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Full Text Summary
The core topic of the meeting is to discuss the upstream electronic materials industry of PCD, led by analysts, covering the volume and price changes of electronic materials, industry trends, the central logic of CCL (circuit board substrate), and its impact on the PCB (printed circuit board) industry. It is particularly noted that NVIDIA’s demand for high-speed, high-frequency CCL is driving advancements in both materials and processes, enhancing the value of PCBs. The meeting also addressed the costs and performance issues of key raw materials such as copper foil and electronic cloth, as well as industry prospects and market potential.
Sharing on the Volume and Price Increase of PCP Electronic Materials and Industry Trends
The event host reminded participants of the rules for the conference call, and then the analyst shared an analysis of the volume and price increase of the PCP electronic materials industry and industry trends, emphasizing the impact of distinguishing business models on the upstream material space and logic, aiming to provide industry insights for institutional investors.
Analysis of CCL Materials and PCB Production Cost and Industry Growth Logic
The dialogue detailed the core role of CCL materials in PCB production, including production processes, cost composition, and the impact of material performance on lamination quality. The industry growth logic focuses on the surge in demand for high-speed, high-frequency CCL, driven by the performance enhancement requirements of high-end chips for PCBs, creating a dual increase in processes and materials, promoting simultaneous volume and price increases in the PCB and motherboard industries.
Technological Upgrades and Supply Chain Analysis of the CCL Industry
The dialogue discussed the technological upgrades in the CCL (copper foil substrate) industry regarding raw material performance and processes, particularly the promotion and application of Panasonic’s Ma series products, and their contribution to the increase in industry value. The high-speed and high-frequency performance of CCL was analyzed through two indicators: electromechanical loss and flow rate, pointing out the adjustments in different formulations of Ma7, Ma8, and Ma9 to achieve optimal electrical performance. The industry structure involves upstream suppliers to ordinary manufacturers, then to PCB production and assembly, ultimately determined by the shipment volume of server cabinets and the demand for PCB solutions.
Comparison of Electronic Components and Electronic Data Business Models and Analysis of Copper Foil Manufacturing Barriers
The discussion focused on the differences between electronic components and electronic data business models, analyzing the core barriers in copper foil manufacturing, particularly the impact of surface smoothness on signal transmission, and the challenges of drawing and weaving in electronic component production. It was particularly mentioned that Q-step materials significantly improve electronic transmission rates due to enhanced DF values, but due to difficulties in mass production, there is currently a short supply, viewed as a forward-looking solution for high-speed and high-frequency applications.
Analysis of First-Mover Advantage and R&D Barriers in the Electronic Materials Industry
The dialogue discussed the challenges and advantages in the production and expansion processes of the electronic materials industry, pointing out that numerical industries need to cooperate closely with customers for debugging, possessing high R&D barriers. However, once a first-mover advantage is established, it can secure long-term stable orders, while the CCL industry requires repeated testing of upstream materials to ensure electrical performance standards.
Long Cycle of the Server Industry Chain and Analysis of Material Stability
The discussion covered the production cycle of servers from CCL to PCB to complete machine manufacturers, indicating that each link has a long verification cycle and requires a high-frequency response to material iterations. The analysis emphasized the low substitutability of basic materials to CCL in the industry chain, highlighting the stability of suppliers and the risks of performance when changing suppliers, indicating that the share of materials with stable supply is difficult to replace.
Analysis of VR Industry Space and Demand for Ma Jiu Series PCB Boards
The discussion focused on the industry space of the Ma Jiu solution in the VR series, predicting a demand of 770 tons of CCL based on 14,000 cabinets, corresponding to an estimated revenue of approximately 1.9 billion. The incremental demand from the Ma8 and Ma9 series is expected to bring an industry increment of 4 billion, with an optimistic industry trend, potentially tripling or quadrupling demand by 2027.
Outlook on the Electronic Materials Industry: Explosive Growth in CCL Demand and Industry Trends
The dialogue focused on the growth of demand for electronic materials, especially CCL (copper foil substrate), and industry trends. The discussion pointed out that the demand for computing power from R-series chips will drive explosive growth in the CCL market, particularly for high-performance PCB boards. The increase in material costs and manufacturing processes is key to the growth in value. In the short term, there is a tight supply of electronic data and copper foil, and the industry is expected to see price increases. In the long term, the overall trend of the industry is positive, with a favorable outlook for medium to long-term development.
Q&A Review
What is the logic of the upstream electronic materials industry of PCD?
This sharing mainly focuses on the upstream electronic materials industry of PCD, starting with the overall increase in volume and price of electronic materials and industry trends. We distinguish the industry business models and correspond them to the entire electronic data space, analyzing the space and logic of upstream materials.
What is the core logic behind the improvement of CCL (copper-clad laminate)?
The core logic behind the improvement of CCL lies in its material performance’s impact on lamination quality. The CCL production process includes soaking electronic cloth in mixed resin, followed by drying, cutting, and laminating copper foil, ultimately used for PCB (printed circuit board) production. Approximately 30% to 40% of PCB costs come from lamination, with 90% of lamination costs derived from raw materials, particularly with a high ratio of Tongbo and digital. Currently, due to the rapid growth in demand for high-speed, high-frequency CCL from high-end chips like NVIDIA, the entire PCD and motherboard industry is experiencing simultaneous increases in volume and price.
How does PCB affect the performance of PC versions? What are the industry standards in terms of raw material performance and processes?
