AI ignites the PCB supply chain! Taiwanese manufacturers' revenues surge across the board, with analysts bullish on these two sectors.

2025/08/27

Commercial Times
August 9, 2025
By Smart Wealth Monthly, Chen Wen

Driven by the stabilization of the global electronics market and strong application demand, according to statistics from the Taiwan Printed Circuit Board Association (TPCA), global printed circuit board (PCB) output value will reach US$80.9 billion in 2024, a 7.6% increase. It is projected to grow another 5.5% to US$85.4 billion in 2025.

Two major trends drive strong growth momentum for Taiwan's PCB industry.

Taiwan is one of the world's top two PCB producers, holding over 30% of the global market share and boasting a comprehensive upstream, midstream, and downstream supply chain. According to a report released by the Taiwan Printed Circuit Board Association and the Industrial Technology Research Institute's International Industrial Science and Technology Research Institute, the total output value of the PCB industry chain will reach NT$1.22 trillion in 2024, an annual growth of 8.1%. The scale of Taiwan's PCB industry is projected to reach NT$1.29 trillion in 2025, a 5.8% annual growth rate.

Legal experts indicate that Taiwan's PCB industry is experiencing steady growth, driven by the application of artificial intelligence (AI). With the continued advancement of AI technology, the PCB industry will experience strong growth momentum, driven by two major trends: AI ASICs (Application-Specific Integrated Circuits) and 800G switch upgrades.

Trend 1: AI ASICs

As AI has developed and its applications have gradually become established, and with the continuous advancement of AI technology, more and more companies are choosing to develop their own AI ASICs. This is particularly true for the four major cloud service providers: Amazon, Microsoft, Google, and Facebook's parent company, Meta. In addition to continuing to use Nvidia AI chips, they are also actively developing their own ASICs to reduce their dependence on Nvidia.

Research firm TrendForce points out that Google has a high proportion of in-house chip deployments. Its Tensor Processing Unit (TPU) v6e, designed for AI inference, has been gradually ramping up in volume and becoming mainstream in the first half of the year. Amazon Web Services (AWS) currently focuses on Trainium v2 for in-house chips, and has initiated development of various versions of Trainium v3, with mass production expected to begin in 2026. Thanks to the expansion of the Trainium platform and the acceleration of its in-house AI computing strategy, AWS's in-house ASIC shipments are expected to double this year. Meta is actively deploying AI server infrastructure to meet the significant increase in demand for general-purpose servers this year due to the completion of new data centers. The company is also expanding its in-house ASIC AI development, and estimates suggest that its MTIA chip shipments could double in 2026. Microsoft, which uses Nvidia's GPU AI solutions, has been relatively slow in developing its own specialized chips. Significant volume growth is not expected until 2026, with the next-generation Maia solution.

Trend 2: 800G Switches

AI is driving the demand for massive amounts of data and transmission, driving the emergence of higher-bandwidth 800G switches and optical modules. According to Cisco, a globally renowned network communications company, 800G optical module shipments are projected to reach 31 million units in 2028, up from 460,000 in 2023, representing a compound annual growth rate of 132%. It is estimated that after 800G, the optical transmission upgrade cycle will be shortened from four years to two years, with 1.6T optical modules expected to debut in 2027. Previously, 100G required 16 to 20 PCB layers, while 400G required 24 to 36 layers. With 800G, the number of PCB layers required has increased significantly, reaching 38 to 48.

Increased revenue in the first half of the year indicates strong resilience.

PCBs have strong future growth momentum. To participate in this industry growth, how can one choose the best PCB stocks among the numerous listed companies on the Taiwan Stock Exchange? Wanbao Investment Consulting CEO Wang Rongxu suggests that when selecting stocks, he recommends first observing operational performance. Taiwan-listed companies have fully announced their first-half revenue figures. Amidst the challenges of tariffs and the appreciation of the New Taiwan dollar in the first half of the year, if a PCB company maintains strong revenue performance and delivers a healthy annual growth rate, then this target is likely to be more resilient to the impact of tariffs and exchange rate losses.

Regarding operational strategies, Wang Rongxu suggests that if the stock price has recently performed strongly and continues to hit new highs, and has a strong performance guarantee, such as Taiwan Optoelectronics (2383), Golden Image Electronics (2368), and Hi-Tech (5439), he recommends waiting for a pullback before looking for a buying opportunity. If the stock price continues to rise, he advises investors not to chase high prices and instead focus on lagging stocks that are catching up, such as Zhen Ding-KY (4958) in the flexible PCB sector, and Xinxing (3037), Nanya (8046), and Kinsus (3189) in high-end ABF substrate sectors.

Target 1: Zhen Ding-KY

Zhen Ding-KY, a subsidiary of Hon Hai Precision Industry Co., Ltd. (2317), was founded in 2006. Its main PCB products include rigid PCBs (R-PCBs), flexible PCBs (FPCs), high-density interconnects (HDIs), and IC substrates. Zhen Ding-KY has secured orders for high-end and next-generation products from customers in the fields of IC substrates, AI servers, optical communications, and automotive electronics. Thanks to the strong performance of each product line, revenue continued to grow in June. Zhen Ding-KY's June revenue reached a record high of NT$12.823 billion, an increase of 8.75% month-over-month and 19.68% year-over-year. In US dollars, the year-over-year growth rate reached 30.82%. Revenue in the first half of the year reached NT$78.285 billion, a year-over-year increase of 20.58%.

As the consumer electronics peak season approaches in the second half of the year, demand for IC substrates is expected to increase significantly as the rush to stock up on new products begins. Zhen Ding-KY will also moderately reflect raw material costs for new products in the second half of the year, and expects second-half operations to outperform the first half.

Notably, Zhen Ding-KY is actively expanding its production capacity. Its new fab in Prachinburi, Thailand, is expected to begin small-scale production in the second half of this year. Construction of its AI campus in Kaohsiung continues to progress, with trial production expected in the first quarter of 2026. This is expected to drive upgrades to its high-end product portfolio and increase its average selling price (ASP).

Target 2: Unimicron

Founded in 1990, Xinxing is a global supplier of high-end ABF substrates and one of the few manufacturers with mass production capabilities for AI computing power OAMs (system boards). Driven by the launch of products such as AI servers and 800G switches, as well as continuous advancements in substrate and OAM structural design, demand for high-end ABF substrates has surged, and performance growth is expected.

Unimicron's current production bases include Taiwan, China, Germany, and Japan. It is understood that the company recently adjusted its facilities, materials, and process technology, completing the conversion of two Taiwanese and one Chinese factories to produce AI-specific OAMs. All three factories are already profitable.

Unimicron's June revenue saw both monthly and annual growth, reaching NT$10.929 billion, a 2.9% increase month-over-month and a 23.2% increase year-over-year. Revenue for the first half of the year reached NT$62.556 billion, a 15.25% year-over-year increase. Amidst increasing AI server inventory and the peak season effect, analysts are optimistic that operations in the second half of 2025 will outperform the first half. They believe that substrates will be the primary growth driver in the second half, with substrates accounting for 63% of the full-year business and a roughly estimated 20% year-over-year increase.

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