UBS China Copper Clad Laminate Industry: Cycle Update: Raising FR4 ASP; PTFE Demand Pulled Forward
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UBS publishes an update on China's copper clad laminate (CCL) industry, arguing the sector is in an upcycle driven by sustained FR4 price increases and strong demand for AI-related high-end materials. The bank raised its FR4 average selling price (ASP) forecasts to Rmb383 by end-2026 and Rmb443 in H1 2027. PTFE, a key material for AI servers, shows demand pull-forward and should deliver meaningful incremental revenue to Shengyi Technology. While the market worries co-packaged optics (CPO) could downgrade CCL content, UBS sees limited near-term risk as AI infrastructure expansion supports high-end CCL demand. Upstream E-glass fabric supply remains tight, with prices expected to rise a further 10-15% in October to above Rmb15. Shengyi Technology holds a first-mover advantage in PTFE and should capture major share in 2027-28; PTFE adoption in NVL576 and Kyber backplanes could add Rmb137mn and Rmb2,635mn of incremental revenue. Kingboard Laminates is lifting loom capacity to 3,733 by end-2026, plus 1,100 more in 2027. Elite Material (EMC) expects M9 to reach a double-digit revenue share in 2027 with yields above 80-90%; M10 is sampling, making end-2026/early-2027 a key watch window. UBS rates Kingboard Laminates (1888.HK) Buy with a target price raised to HK$75, and Shengyi Technology (600183.SS) Buy with a target price raised to Rmb209.
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