In early March 2026, Japanese materials giants Lisonoco and Mitsubishi Gas Chemical announced significant price increases of 30% for copper-clad laminates and related materials. Almost simultaneously, domestic fiberglass leader Guangyuan New Materials and international composite materials also issued new price increase notices. Prior to this, major IC substrate manufacturer Xinxing had clearly stated at its February earnings call that the supply-demand imbalance for fiberglass cloth &#34;will not be resolved in 2026.&#34;
This series of intensive price hikes and supply shortage signals has brought the structural shortage issue of fiberglass cloth, a basic material that has long been in the background of the industry, to the forefront.
Fiberglass cloth is a core upstream material for manufacturing PCBs and IC packaging substrates. Its shortage means that the entire semiconductor supply chain, from advanced packaging of AI chips to end products in consumer electronics, will face pressures of rising costs and extended delivery times. Currently, upstream material manufacturers have order backlogs of up to six months, while downstream PCB manufacturers are experiencing high growth in performance due to AI demand. Reportedly, Jensen Huang, CEO of Nvidia, has personally visited upstream suppliers in Japan to ensure material supply. It is extremely rare in the semiconductor industry for end chip companies to directly contact the most upstream material manufacturers. How serious is the issue caused by the shortage of fiberglass cloth?
<h2>Continued Shortage of Fiberglass Cloth</h2>
Fiberglass cloth is the core structural material for copper-clad laminates, which are the direct raw materials for manufacturing PCBs and IC packaging substrates. Among them, high-end low thermal expansion coefficient fiberglass cloth is widely used in the organic core layer of IC substrates for AI chips, providing necessary dimensional stability and mechanical support for large-size, high-power chip packaging, and is referred to in the industry as &#34;chip armor.&#34; The value of fiberglass cloth accounts for about 30% of the cost of copper-clad laminates, making it a key variable in the cost structure of PCBs.
One of the fundamental reasons for the current supply tightness is the extreme concentration in the high-end fiberglass cloth market. Japan's Nitto Denko controls about 90% of the global supply of high-end fiberglass cloth. The production of this type of fiberglass cloth relies on special electric melting furnaces operating at temperatures between 1600 and 1700 degrees Celsius. The process chain from raw material melting, spinning to weaving is long and has high technical barriers, with the construction cycle for new capacity typically requiring several years. This highly concentrated supply structure leaves the market with almost no elastic buffer when facing sudden changes in demand.
Since the second half of 2025, high-end fiberglass cloth has entered a state of continuous shortage. Entering 2026, the pace of price increases has clearly accelerated. On February 4, domestic fiberglass leader Guangyuan New Materials and international composite materials issued price increase notices, raising the price of traditional fiberglass cloth type 7628 by 0.5 to 0.6 yuan per meter, a significant increase compared to before. In the international market, Lisonoco raised the prices of copper-clad laminates and adhesive films by more than 30% starting March 1. Subsequently, Mitsubishi Gas Chemical announced a 30% price increase across the board for copper-clad laminates, semi-cured sheets, and resin-coated copper foil starting April 1.
Lisonoco and Mitsubishi Gas Chemical are both core suppliers of IC substrate materials. Industry insiders analyze that the price increases by these two Japanese companies reflect market expectations for stronger demand for IC substrates in the second half of 2026, driven mainly by AI, smartphones, and memory sectors
Mitsubishi Gas Chemical issued a delivery delay notice to customers in mid-2025, indicating that orders for copper-clad laminates and semi-cured sheets have exceeded existing capacity, and the supply of upstream fiberglass cloth is lagging behind demand growth. According to feedback from BT substrate manufacturers, Mitsubishi Gas Chemical's order delivery time has been extended to over 16 weeks.
From the price trend, the price of 7628 fiberglass cloth has risen from RMB 4.15/meter at the end of September 2025 to the current RMB 4.75/meter, with increases in October, December 2025, and January 2026, each by RMB 0.15 to RMB 0.25/meter. Taiwanese fiberglass manufacturers have seen price increases exceeding 50% in 2025, with monthly adjustment ranges in 2026 reaching 10% to 15%, and industry research predicts that prices may double by the end of 2026. Huatai Securities believes that fiberglass cloth has undergone four rounds of price increases since early 2025, with shortages spreading from high-end to ordinary products, and a new round of price increases may begin in 2026. Citigroup analysts expect fiberglass cloth prices to rise by 25% or even higher in 2026.
<h2>Surge in PCB Demand</h2>
The demand for AI computing power is the core driving force behind this round of supply tightness. The iteration of AI chips represented by NVIDIA is fundamentally changing the technical specifications and material usage of PCBs and packaging substrates.
