBs is growing rapidly. According to the Guangdong Circuit Board Industry Association (GPCA), the PCB output value of each AI server is expected to increase by 5 to 7 times compared to traditional servers. According to Prismark's latest quarterly report, the global server/data storage market is expected to reach approximately USD 291 billion in 2024, a year-on-year increase of 45.5%, with the market size projected to grow by 36.1% year-on-year in 2025, and the CAGR (compound annual growth rate) from 2024 to 2029 is expected to reach as high as 11.2%. Leading PCB companies are increasing expansion, benefiting upstream equipment and materials According to the company's expansion announcements and online information from Wuxi New High-tech Zone, leading companies such as Dongshan Precision, Shenghong Technology, Shenzhen South Circuit, and WUS have all initiated large-scale expansion plans. However, due to factors such as high-end equipment delivery, breakthroughs and verification of key processes, and yield ramp-up, the actual pace of capacity release lags behind the growth rate of demand, resulting in a certain capacity gap for AIPCB in the short term. Compared to overseas, domestic manufacturers will seize market share with faster expansion capabilities. AIPCB technology upgrades drive simultaneous increases in equipment and material prices and quantities The continuous expansion of AIPCB has a direct impact on PCB processing, resulting in both a direct increase in quantity and an expansion of the impact of process iteration (with a significant increase in the proportion of high-layer and HDI). Correspondingly, the processes for PCB processing have also seen significant improvements, including increased thickness-to-diameter ratios, increased aspect ratios, and increased hole density, driving processes to become more refined and complex, leading to simultaneous increases in the quantity and price of equipment and materials. Additionally, domestic manufacturers are gradually achieving import substitution in high-end markets. As the demand and technical requirements for AIPCB increase, the usage and value of core equipment and materials for key processes are expected to grow in tandem. Domestic manufacturers are actively iterating technology and rapidly expanding, while overseas manufacturers face supply shortages, driving an increase in domestic substitution rates In terms of drilling equipment, mechanical drilling machines are primarily supplied by Germany and China; laser drilling machines have a higher value than mechanical drilling machines, leading to more intense competition, with major suppliers from the US, Japan, and Germany, while Chinese suppliers have yet to penetrate the high-end market. In terms of exposure equipment, the high-end market is dominated by suppliers from the US and Japan, while in the mid-to-low-end market, domestic manufacturers have successfully replaced foreign shares through price competition Currently, there is still a supply-demand gap in high-end drill needles. Domestic manufacturers are leading in both expansion actions and capabilities compared to overseas counterparts, with self-developed equipment and a faster expansion pace than foreign manufacturers. Investment Suggestions (1) From the perspective of core equipment, prioritize suppliers with leading technology and stable production capacity, recommending XINQI Microelectronics (direct write lithography), and suggest paying attention to Han's CNC (laser drilling) and Dongwei Technology (vertical continuous plating); (2) From the perspective of major consumables, as AIPCB raises higher requirements for drilling processes, the usage of drill needles will continue to increase significantly, suggesting to pay attention to Dingtai Gaoke and Zhongtung Gaoxin. (3) In the PCBA segment, suggest paying attention to Kaige Precision Machinery and Jintuo Co., Ltd. Risk Warning Downstream AIPCB capital expenditures may be lower than expected; domestic manufacturers' technological breakthroughs and market share expansion may be less than expected; supply chain price fluctuations