According to industry experts, PCBs (Printed Circuit Boards) play a vital role as a key component in servers, serving as the crucial material for their operation. The significant increase in server shipments has led to the expansion of the server PCB market, making it the fastest-growing downstream segment in the PCB market. With the growing demand for AI computing power, the PCB market is poised for a resurgence. Here are the key insights:

1. PCBs fulfill essential functions in servers, including chip mounting, data transmission, and interconnection. Acting as a replacement for complex wiring, PCBs enable electrical connections and insulation between components, serving as the backbone of the electronics industry. PCBs in server boards provide the base for chip modules, primarily used in motherboards, backplanes, and network cards. They are responsible for transmitting data signals between server components and managing power distribution.

2. The demand for AI computing power is driving the high-performance chip market, benefiting the AI server market and increasing the usage of PCBs. The expanding requirements for AI model computing power create opportunities for high-performance computing chips. It is projected that by 2025, the AI chip market in China will reach 178 billion yuan, with a Compound Annual Growth Rate (CAGR) of 42.9% from 2019 to 2025. Leading server manufacturer Intel has already started shipping AI-focused server products and has transitioned to industry-leading standards in memory and interfaces. GPUs, which are compatible with training and inference, are highly suitable for AI model training and inference, further favoring the development of the AI server market. AI servers typically feature 4-8 additional GPGPUs, increasing the usage of GPU boards.

3. In line with AI server demands, PCB layer counts, materials, and processes are optimized to achieve a simultaneous increase in quantity and price. To meet the growing data volume requirements, server transmission protocols have gradually upgraded, with Intel and AMD already shipping PCIe 5.0-related products boasting a signal rate of 32 GT/s. The newly released PCIe 6.0 specification doubles the data rate compared to PCIe 5.0 and is expected to appear in servers starting from 2023. As PCIe protocols advance, PCBs need to increase layer counts while reducing transmission losses, providing design flexibility and improved impedance control, thereby increasing the value of PCB products. In 2022, China's PCB industry reached a total output value of 44.2 billion US dollars, accounting for 54.1% of the global market. With the incremental market background of AI servers, domestic PCB manufacturers can achieve simultaneous growth in quantity and price.

Leading securities firms such as Guotai Junan Securities and Everbright Securities believe that the continuous growth in AI computing power will bring vast growth opportunities to the PCB market. They recommend focusing on PCB companies in AI-related fields such as Shanghai Electric Group Co., Ltd. (002463), Shenghong Technology Co., Ltd. (300476), Shennan Circuits Co., Ltd. (002916), Chongda Technology Co., Ltd. (002815), Shengyi Electronics, and Jingwang Electronics Co., Ltd. (603228).

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Source: Securities Times

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