AI-powered stealth skeleton emerges! Morgan Stanley: $10 billion in growth potential for CCL and copper foil sectors.

Kingboard Laminates bucked the market trend on Wednesday, surging over 6% to HK$49, becoming a striking signal in the AI infrastructure materials chain. Behind this surge lies a structural opportunity revealed in an in-depth industry report by Morgan Stanley—copper clad laminates (CCL) and copper foil, two basic materials that have long been excluded from the AI investment narrative, are becoming an indispensable "invisible skeleton" for computing power expansion.

According to TrendFocus, Morgan Stanley stated in its latest report that it expects the global CCL potential market size (TAM) to grow from $19 billion in 2025 to $47 billion in 2030, corresponding to a compound annual growth rate of 20%, significantly higher than the market consensus of $35 billion to $40 billion; of which AI and data center applications will contribute 90% of the incremental growth.

Meanwhile, Morgan Stanley initiated coverage of Taiguang Electronics, Taiyao Technology, Kingboard Laminates, and Kingboard Laminates, all with an overweight rating and target prices of NT$8,400, NT$2,700, NT$730, and HK$75, respectively.

Previously, JPMorgan Chase initiated coverage of Kingboard Laminates with an "overweight" rating and a target price of HK$65. Analysts, including Parsley Ong, predicted that its earnings per share would increase eightfold between 2025 and 2028, driven by factors including rising copper clad laminate prices, capacity expansion, and a 75% increase in the scale of weaving equipment. The simultaneous bullish outlook from two major investment banks has suddenly increased market attention to this sector.

TAM is undervalued: The CCL market is far more than just one commodity cycle.

Morgan Stanley's core judgment is that the current market trend is not a broad commodity uptrend, but a selective materials cycle driven by specification upgrades.

The bank forecasts that the CCL market will grow at a CAGR of 20% from 2025 to 2030, expanding from $19 billion to $47 billion, while the market consensus is only $35 billion to $40 billion. The key difference is that Morgan Stanley not only considers the growth in the number of AI servers and data centers, but also emphasizes the continued improvement in the strength of materials for next-generation computing and networking platforms.

The report points out that the growth in content value, rather than quantity, is the main engine driving demand for AI-related CCLs, and is expected to contribute 84% of the AI-related CCL growth by 2030. As AI motherboards migrate to more layers and lower-loss materials, the CCL value per system will continue to climb. For example, Morgan Stanley estimates that the CCL content per rack on the Nvidia platform jumped from $6,695 for GB300 to $18,750 for VR200, and then to $35,601 for VR300, representing a generational increase of 90% to 180%. AMD, TPU, and Trainium platforms also show similar generational value leaps.

Morgan Stanley further extends this framework downstream, predicting that the global PCB TAM market will grow from $58 billion to $135 billion between 2025 and 2030, representing a compound annual growth rate of 18%.

Supply bottlenecks: Certification barriers and yield constraints will continue to strain supply until 2028.

Morgan Stanley emphasizes that what is truly scarce is certified production capacity with high yield, not nominal capacity.

In the high-end CCL (Ceramic Crystal Filter) market, only a handful of global suppliers possess M8+ level certification, including Taikoo Electronics, Panasonic, Taiyo Technology, Doosan, and Shengyi Technology. Upgrading from M7 to M8 level CCL is not a simple incremental improvement; it requires simultaneously meeting multiple requirements, including improved low-loss resin, smoother HVLP copper foil, higher-specification low-dielectric-constant glass cloth, and stricter manufacturing tolerances. This significantly narrows the process window, reduces yield, and drives up certification costs. Report data shows that the average selling price of M8 level CCL is more than double that of M7, while M9+ level CCL reaches 12.1 times the benchmark price.

Supply constraints at the copper foil end are even more pronounced. Morgan Stanley estimates that the HVLP4 copper foil market will grow from less than US$50 million in 2025 to US$2.8 billion in 2030, representing a compound annual growth rate of 123%. Currently, effective production capacity is held by only five suppliers: Mitsui Kinzoku, Kinzoku, Furukawa, Fukuda, and Copper Foil Luxembourg, totaling approximately 1,000 tons per month. Among them, Mitsui Kinzoku alone accounts for 41% of the capacity in 2026.

The supply-demand gap will widen significantly in 2027. Morgan Stanley estimates that HVLP4 demand will increase from 12,300 tons in 2026 to 39,200 tons in 2027 (a year-on-year increase of 218%), and further to 52,000 tons in 2028, at which point the market will experience a 31% supply gap, with a 20% gap still in 2028. Production line conversion is not a one-to-one process; converting HVLP2 production lines to HVLP4 will reduce effective output by more than 40%. New production lines are also constrained by the queue of surface treatment equipment deliveries, and this type of equipment is concentrated in the hands of a few Japanese suppliers.

Cycle positioning: Profit realization not yet fully realized

Morgan Stanley positions high-end CCL and HVLP copper foil as "having bottomed out, but not yet at the peak of profitability and cycle," and expects product mix, pricing and profit margins to continue to improve in 2027 and 2028.

The bank also warned that this is a stock-picking cycle rather than a sector-wide rally—even with the tightening of qualified high-end materials, commodity-grade CCL may still be in oversupply.

In the high-end CCL sector, Morgan Stanley is most bullish on Taikwang Electronics, predicting its revenue will achieve a CAGR of 76% from 2025 to 2028, with even faster net profit growth at 117%. The target price is NT$8,400, corresponding to a 2028 P/E ratio of 20x. Taiyao Technology possesses a differentiated advantage in the high-end network switch sector, with an expected EPS CAGR of 138% from 2025 to 2028. The target price is NT$2,700. Kingmax, as a key second-largest supplier in the HVLP4 copper foil sector, is expected to increase its global capacity share from 13% in 2026 to 21% in 2028. The target price is NT$730.

Kingboard Laminates' logic leans more towards cyclical recovery. Leveraging its vertically integrated system covering copper foil, glass yarn and cloth, and epoxy resin, the company has a clear advantage in cost control. Morgan Stanley projects its net profit for the second half of 2026 to increase by 97% year-on-year, driven by rising E-glass cloth prices—which have increased approximately fourfold in the past year. The target price of HK$75 corresponds to a 2028 P/E ratio of 14x, representing significant upside potential from the current valuation of 8.5x.

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