CITIC SEC: Upgraded AI computing power facilities driving optimism for the future development and investment opportunities in the glass substrate industry chain.

CITIC SEC released a research report stating that, driven by the upgrading demand for AI computing power facilities, glass-based carrier boards are expected to become an important upgrade direction for future packaging substrates due to advantages such as CTE superiority, higher flatness, lower warpage, finer TGV apertures/wiring, and higher interconnect density. Current customer demand is urgent, with significant investment in various links of the industry chain, and the commercialization landing pace is expected to exceed expectations. The estimated long-term potential space in the industry is over 60 billion RMB, and there is confidence in the future development of the glass-based carrier board industry chain and investment opportunities, recommending a focus on benefiting manufacturers in core process segments and equipment. Key points from CITIC SEC are as follows: Driven by the upgrading of AI computing power facilities, trends such as glass-based carrier boards are expected to be further clarified in the industry. Current AI computing power demand is still in a high-speed growth stage, and the improvement of computing facility performance mainly relies on two approaches: stronger interconnectivity provides clustered computing power, and stronger single-chip/single-unit computing power performance. Focusing on the chip end, AI computing chips continue to evolve towards large size, high bandwidth, high speed, and low power consumption, placing higher demands on packaging carrier boards in terms of line width separation, flatness, warpage control, and signal integrity, causing bottlenecks for traditional organic ABF carrier boards in large-size packaging due to issues such as plate size, CTE matching, warpage control, drilling/wiring accuracy, signal interference/loss, etc. Glass-based carrier boards, by upgrading the core board of ABF carrier boards to glass carrier boards, have the potential to become an important upgrade direction for next-generation high-end computing power chip packaging such as AI CPUs/GPUs/ASICs, thanks to their thermal expansion coefficient more compatible with silicon chips, higher flatness, lower warpage, finer TGV apertures/wiring, and higher interconnect density. Glass-based carrier boards are accelerating their commercialization and the potential market space by 2030 could reach 60 billion RMB. Glass-based carrier boards are an innovative upgrade based on the industry foundation and product form of ABF packaging substrates. Focusing on the packaging carrier board market, demand for computing and storage power is growing rapidly, driving the global packaging substrate market into a new growth cycle. According to Prismark data, the global packaging substrate market is expected to reach 14.9 billion USD by 2025, with a year-on-year increase of 17%. Within this, the ABF carrier board market is expected to reach 7.8 billion USD, with a year-on-year increase of 22%, making it the fastest growing segment. Combining Prismark forecasts, the company estimates that the global ABF carrier board market space will grow to 106.1 billion RMB by 2028, and is expected to reach over 150 billion RMB by 2030. Previously, the market generally expected large-scale application of glass-based carrier boards around 2030, but according to research by BOE, top customers are urgently in need, with some customers expecting a significant volume window by 2028 and expecting a 30% penetration rate for glass-based carrier boards. If the penetration rate of glass-based carrier boards exceeds 30% by 2030, and considering the price rise driven by the large-scale application of packaging substrates, the market space for packaging substrates is expected to increase to over 200 billion RMB, corresponding to a potential market size of over 60 billion RMB, with considerable growth potential. Urgent customer demand, leading manufacturers in various links have begun to accelerate their layout, and commercial progress is expected to exceed expectations. The manufacturing of glass-based carrier boards is mainly divided into two major production processes: glass core board processing and BU layer processing. Currently, BU layer processing mainly adopts existing organic ABF processing technology, with a relatively high level of industrial maturity, and the core technical difficulties lie in the TGV drilling of the glass core board, material performance treatment and bonding, high aspect ratio copper plating, etc., which are the key points for improving product yield. However, it is also observed that under the drive of the upgrading of computing power facilities, the urgent demand from end customers is relatively pressing, and many major players in the industry chain have already entered the layout. The company believes that with the combination of urgent customer demand and the forming of the industry chain, the large-scale commercial progress of the glass-based carrier board is expected to exceed expectations, and leading manufacturers with forward-looking layout are expected to benefit significantly. Investment strategy: Optimistic about glass-based carrier boards as an important direction for future packaging substrate upgrades, with current urgent customer demand and many major industry manufacturers already entering the layout, the commercialization process is expected to accelerate. Positive outlook on the future development of the glass-based carrier board industry chain and investment opportunities. Specific recommendations focus on two core directions: 1) companies with leading technical capabilities, customer positioning, and product development in the glass-based carrier board manufacturing segment; 2) upstream materials and supporting equipment segments with high value and high technological barriers. Risk factors: Risks of macroeconomic fluctuations and geopolitical risks, risks of fluctuating raw material prices, new product launches from overseas computing power leaders fall short of expectations, AI market demand growth falls short of expectations, risks of technological changes and product iterations, risks of policy regulation and data privacy, risks of high customer concentration rates, risks of commercialization progress of glass-based carrier boards falling short of expectations.