IC substrates and networking PCBs grow; materials and equipment face shortages

The PCB industry is making large upgrades. The largest beneficiaries of the AI boom are IC substrate makers that are part of the advanced chip packaging supply chain, such as Unimicron and Kinsus, which have gradually emerged from the oversupply bottleneck caused by large-scale post-pandemic capacity expansion. The surge in orders has spread to multiple networking and server PCB manufacturers, including Gold Circuit Electronics (CGE), Allied Circuit Co. (ACCL), and First Hi-tec, driving double-digit year-over-year growth in Taiwan's PCB manufacturing output value in 2025.

Taiwan's PCB supply chain is at a critical growth inflection point. However, shortages of strategic materials such as copper-clad laminates (CCL) and constraints in process production equipment, along with extended lead times, could evolve into major obstacles to further output value growth.

AI computing depends on PCB materials

As next-generation high-end applications such as AI servers continue to push up PCB board sizes, layer counts, and material specifications, massive demand has surged into the upstream supply chain. Key high-end materials, including fiberglass cloth, copper foil, and drill bits, have successively shown signs of supply tightness, dragging on the operating momentum of IC substrate, networking, and server board manufacturers.

In response, Taiwan's upstream material suppliers, at customers' request, have launched large-scale capacity expansion plans in parallel. For example, Elite Material Co. (EMC) plans to expand capacity by 70% over the three years starting in 2024. Co-tech is also expected to double its existing copper foil capacity by 2027. Taiwan Glass and Fulltech Fiber Glass (FFG) are entering the high-end AI fiberglass yarn and cloth market, reshaping an industry landscape that was previously dominated by Japanese manufacturers.

Regarding low coefficient of thermal expansion (low CTE) fiberglass cloth used for IC substrates, Unimicron believes that upstream and downstream players across the PCB supply chain have already begun collaborating to cope with material shortages. With Nittobo bringing new capacity online and second-tier suppliers' new materials passing qualification, supply tightness is expected to see initial relief as early as the fourth quarter of 2026, helping to fully unblock the AI supply chain.

PCB supply chain re-enters a Capex expansion cycle

PCB industry leaders such as Zhen Ding Technology (ZDT) and Unimicron have both expressed optimism for the future, predicting that the next decade will bring in an explosion of cloud and edge AI demand. Applications ranging from AI servers and smart glasses to humanoid robots are all seen as potential growth drivers for output value.

In seizing the growth opportunities brought by the AI wave, the PCB supply chain is re-entering a phase of capital expenditure (CapEx) expansion. Facing time pressure to quickly establish a market presence, board makers are acquiring land and building new plants in Taiwan while upgrading existing process equipment. At the same time, they are continuing to expand into Southeast Asia, deploying new overseas production capacity to capture de-China supply chain orders from international customers.

Aside from IC substrate, networking, and server PCB manufacturers, companies traditionally focused on consumer and automotive electronics, such as ZDT, Compeq, and Tripod Technology, are also aggressively expanding high-end new capacity. As a result, lead times for key production equipment, including back-drilling machines and automated optical inspection systems, have been significantly extended to three to six months, posing additional challenges to board makers' business transformation efforts.

Source: various companies, compiled by DIGITIMES Asia 1/2026

Article translated by Emily Kuo and edited by Jack Wu