AI server growth could boost PCB and copper-clad laminate demand more than 200% by 2027, straining global materials supply.
The global excitement surrounding AI has certainly caught my attention for many reasons. However, I was taken aback by an analysis indicating that increasing demand for new infrastructure will significantly boost growth rates for copper-clad laminates (CCL), which are expected to rise by over 200% in 2027, as reported by Goldman Sachs in January.
Although AI servers are clearly not consumer products, consumer adoption is a huge factor driving the AI boom. Access to AI on our smartphones and in the cloud is transforming every aspect of our lives, from the way we search the Internet to how we shop online, access essential services and use social media. As our lifestyles and habits are changing profoundly, the electronics industry is tasked with providing the hardware to power the revolution.
And it’s sucking up the industry’s resources as suppliers race to capitalize on the opportunity and secure their position in emerging markets, from AI processors and high-bandwidth RAM to PCB fabrication services and materials. Goldman predicts the global AI server PCB market will grow from $3.1 billion in 2024 to $27.1 billion in 2027, with the upstream AI server CCL market expected to grow from $1.5 billion in 2024 to $18.7 billion in 2027.
That’s a transformation in upstream core materials and is driven by increasing processor power density and high-speed connectivity standards, as PCBs replace traditional cabled connections inside servers. In the search for ultimate performance, PCBs deliver greater control over signal path lengths and impedances, while permitting increased interconnect density.
The effects of this massive expansion are evident throughout the entire industry, diverting components and raw materials from other sectors. Supply issues are forcing allocation and dramatic price increases from 30% to 50% or as much as 100% in some cases. The shortages are not confined only to materials. They are affecting every aspect of PCB production, including precision drills, which are also in high demand and subject to short supply. In previous comments, I’ve compared today’s AI boom with the network infrastructure boom of the 2000s. It’s clear that, this time, high demand is set to continue. With the sustained high pace of innovation, today’s high demand could transition directly into the next wave of upgrading and investment.
Figure 1. AI server deployments are accelerating demand for advanced PCBs and copper-clad laminates, tightening materials supply chains across the electronics industry.
ABF: The essential dielectric. Among materials suppliers, advanced performance requirements are driving migration to high-end materials such as low-Dk glass cloth and T-glass, as well as high-grade copper foils and advanced film materials like ABF. Here, bottlenecked conditions are felt throughout the stackup and into advanced components such as GPUs and CPUs. ABF has quickly become an essential dielectric for high-performance semiconductor packaging, although chip makers cannot get enough. Despite investment, producing advanced materials is inherently complex, and increasing capacity takes time. Suppliers have moved to prevent stockpiling, which has displeased some of the larger OEMs. Although this has leveled the field to an extent, all are suffering from the inability to secure sufficient supplies to keep their production lines moving quickly enough to fulfill market demands.
Conventional economics would suggest that there are opportunities for new suppliers to move in as incumbents deal with scaling challenges. Many are also moving strategically away from more general-purpose materials such as e-glass and FR-4 resins. But bigger changes are happening.
I’ve commented before on the fundamental changes happening under the hood of today’s consumer products. The general performance standards and quality of manufacture have advanced extremely quickly. A few generations ago, consumer products would be produced using relatively low-grade materials, while higher performing materials would be found exclusively in the military and high-end industrial equipment. This pattern is now reversed, as consumers have come to expect extremely high standards of equipment like smartphones, televisions, laptops and home networking, smart appliances and smart lighting/heating equipment that have become the key enablers of modern life. Markets for general-purpose materials, at least, are dwindling and therefore present very limited incentives for new suppliers to invest.
At the same time, there is another, more powerful global shift. We know that AI is set to change the world as dramatically as any invention since the industrial revolution – railways, air travel, automobiles, telecommunications, semiconductors, home computing – yet, from the beginning, the major technology producers driving the change are not in the West, but in Asia. Taiwan has led the manufacture of servers and other AI hardware, currently building as much as 90% of the world’s servers. With the offshoring of electronic manufacturing over the past three decades or more, Asia has transformed from a workshop into the cradle of innovation.
The change has happened quietly, although the result is now clear for all to see. Today’s tariff wars and geopolitical wranglings are happening as the West, and the US in particular, seek to regain economic power. It’s working to an extent, as the most influential computing companies and hyperscalers can effectively encourage hardware producers to expand manufacturing to locations closer to North America. Also benefiting from a strong aerospace and defense sector – experiencing strong demand due to perceived growing necessity amid rising global tensions – the US is in the strongest position among Western powers to retain a viable electronics business.
It’s a fascinating period in industrial and economic history, as major powers maneuver for advantage, using every tool at their disposal. The challenges happening in our industry and the solutions we can create will have a critical role in the outcome.
Alun Morgan is technology ambassador at Ventec International Group (venteclaminates.com); This email address is being protected from spambots. You need JavaScript enabled to view it.. He is presenting at the PCEA PCB Management Symposium, “Strategic Leadership in the Age of AI, New Technology Adoption, and Talent Scarcity,” taking place April 28 at PCB East. His column runs monthly.
