AI demand and capacity constraints are pushing up fiber-optic prices, while the market opportunity for cloth-free PCBs depends on the ramp-up of new-generation rack shipments; the hotel and tire industries present different dynamics in platform monetization and cost pass-through, respectively.
Long-context inference is increasing demand for memory, upgrades to optical architecture are raising the value of connectors, and PCB manufacturers are beginning to pass price increases through to gross margins; earnings are materializing at different rates across the three supply chains.
Morgan Stanley believes several material options remain for next-generation AI servers; shortages of thin glass fabric and lead times for ABF lamination equipment could constrain supply, with the ABF substrate supply-demand gap expected to widen in 2027–2028.
After visiting an industry trade show in Taipei, Nomura found that supply constraints on fiberglass cloth, equipment and copper foil are spreading through the PCB supply chain. High-end ABF substrates may become scarcer, but the overall ABF substrate market remains oversupplied.
Price increases for mid- and low-end copper-clad laminates are narrowing the gross margin advantage of high-end products. J.P. Morgan expects prices of M7 and above products to rise by more than 10% before the end of 2026; meanwhile, PTFE mass-production processes and substrate equipment supply remain key constraints.
Customers are beginning to support capacity for 2027–2030 through long-term contracts, advance payments or subsidies, prompting Goldman Sachs to raise its earnings outlook for the supply chain. Another growth avenue comes from upgrades to M10 materials and high-margin ABF substrate materials, but certification, yields and expansion progress will determine how quickly the opportunity materializes.
J.P. Morgan’s sales team believes policy-driven buying and ETF inflows have yet to offset local redemption pressure, leaving technology stocks more sensitive to positioning in the short term. Meanwhile, results from Shennan Circuits, Aoshikang and fiberglass cloth manufacturers show that earnings improvement is spreading across the PCB supply chain; back-end equipment is supported by higher packaging and testing capital expenditure.
