Leading the pack!
In recent years,AI has become a hot topic, and its name can be heard everywhere.
Whether it’s theAI assistant in our chat software, or theAI optimization in mobile photography, even when scrolling through short videos or shopping online,AI big data is quietly recommending content you might like.
Given how popular it is, one would expect the companies behind it to be raking in profits. However, many companies claiming to be involved inAI are unable to show tangible results, leading many to question whetherAI is just a “scam” for profit.
Amidst this skepticism, however, there is a “dark horse” emerging in the field ofAI, and that is Shenghong Technology.
Recently, Shenghong Technology announced astonishing quarterly results, with net profit surging339%, setting a historical high for the same period, and a gross margin exceeding the industry average by10 percentage points. This performance is akin to that of Maotai in the liquor industry.
Such results inevitably raise questions: What are the components of Shenghong Technology’s performance? Can such high growth rates be sustained? Is it just a flash in the pan?
Next, let’s delve deeper into the analysis.
In a nutshell, the key to this outstanding performance is that Shenghong Technology has accurately seized theAI opportunity.
Shenghong Technology’s chairman and founder, Chen Tao, has come a long way from the Gobi Desert in Xinjiang, spending nearly20 years developing this small factory into a globalPCB giant, and now he has discovered theAI opportunity.
According to a report jointly released byIDC and Inspur, the globalAI server market is expected to reach125.1 billion USD by2024. Although theAI server PCB market only accounts for5% of the overall PCB market, Shenghong Technology has recognized its enormous potential for future growth.
Today, it is one of the global core suppliers of NVIDIA GB200 server PCB, sharing the high-end market with companies like Unimicron and TTM, capturing 60% of NVIDIA’s orders in the first quarter of 2025, thus benefiting from the“technological dividend”.
To become a core supplier for international giants like NVIDIA, Shenghong Technology has done two key things right.
The first thing is betting on the right track.
While other peers are fiercely competing in the mobile circuit board sector, Shenghong Technology made a bold decision in 2021— investing1.5 billion to expand its HDI (High-Density Interconnect, which allows for more densely packed circuits and is commonly used in high-end electronics) production line, focusing on theAI server sector.
This decision was not well-received at the time, with many mocking it, saying:“AI servers only account for5% of the PCB market, isn’t this just burning money?””
However, Shenghong Technology resolutely invested, and as2022 saw the explosive growth of ChatGPT, the AI industry began to grow rapidly. By the first quarter of2025, the situation underwent a remarkable turnaround, with demand forAI server PCB skyrocketing by300%, with prices exceeding three times that of ordinary boards.
Thanks to its early positioning, Shenghong Technology has significantly increased its quarterly shipment volume. Now, theAI server PCB market is growing rapidly, with an annual growth rate exceeding50%, and a long-term average compound growth rate of32.5% (excluding packaging substrates), allowing Shenghong Technology to continue benefiting from this fast-growing market.
The second thing is getting the technology development right.
ProducingPCBs for AI servers is extremely challenging.
Imagine having to arrange40 layers of circuits on a board the size of a palm, like squeezing40 overpasses into a fingernail, while also ensuring it can withstand1000W of power consumption for heat dissipation; the difficulty is evident.
However, Shenghong Technology has its own“secret weapon” — its self-developed nano-etching technology (a technique that allows for extremely fine circuit board lines). This technology meets the ultra-high-density wiring requirements for AI server PCBs, with a yield rate exceeding the industry average by 15 percentage points..
NVIDIA has stringent yield requirements forH100 substrates, and only Shenghong and Unimicron can meet them. With“high precision+ high yield”, Shenghong Technology’s products can command a price of5200 yuan per square meter, three times that of ordinary boards.
With this unique technology, Shenghong Technology stands out in the high-difficulty order sector.
By betting on the right track and getting the R&D right, Shenghong Technology has established four major advantages compared to its peers in the fiercely competitive PCB industry.
From a technical perspective, Shenghong Technology has built a strong technical moat.
6 layers of HDI technology are extremely difficult, with only5 companies globally mastering it, and Shenghong Technology is one of the first mainland companies capable of mass-producing28 layer accelerator cards, occupying an important position in the high-end PCB technology field.
In terms of cost control, Shenghong Technology has optimized its production processes through the establishment of smart factories and vertical integration, achieving a unit cost that is 12% lower than its peers, giving it a competitive edge in pricing.
In terms of customer resources, Shenghong Technology has deep collaborations with industry leaders like NVIDIA andAMD, securing a large number of orders from these top clients, ensuring stable and high-quality customer resources.
In terms of market share, Shenghong Technology has achieved full-category coverage ofPCBs, currently holding the global number one market share inAI computing cards andAI Data Center UBB switches.
In contrast, many of its peers are still caught in fierce competition in the traditional consumer electronics sector. Due to severe product homogeneity, they can only engage in price wars, leading to gross margins being squeezed below20%.
This starkly illustrates the significant advantages of high-end manufacturing over low-end assembly, explaining why Shenghong Technology can be “leading the pack” in the industry.
However, opportunities also come with risks for Shenghong Technology.
In the short term, whether NVIDIA’s H200 orders ramp up in the second quarter is crucial for Shenghong Technology. Analysts predict that if orders ramp up as expected, the company could contribute600 million in revenue, further solidifying the company’s profit growth trend in the short term.
In the long term, if Shenghong Technology successfully mass-produces ultra-high-frequency PCBs for 5G base stations and breaks through the technology for automotive laser radar substrates, it will further consolidate its high-end manufacturing advantage.
However, this also comes with risks, as currently, 60.88% of Shenghong Technology’s revenue comes from overseas. If trade frictions escalate, the company may face a“supply disruption” crisis.
Fortunately, in the face of this potential risk, Chairman Chen Tao stated:“We will continue to invest in R&D to ensure our technology is uncopyable by others.”
In summary, Shenghong Technology’s success is not accidental; the secret lies in not blindly chasing trends but focusing on building its core competitiveness. With the development ofAI, the company is expected to continue consolidating its leading position in thePCB industry and expand into a broader market landscape.
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The above analysis is merely personal opinion and does not constitute specific trading advice. The stock market has risks; investment requires caution.