PCB performance is mainly influenced by two factors: processes and materials. High-end chips require high-end PCBs, and their performance is achieved through special processes on specific materials. Therefore, the dual upgrade of processes and materials drives the overall increase in PCB value. Currently, the industry performance process is represented by Panasonic’s Ma series, with high-speed shipments of Ma8 starting this year and continuing with the subsequent Ma Jiu series, leading to continuous price increases for ordinary versions. The main performance indicators of CCL are DNDF.
What is the role of electromechanical loss and electromechanical constant in CCL?
Electromechanical loss is the phenomenon of signal attenuation during transmission, while the electromechanical constant is an indicator of flow rate. By controlling the formulation of CCL, it can achieve the corresponding DK and DF values to optimize electrical performance.
What is the structure of the CCL industry?
The CCL industry structure involves upstream suppliers such as Dove, Tongguang, Feilihua Zhongcai, and Dongcai Honghe providing electronic cloth and copper foil. They supply products to ordinary manufacturers like Dou Shan, Taiguang, and Shengi Technology, which produce CCL based on PCB’s electrical performance requirements and laminate according to specific Ma series solutions, ultimately forming PCBs that meet demand, which are then supplied to Fuli for assembly.
How is the overall volume and price of the industry determined?
The overall volume and price of the industry are determined by two aspects: in terms of volume, it is based on the shipment volume of server cabinets and the types of PCB board demand within the cabinets; in terms of price, it depends on the specific requirements of PCB solutions for CCL, such as the value increase brought by different formulations like Ma8 or Ma9.
What are the differences between electronic cloth and electronic data business models?
The main difference between electronic cloth and electronic data business models lies in manufacturing barriers, especially the requirements for surface smoothness in the copper foil manufacturing process and its adhesion ability during electronic component bonding. Copper foil plays a key conductive role in electronic cloth.
What is the core of copper technical indicators, and why is low roughness needed?
The core of copper technology is to achieve very low surface roughness, as higher roughness leads to electromagnetic wave losses at rough points, thereby reducing signal transmission strength. To minimize electrical losses and ensure minimal signal attenuation, the copper surface needs to be as smooth as possible.
What are the key challenges in the Chen copper process?
The key challenges in the Chen copper process include achieving high smoothness of copper during production and obtaining products with normal area after cutting, ensuring the entire board remains stable. Additionally, the process of resin adhesion is crucial to ensure that the electronic cloth can accurately adhere to the resin and maintain a smooth surface.
What are the advantages of Q-step compared to Nuo1K2?
Q-step shows significant improvements in electronic transmission rates, with its performance value increasing from 19% to about 4‱, making electronic transmission faster, thus overall performance surpassing Nuo1K2. However, due to the difficulties in mass production of Q-step, there is currently a supply shortage in the industry.
What are the technological trends and barriers of Q-step?
Q-step is a forward-looking material with high-speed and high-frequency performance, considered the optimal short-term solution. Its barriers are similar to those of Chen copper, mainly due to the difficulties in drawing and weaving processes caused by material characteristics, especially the higher hardness of quartz materials, which requires higher production equipment and process standards.
What is the competitive advantage of numerical materials in the industry?
Numerical materials can enter large customer systems first and actively respond to customized needs, thus possessing a first-mover advantage. Through continuous iteration and adjustment of formulations, numerical materials can secure long-term stable orders, and their supply processes are more flexible, making it easier to expand production compared to electronic components and copper foil.
What are the differences between numerical materials and electronic copper foil and electronic components?
Numerical materials have a first-mover advantage and require highly stable cooperation with customers. In their production process, in addition to ensuring electrochemical performance, they also need to adjust other indicators such as adhesion to meet the close cooperation between electronic components and copper foil. The R&D barriers for numerical materials are high, requiring continuous formulation adjustments to stabilize supply, while mass production of electronic copper foil and electronic components is relatively easier.
How long does the entire process from design to verification take in the lifecycle of server products?
The entire product lifecycle generally takes between one and a half to two years, with each stage such as testing, small batch long-term testing, and final mass production typically requiring more than nine months.
Why are certain links in the material supply chain difficult to replace?
The main reasons these links are difficult to replace are twofold: first, the long industry chain means that changing solutions or suppliers can have a chain reaction throughout the entire industry; second, changing suppliers may increase the risk of overall performance in cabinets, and since the products of these manufacturers have minimal impact on performance, from a cost perspective, replacing suppliers is not cost-effective.
What is the penetration trend of the Ma Jiu series in PCB boards?
According to current predictions, the Ma Jiu series of PCB board information sections will gradually show a higher penetration trend, especially in HDI or high-layer structures, likely becoming the mainstream solution.
What is the current market space for the Ma Jiu series in data centers?
Based on the current forecast of 14,000 cabinets, the market space for the Ma Jiu series is approximately 770 tons of CCL, corresponding to about 800 tons of total industry volume.
What is the contribution of the Ma Jiu and Ma Jiu series to industry increment next year?
Next year, the incremental contribution of the Ma Jiu and Ma Jiu series to the industry is expected to bring about 4 billion in input space.
What is the outlook for the entire industry trend in the following year?
With the stocking and demand growth of R-series chips, it is expected that the entire industry’s space will significantly increase, with demand likely to triple or quadruple at a minimum, indicating a very optimistic industry trend.
What are the main driving forces behind the growth of CCL?
The growth of CCL is mainly benefited from the increased penetration of high-level products from companies like NVIDIA, especially the growing demand for high-definition RPCB, which will drive explosive growth in the demand for high-speed, high-frequency CCL, and also significantly increase the demand for electronic components, copper foil, and electronic data.
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