According to public information, the PCB layer count of NVIDIA's GB300 server has increased to over 16 layers, with the amount of fiberglass cloth used per unit reaching 18 to 24 meters, approximately 5 times that of traditional servers. In higher-end product lines, traditional 8-card GPU servers use PCBs with 20 to 24 layers, while the PCBs used in the Rubin architecture have reached 40 to 78 layers. The area of the interposer for NVIDIA chips has expanded from 814mm² in the Hopper architecture to 1700mm² in the Blackwell architecture, an increase of 109%, with further expansions expected in the subsequent Rubin and Feynman generations. The larger packaging area and higher power density impose stricter requirements on the thermal expansion coefficient and dimensional stability of substrate materials, making high-end fiberglass cloth an irreplaceable choice.
Bilal Hachemi, an analyst at Yole Group, pointed out in an interview that this high-end fiberglass cloth has specific dielectric constants and thermal expansion coefficients, performing better than other alternative materials in the organic core substrates of AI chips, stating that &#34;it is not easy to replace it.&#34;
The magnitude of this demand change is directly reflected in its value.
According to institutional estimates, the PCB value of a single AI server can reach RMB 19,500, which is 8 times that of a regular server. Goldman Sachs analysis indicates that AI is driving the PCB industry into a &#34;super cycle,&#34; with the global AI server PCB market size expected to grow by 113% year-on-year in 2026, driving the growth rate of the upstream copper-clad laminate market to 142%, with price increases expected to continue through 2026 to 2027
Consulting firm Prismark predicts that from 2024 to 2029, the global PCB industry will have a compound annual growth rate of approximately 5.2%, with the annual compound growth rate of AI server-related HDI boards reaching 16.3%. Market research firm Mordor Intelligence data shows that the global PCB industry size will increase from USD 85.2 billion in 2026 to USD 109.68 billion in 2031.
The concentrated explosion of demand has brought about a significant capacity squeeze effect. Guojin Securities analysis points out that the capacity required to produce one unit of high-end copper-clad laminate is equivalent to squeezing out 4 to 5 units of ordinary copper-clad laminate capacity. A PCB listed company's substrate head revealed, &#34;It is expected that the supply of fiberglass cloth will remain tight throughout this year, and it is not expected to ease until the second half of 2027,&#34; and currently, the substrate delivery period has been extended to six months. The head also stated that the demand for PCBs related to AI is extremely strong, while consumer demand is relatively stable.
Globally, the supply-demand gap data for high-end materials is even more intuitive. According to industry statistics, the global monthly production capacity of HVLP4 grade high-end copper foil is only 700 tons, while the demand has reached 850 tons by 2025; the global demand for low-dielectric fiberglass cloth is expected to be 18.5 million meters in 2026, with effective capacity only at 10 million meters. Japanese companies occupy over 80% of the market share in the M9 grade copper-clad laminate and high-end fiberglass cloth segments, forming a de facto supply monopoly, and prioritize supplying high-priced AI orders, causing the delivery cycle for traditional orders to extend from 8 weeks to 20 weeks.
<h2>Multidimensional Impact on the Semiconductor Supply Chain</h2>
The tight supply of fiberglass cloth and copper-clad laminates has had substantial impacts on the semiconductor supply chain through multiple pathways.
Packaging substrates have become a key constraint on AI chip delivery. Advanced packaging technologies represented by TSMC's CoWoS are the core link in the mass production of AI chips, while the manufacturing of ABF packaging substrates relies on high-end fiberglass cloth. The shortage of fiberglass cloth directly translates to insufficient supply of ABF substrates, thereby limiting the capacity release of CoWoS. Reports indicate that the rapid increase in demand for CoWoS advanced packaging has driven up orders for ABF substrate materials, further squeezing upstream fiberglass cloth supply. IC substrate and PCB giant Xinxing clearly stated at their February 2026 earnings call that due to strong demand from AI customers, the shortage of fiberglass cloth &#34;will not be resolved in 2026,&#34; affecting almost all AI customers.
It is noteworthy that NVIDIA, as an end chip design company, has unprecedentedly contacted the upstream material supplier Nitto Denko directly to ensure the supply of high-end fiberglass cloth capacity. Yole Group analyst Hachemi stated, &#34;This is the first time I've seen an end customer like NVIDIA directly contact upstream material suppliers to ensure capacity.&#34; This move highlights the severity of the supply issue and raises market concerns about further supply centralization—when leading customers lock in most of the capacity, other chip companies and application fields will face greater supply pressure
The price increase trend is spreading to a broader semiconductor field. Since the beginning of 2026, price increases in the semiconductor industry have not been limited to PCB materials. Samsung has raised DRAM prices by nearly 100%, with NAND flash memory increasing by 55% to 60%, followed by SK Hynix and Micron; Infineon plans to increase power semiconductor prices by 5% to 15% in April; Texas Instruments will raise some analog chip prices by 15% to 85% starting in April; TSMC's advanced processes are expected to rise by 3% to 10%. The common background for these price increases is the demand for AI computing power driving the entire industry chain, as well as the contradiction between new demand and limited capacity after the destocking cycle from 2023 to 2024 ends.
