AI server upgrade wave arrives, Goldman Sachs: Effective supply of high-end copper foil is severely insufficient, supply shortage may become the "new normal" in the next three years.

AI server upgrade wave arrives, Goldman Sachs: Effective supply of high-end copper foil is severely insufficient, supply shortage may become the "new normal" in the next three years.

Accelerated iteration of AI servers is reshaping the landscape of the PCB copper foil industry. Goldman Sachs’ latest research report points out that as demand for high-end HVLP copper foil enters the phase of large-scale adoption in the second half of 2026, supply-demand imbalance will continue to intensify over the next three years. The industry’s supply gap may become a structural "new normal," providing significant pricing power and profit expansion opportunities for the few suppliers with mass production capabilities.

According to Wind Trading Desk, Goldman Sachs’ latest report highlights that the addressable market size of high-end copper foil (HVLP3 and above) is expected to expand at a 122% annual compound growth rate, from $216 million in 2025 to $2.4 billion in 2028, then accounting for 33% of the global PCB copper foil market. On the supply-demand front, considering that the yield rate of HVLP3+ products for major suppliers is only 70% to 80%, Goldman Sachs estimates that the actual effective supply gap will reach 28%, 39%, and 38% in 2026, 2027, and 2028 respectively, far exceeding the moderate imbalance shown by nominal capacity.

Goldman Sachs believes that supply shortages will provide a sustained window for price increases for suppliers of high-end copper foil, shifting the business model of the copper foil industry from cost-driven to value-driven. The average price of high-end HVLP copper foil is more than double that of traditional HTE copper foil, with gross profit margins generally reaching over 40% to 60%, whereas HTE copper foil’s gross profit margin is only 0% to 10%.

Demand Side: AI Server Upgrades Drive HVLP Copper Foil Demand Boom

The ongoing enhancement in signal integrity requirements for AI servers and high-end Ethernet switches is the core driving force behind this wave of high-end copper foil demand explosion. Goldman Sachs reports that demand for HVLP3+ copper foil will grow at a CAGR of 97%, from 679 tons per month in 2025 to 5,206 tons per month in 2028.

In terms of application scenarios, demand for HVLP3+ copper foil from AI servers is expected to increase more than sixfold between 2025 and 2028. Meanwhile, upgrades in Ethernet switches are also contributing significant incremental demand—400G switches have adopted M7-grade copper clad laminate with HVLP3 since 2023, 800G switches will use M8-grade laminated boards with HVLP3 and HVLP4 from the second half of 2024, and 1.6T switches expected to be mass-produced from the second half of 2026 will use M9-grade laminated boards with HVLP4 and HVLP5.

Regarding product specification migration, HVLP4 is rapidly becoming the mainstream specification for the most advanced AI servers. Goldman Sachs predicts that Nvidia VR200’s mid-board (44 layers) and switch board (24 layers) will use M9-grade copper clad laminate with HVLP4 copper foil, and Amazon AWS Trainium 3 UBB (28 to 30 layers) will also upgrade to higher-spec copper clad laminate with HVLP4 copper foil. Channel research by Goldman Sachs shows that demand for HVLP4 copper foil in the second half of 2026 will increase by at least 100% over the first half, reaching at least 560 tons per month, exceeding the main supplier Mitsui Kinzoku’s monthly production ceiling of 490 tons.

In terms of product structure evolution, HVLP3’s share in total high-end copper foil demand will decline from 76% in 2025 to 30% in 2028, while HVLP4’s penetration rate will rise from 24% in 2025 to 46% in 2028. HVLP5 is expected to contribute demand starting from 2027.

Supply Side: Yield Bottlenecks Severely Limit Effective Capacity

Despite the industry’s nominal capacity expansion being impressive, yield losses and production line switching losses make actual effective supply far below the book numbers.

Goldman Sachs calculates that nominal industry capacity for HVLP3+ will grow from 1,057 tons per month in 2025 to 4,977 tons per month in 2028, a CAGR of around 68%. However, after deducting yield losses of 70% to 80% and capacity losses of 10% to 20% from production line switches, effective capacity can only rise from 803 tons per month to 3,759 tons per month, and CAGR drops to 67%.

At the core supplier level, Mitsui Kinzoku as the industry leader, its effective HVLP3+ capacity is expected to be only 718, 870, and 1,140 tons per month in 2026, 2027, and 2028 respectively, corresponding to a CAGR of about 35%. Goldman Sachs’ channel research shows that customers usually prioritize placing orders with Mitsui Kinzoku, but even if the company operates at full capacity, it still cannot cover all customer demand, thus creating structural opportunities for the second supplier.

Goldman Sachs further notes that as the industry gradually converts HVLP3 production lines to HVLP4/5 from 2027 to 2028, each line switch will bring a 10% to 20% capacity loss, further intensifying overall supply tension for HVLP3+ copper foil. Even when combining effective capacity of Mitsui Kinzoku and the second supplier, both together can only meet 50% to 60% of total industry demand over the next three years.

Pricing Logic: Business Model Shifts from Cost-Driven to Value-Driven

The supply-demand pattern in the high-end copper foil market is fundamentally changing industry pricing logic. Goldman Sachs reports that low-end copper foil (including HTE and RTF) has long priced based on processing fees tied to copper cost, with copper cost accounting for over 80% of production costs. Profitability is highly dependent on whether the processing fee can cover non-copper costs. Chinese suppliers are dominant in this segment, but have faced ongoing price pressure since the industry boom peaked in 2021.

By contrast, high-end copper foil of HVLP3 and above has shifted to a completely value-driven pricing model. Due to extremely limited suppliers with mass production capability, processing fee pricing is mainly determined by supply-demand dynamics Rather than simple cost plus. Goldman Sachs expects that supply shortages from the second half of 2026 will persist into 2027 and 2028, providing effective support for high-end copper foil suppliers’ pricing power in the medium term.

It is noteworthy that copper foil processing fees only account for 14% of the bill of materials for M9-grade copper clad laminate, lower than the 19% to 21% for M6/M7/M8 grades. This means terminal customers are less sensitive to price increases in copper foil processing fees for the latest generation copper clad laminates, further creating favorable conditions for price hikes by upstream suppliers.

Goldman Sachs Initiates Buy Rating on Chin-Poon Industrial, Target Price NT$900

Against the above industry backdrop, Goldman Sachs is initiating coverage of Chin-Poon Industrial, a copper foil manufacturer in Taiwan, China, with a Buy rating and a 12-month target price of NT$900, implying about 110% upside from the current price of NT$429.

Goldman Sachs believes that as the second HVLP4 supplier currently certified by customers, Chin-Poon Industrial will be the core beneficiary of this round of high-end copper foil demand expansion. Goldman Sachs forecasts Chin-Poon’s market share in the HVLP3+ supply chain will rise from 5% in 2025 to 53% in 2028, and HVLP3+ products’ contribution to company gross profit will leap from 8% in 2025 to about 77% in 2028.

 

 

 

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