HSBC: AI demand widens copper-clad laminate shortfall; durability of price increases depends on downstream customers’ ability to absorb them
After visiting the TPCA trade show, HSBC found that fiberglass cloth, high-end copper foil and equipment lead times are constraining copper-clad laminate capacity expansion. Companies across the supply chain broadly plan to pass on costs, while consumer electronics customers’ ability to absorb them is a key constraint.
Original source：HSBC Securities (Taiwan) Corporation LimitedFirst published on Unhidea：Original source date：
Key takeaway
AI demand is keeping copper-clad laminates in short supply, but materials and equipment bottlenecks, downstream cost sensitivity and the difficulty of processing new materials will together determine the results of capacity expansion and price increases.
Why is capacity expansion still struggling to keep pace with demand?
After speaking with supply-chain companies at the TPCA trade show in October 2026, HSBC found that all interviewed copper-clad laminate (CCL) manufacturers believed demand exceeded supply and that the market was unlikely to return to balance before 2029; AI is an important source of demand growth.
A shortage of fiberglass cloth is already limiting output: ITEQ said its capacity utilization is constrained to around 75%, but could exceed 90% if fiberglass cloth supplies were sufficient. The company expects tight supply to persist at least until the middle to second half of 2027.
Capacity expansion is also constrained by high-end copper foil and equipment lead times. Co-Tech expects the supply shortfall for high-end copper foil to exceed 30% and ease only around 2029; Asia Metal, a supplier of copper-clad laminate processing equipment, has orders booked through 2029.
Can price increases translate into sustained pricing power?
From fiberglass cloth and copper-clad laminates to PCBs, companies broadly plan to pass on material costs through price increases. HSBC believes that, with supply constrained and customers accepting price increases, incumbent manufacturers that have secured raw materials have greater pricing power.
But price increases do not always mean margin expansion: Kinsus said its quarterly price increases of 7%–8% in 2026 were solely to pass on costs. Whether high-layer-count, large-format ABF substrates can command a premium in 2027 also depends on whether substrate capacity becomes the main constraint after the T-glass shortage eases.
Consumer electronics end products have lower prices than AI products and are more sensitive to costs. PCB maker Unitech raised prices only in the second quarter of 2026, when it could no longer easily absorb costs. Customers have accepted the increases so far, but the company is uncertain how much more they can bear in the future.
What new bottlenecks will upgrades to high-speed materials create?
Faster connections are driving copper-clad laminates toward M10 and M11 grades, with material choices shifting to hydrocarbon resin (HC) and polytetrafluoroethylene (PTFE). However, EMC expects M7 through M9 to remain mainstream in 2027; it submitted its M10 for sampling in May 2026, expects certification could be completed before year-end, and plans to use it in Rubin Ultra from the second half of 2027.
PTFE helps reduce signal loss, but processing consumes more capacity: TUC said its lamination temperature is around 380°C, above the current approximately 220°C, and takes more than six hours. TUC prefers a hybrid design using HC for the outer layers and PTFE for the inner layers to balance material properties and processing requirements.
The supply of high-specification fiberglass cloth also affects design choices. Co-Tech said there may be only two Q-glass suppliers, prompting some customers to consider designs without fiberglass cloth; high-end copper foil manufacturers also expect HVLP5 to ramp up in 2028.
How will optical interconnects change PCB demand?
As optical devices evolve from pluggable modules toward NPO and CPO, closer to the ASIC, HSBC believes the amount of PCB required per connection increases, bringing HDI and mSAP boards into AI data centers.
Compeq said that, in the upgrade from 400G to 800G or 1.6T, optical module PCBs shift from 3+4+3-layer HDI using M6 material to 12- to 14-layer any-layer interconnect mSAP using M7N material. Its 800G product was its highest-volume specification by shipments in 2026, and 1.6T is expected to gradually ramp up at the end of 2027.
Higher requirements also make manufacturing more difficult: ZDT said conventional HDI boards are generally 2–3 millimeters thick, while AI-related products increasingly require 3–5 millimeters or more. The company said its 800G and 1.6T optical module capacity for 2026–2027 is sold out and it continues to expand capacity.
