Nomura: Elite Material: Nomura raises earnings forecasts on expected high-end copper-clad laminate price increases and capacity expansion

Latest results beat expectations: what will price increases change?

In the third quarter of 2026, Elite Material reported revenue of 60.885 billion New Taiwan dollars and earnings per share of 40.47 New Taiwan dollars, above Nomura’s forecasts of 58.459 billion and 36.57 New Taiwan dollars, respectively; gross margin was 37.7%, 1.6 percentage points above Nomura’s forecast.
Nomura observed that price increases in recent months have mainly been concentrated in low-end materials to pass on costs; against a backdrop of strong demand, major high-end copper-clad laminate suppliers are seeking to renegotiate prices at least once every six months.
Nomura maintains its assumption of a 10%–20% price increase in the fourth quarter of 2026 and expects revenue to rise 23% quarter on quarter, with gross margin climbing further to 39.3%.

Nomura expects next-generation AI GPU and ASIC platforms to make greater use of M9K1/K2 copper-clad laminates alongside M4/M6 from the second half of 2027 through 2028; the current generation mainly uses a combination of M8K1/K2 and M4/M6.
Over the same period, PCB designs are expected to shift toward greater use of high-density interconnect (HDI), or a mix of HDI and other structures. Nomura considers Elite Material an important copper-clad laminate supplier to major AI platforms and believes its lead in HDI materials could therefore become more strategically valuable.
Views on the material roadmap remain divided: Nomura believes the HCR versus PTFE debate is unlikely to be settled soon, but considers related concerns potentially overblown because Nvidia’s AI platforms currently contribute relatively little to the company.

Nomura observed that more AI end customers are proactively discussing long-term agreements with the company, helping it procure raw materials in advance, plan capacity allocation and extend its expansion plans to 2030.
Nomura estimates that monthly copper-clad laminate capacity will rise from 5.85 million sheets at the end of 2026 to 15.25 million sheets at the end of 2030, an increase of 161%.
Not all expansion is proceeding as originally planned: an additional 300 thousand sheets of monthly capacity at the Guanyin plant has been delayed from the second half of 2026 to the second half of 2027 because of a longer construction cycle; Nomura believes the Kunshan production line could ramp up early, helping mitigate the impact.

Nomura raised its 2026–2028 earnings-per-share forecasts by approximately 6%–35%, from 129.5, 250.5 and 345.3 New Taiwan dollars to 137.4, 303.5 and 466.5 New Taiwan dollars, respectively, reflecting stronger pricing power and an upgraded product mix.
Nomura maintained its buy rating and raised its target price from 8,015 to 9,700 New Taiwan dollars, equivalent to approximately 32 times forecast 2027 earnings, at the high end of the company’s historical range of 8–36 times since 2017. The company’s share in AI servers and switches, and end demand, will affect this assessment.