AI-Driven Electronic Innovation Cycle and Growth in Computing Power DemandAI is the core driving force behind this round of electronic innovation cycle. As large models penetrate applications from training to inference, the optimization of various large models has led to an explosive growth in AI application scenarios. According to the content from NVIDIA’s 2025 GTC conference, current model training requires over 100,000 tokens, while the computational demand for inference is 150 times that of training, which directly drives the demand for AI servers—by 2025, AI servers are expected to account for over 70% of the server market. In terms of computing power chips, NVIDIA GPUs (such as H200, B300) currently dominate, but as the market transitions from training to inference, customized ASIC chips are gradually emerging due to their cost and energy advantages, leading to a trend of co-development between GPUs and ASICs in the future. Additionally, the annual capital expenditure of the four major CSB manufacturers continues to grow, becoming a significant indicator of computing power demand.
Trends in PCB and CCL Upgrades and Market DemandAI servers have higher requirements for PCBs, needing to meet faster signal transmission, high-density integration, and high reliability within limited space. Therefore, PCBs are evolving towards more complex, high-performance, and higher-layer designs, driving simultaneous upgrades in upstream CCL (Copper Clad Laminate) and raw materials (glass fiber cloth, resin). Specifically, the number of layers in PCBs has increased from below ten to over 16, with transmission rates doubling with each generation of server platform upgrades (requiring ultra-low loss materials to support this). The compound annual growth rate (CAGR) for AI server and HPC-related PCBs is expected to reach 40% from 2023 to 2028, with Asia (especially China) becoming the core of this growth due to concentrated production capacity. In the CCL sector, the technical barriers in high-frequency and high-speed fields are high (long talent and customer certification cycles), currently dominated by Taiwanese and Japanese manufacturers (such as DuPont, Huacheng, and Taiyo Yuden), while domestic manufacturers (such as Shengyi Technology) are accelerating their catch-up. HDI (High-Density Interconnect) is a key PCB technology for AI servers, as it meets the high-density wiring requirements of OM cards (supporting eight GPU cards) and UBB (Universal Base Board), becoming a growth focus and a significant reason for Shenghong’s strong performance this year.
Explosive Demand for Electronic Fabrics (Low DK, LCT) and Market EvolutionElectronic fabric, as a core upstream material for PCBs, is divided into low DK (low dielectric constant) and LCT (low coefficient of thermal expansion). For low DK electronic fabrics, the first generation has a dielectric constant of 4.5-4.8 (corresponding to AI server GB200’s 800G switch), the second generation 4.0-4.3 (corresponding to ruby server’s 1.6T switch), and the third generation quartz fiber fabric 3.7-3.8 (optimal performance). Demand estimates show that by 2025, the demand for low DK electronic fabric will be nearly 90 million meters, reaching 150 million meters in 2026, and 240 million meters in 2027, with a compound growth rate exceeding 60%. Coupled with the increase in value (quartz fabric has a higher value), the market space growth is even more significant—115% growth in 2026, 167% in 2027, and the market space reaching 25.1 billion (300 billion including LCT) in 2027-2028. LCT electronic fabric is mainly used for advanced chip packaging (such as TSMC’s CoWoS technology), addressing warping and detachment issues in high-end packaging, with the current supply pattern being more concentrated (a few companies like Dongfang and Zhongtai Technology), with a gap of 30% expected in 2024, and demand growth outpacing that of low DK. Technically, the challenges in electronic fabric lie in drawing (especially quartz fiber, which requires rod drawing without liquid) and post-processing (which needs fine-tuning with the drawing process). Domestic companies (such as Zhongtai Technology and Honghe Technology) began research and development as early as 2018-2019, with a projected global market share of over 70% by 2027, adding 110 billion in market value (15 times PE).
Philips’ Core Advantages in the Quartz Electronic Fabric FieldQuartz electronic fabric has a significantly lower DF value (5‱-7‱) compared to the first and second generation low DK products (optimal performance), making it a preferred choice for core customers like NVIDIA in the AI performance-driven context. Philips’ advantages are reflected in three aspects: first, early layout—establishing ultra-thin quartz electronic fabric through its subsidiary Zhongyin New Materials in 2017, in strategic cooperation with Shengyi Technology; second, broad customer coverage—serving core clients like Shengyi, Taiguang, Panasonic (standard definers), and Doushan; third, full industry chain autonomy—controlling all aspects from quartz sand (purified by subsidiary Rongdian Technology), quartz rods (mother company’s electric connection technology), quartz fiber (military-grade technology accumulation, subsidiary Dingxin Materials) to electronic fabric (Zhongyin New Materials), allowing for rapid response to downstream demand. Additionally, Philips has expanded production capacity, with core customers providing framework agreements, expecting a shipment volume of 12 million meters by 2025, and relying on technological barriers and customer resources, is likely to occupy a leading position in the quartz electronic fabric field.
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