As investment in artificial intelligence (AI) data centers surges, the burden on printed circuit board (PCB) supply is growing. Demand for very high-layer, high-spec PCBs used in AI servers and high-speed network equipment is rising quickly, and domestic companies are moving to expand capacity one after another, but demand is climbing at a steep pace. With supply of copper-clad laminate (CCL), a key material, also tightening, prices are rising and lead times are getting longer.
According to the industry on the 31st, supply has recently tightened, centered on high-spec PCBs for AI servers, leading to capacity expansions and product price hikes by companies. In the server industry, there are growing voices that the PCB procurement bottleneck that existed before has worsened recently.
A PCB is a substrate that connects semiconductors and various electronic components. AI servers use high-layer PCBs to connect not only the graphics processing unit (GPU), central processing unit (CPU), and memory, but also AI accelerators and network switches. As server performance increases, the number of layers rises and structures become more complex, increasing the production burden.
ISU Petasys, a leading ultra-high-layer PCB company, is considering an additional mid-100 billion won in facility investment on top of its existing 400 billion won expansion to meet rising demand for high-spec PCBs for AI servers and data centers. The company mainly produces high-layer PCBs for AI accelerators, servers, and network equipment. Ultra-high-layer PCBs require simultaneous increases in capacity across multiple processes such as lamination, plating, and outer layers, making it difficult to ramp up output in a short period.
The pace of demand growth is also steep. ISU Petasys' order backlog at the end of the second quarter was 622.2 billion won, up 97% from a year earlier. Second-quarter revenue was 379.9 billion won and operating profit was 77.1 billion won, up 57.4% and 83.2%, respectively. According to the securities industry, the company negotiated an average list price increase of around 15% with major clients, and the higher prices are being applied sequentially from August to October.
Other PCB and substrate makers are also being affected by rising demand for AI servers and high-performance memory. Daeduck Electronics posted second-quarter revenue of 401 billion won and operating profit of 70.3 billion won, up 63% and 3,599% from a year earlier, respectively. SIMMTECH recorded revenue of 514.6 billion won and operating profit of 62.9 billion won, up 51% and 1,035%, respectively, and TLB, which has strengths in server memory PCBs, posted revenue of 88.2 billion won and operating profit of 12.8 billion won, up 38% and 86%, respectively.
Supply pressure is also emerging in CCL, a core PCB material. According to the Korea Customs Service, CCL exports from January to July this year totaled $517.33 million, up 41.6% from a year earlier, and exports in July alone rose 53.7%. Doosan Electronics Business Group (BG), Korea's leading CCL maker, posted second-quarter revenue of 676 billion won, up 42%. Demand for CCL for AI accelerators, networks, and high-performance memory lifted results.
It is not easy to expand supply of high-performance CCL. In May, Growth Research analyzed that lead times for some high-performance CCLs had extended to as long as six months, and as of March, CCL import unit prices were up 74.5% from a year earlier. High-performance CCL for AI servers requires low-dielectric glass fiber and special copper foil, limiting the number of manufacturers that can produce it.
In fact, Hanssaem Digitech, a domestic PCB company, said that as production of high-spec materials for AI servers and data centers has increased, supply of general industrial CCL has decreased and prices of some CCLs have more than doubled from previous levels, prompting the company to raise product prices starting this month. Taiwan's Nan Ya Plastics also decided to raise prices of CCL and prepreg by 20% to 25% for shipments from September, citing shortages of glass fiber and other factors.
PCB supply pressures are also growing on domestic server manufacturing lines. According to the server industry, although there had been PCB procurement issues before, the bottleneck is said to have worsened recently as demand for AI servers has surged.
The industry expects the tight supply of high-spec PCBs to continue for the time being. Although PCB makers are expanding capacity, it is difficult to significantly increase output in a short time because production equipment for individual processes such as lamination and plating, as well as supplies of materials such as CCL, glass fiber, and copper foil, must all increase together.