Mid-to-low-end CCLs generally price increase due to capacity constraints; AI PCs, conventional servers, & material cost the key factors; Taiwanese CCL suppliers the focus

1. My latest survey indicates that prices for CCLs below M4 have generally increased by nearly 10% on average. There is no sign of price increases for high-end CCLs above M4.
2. From the supply side, the demand for AI servers has skyrocketed over the past year, prompting CCL suppliers to upgrade their production lines to meet the high-spec (above M4) demand, indirectly reducing the supply of CCLs below M4.
3. On the demand side, AI PCs led by $Qualcomm(QCOM.US)$ have upgraded their mainboard materials from standard-loss to mid-loss, with a 15–20% price increase. Similar to mobile phones, Qualcomm specifies the components/materials for AI PCs. Currently, they mainly use TUC’s TU862S and ITEQ’s IT170GRA1. Except for Samsung (which is very familiar with Qualcomm platform development and can choose suppliers on its own) other brands (accounting for 90–95% of Qualcomm AI PC shipments) almost all follow Qualcomm’s material recommendations.
4. $Intel(INTC.US)$ and $Advanced Micro Devices(AMD.US)$ ’s AI PC mainboards increasingly use mid-loss CCL, with some models continuing to use standard-loss.
5. Conventional server demand will begin to recover from 2H24, also driving demand for mid-to-low-end CCLs. Several companies (such as Broadcom and Aspeed) have publicly stated that conventional server demand will begin to recover from 2H24.
6. The rise in material costs has a more significant impact on the profitability of mid-to-low-end CCLs. Another reason for the price increase of mid-to-low-end CCLs is to cope with the rise in upstream material costs. This is very beneficial for profitability because the increase in material costs in the past few months has eroded it. After the price increase, the raw material costs will be fully passed on to customers, and profitability will be significantly improved.
7. Since Taiwanese manufacturers mainly obtain AI PC and general server assembly orders, this benefits Taiwanese CCL suppliers, including TUC, ITEQ, and EMC. In addition to mid-to-low-end CCLs, the high-end CCL orders from these three Taiwanese companies, such as TUC’s satellite orders and ITEQ and EMC’s GB200/AI server orders, are also worth noting.