The consumer electronics market is under pressure from cost transmission. Omdia's latest forecast shows that global PC shipments are expected to decline by 12% to 245 million units in 2026, mainly due to a sharp rise in memory and storage prices, which are expected to increase by at least 60% in the first quarter of 2026. Among them, PC shipments priced below $500 are hit hardest, expected to decline by about 28%. This data indicates that the price increases of upstream materials and chips are affecting the terminal market through cost transmission mechanisms, with a more significant impact on price-sensitive mid-to-low-end products. Citigroup analysts previously also predicted that the rise in fiberglass prices is likely to be transmitted downstream, pushing up the prices of terminals such as smartphones and laptops.
The process of domestic substitution is accelerating. Against the backdrop of tight global supply of high-end materials, Chinese companies are accelerating their technological catch-up and capacity layout in the fiberglass field. By August 2025, the monthly production capacity of domestic special fiberglass cloth manufacturers has exceeded 6 million meters. Honghe Technology, as a leader in low-dielectric fiberglass cloth, is expected to see its net profit attributable to the parent company grow by 745% to 889% in 2025, with a non-recurring net profit increase of up to 3377% to 3969%. International Composite Materials has achieved mass production of second-generation low-dielectric fiberglass cloth, with full orders and capacity running at full load. The national &#34;14th Five-Year Plan&#34; lists integrated circuits as a key development area, which will further stimulate the domestic substitution demand for key materials such as fiberglass cloth. However, it should be noted that in the highest-end fiberglass cloth field, there is still a significant technological gap between domestic companies and Nitto Denko, making complete substitution difficult in the short term.
<h2>When will supply and demand rebalance?</h2>
In the face of ongoing supply tightness, major manufacturers have launched large-scale expansion plans. Nitto Denko plans to invest 80 billion yen, approximately $510 million, in global expansion over four fiscal years under its &#34;Big VISION 2030&#34; strategy, with 15 billion yen allocated to the construction of a new high-end fiberglass cloth factory at its Fukushima base, aiming to triple production capacity by 2028 compared to 2025. At the same time, Nitto Denko is expanding its raw yarn production capacity at its Taiwan factory and collaborating with South Asian Plastics to outsource part of the weaving, with about 20% of fiberglass cloth expected to be woven by South Asia by 2027. Panasonic Industrial has also announced an investment of 7.5 billion yen to build a new MEGTRON circuit board material production line to meet AI server demand
However, the release of new production capacity takes time. The capacity of the new Nitto Denko factory in Fukushima will not enter the market until mid-2027 at the earliest. Yole Group analyst Hachemi estimates that the supply-demand imbalance is unlikely to ease until the second half of 2027. During this period, the supply tightness of high-end fiberglass cloth and copper-clad laminates will continue, and the pressure for price increases will be difficult to alleviate. Goldman Sachs predicts that the price increase trend will persist throughout 2026 and 2027.
Bank of America estimates that sales in Nitto Denko's electronic materials division will increase from 40.9 billion yen in 2025 to 87.7 billion yen by March 2028, with an operating profit margin close to 48%. Bank of America analyst Takashi Enomoto pointed out that &#34;the demand for high-end fiberglass cloth may exceed initial expectations,&#34; as the demand for thick specifications used in GPU/CPU packaging is growing, and the demand for ultra-thin specifications is also rising, due to cutting-edge devices transitioning from traditional fiberglass cloth to high-end fiberglass cloth.
Hachemi from Yole Group also warned that fiberglass cloth is not the only potential bottleneck in the IC substrate supply chain; materials such as copper foil layers, solder masks, and copper-clad laminates may also experience similar supply tightness. This means that even if the supply and demand for fiberglass cloth gradually eases after 2027, the overall vulnerability of the semiconductor packaging materials supply chain will remain a long-term issue.
<h2>Conclusion</h2>
The supply chain tension triggered by the shortage of fiberglass cloth is essentially a result of the demand for AI computing power being transmitted from the application layer to the physical layer, and it will last at least until the second half of 2027. It exposes the global semiconductor supply chain's excessive reliance on a single supplier and forces chip companies to engage more deeply in upstream material segments than ever before.
The semiconductor industry is transitioning from an old cycle dominated by consumer electronics to a new cycle driven by AI computing power. In this transformation, the ability to control underlying materials and packaging technology will become a key factor in determining the competitive landscape, just like advanced processes.
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The market has risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at one's own risk

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In March 2026, Japanese materials giant Lisonoco and Mitsubishi Gas Chemical announced a 30% price increase for copper-clad laminates and related materials. Domestic fiberglass leader Guangyuan New Materials also issued a price increase notice. Major IC substrate manufacturer Xinxing stated that the supply-demand imbalance for fiberglass fabric will continue until 2026. Fiberglass fabric is a core material for manufacturing PCBs and IC packaging substrates, and its shortage will lead to increased costs and extended delivery times in the semiconductor supply chain. The high-end fiberglass fabric market is highly concentrated, mainly controlled by Japan's Nitto Denko, resulting in a lack of market elasticity

Shortage of fiberglass cloth, PCB in urgent situation