Economic Observer reporter Zheng Chenye

After the National Day holiday, concept stocks related to printed circuit boards (PCBs) and copper-clad laminates (CCL) experienced a continuous sharp decline in stock prices along with artificial intelligence (AI) computing hardware stocks.

For example, on October 9th and 12th, when the sector experienced significant declines, Jin'an Guoji (002636. SZ) hit the limit down for two consecutive trading days, Shennan Circuit (002916. SZ) and Shengyi Technology (600183. SH) both fell more than 5% on October 9th, and Hongchang Electronics (603002. SH) also hit the limit down on October 12th.

In contrast to the cooling of the secondary market, from October 9th to 13th, several PCB industry chain companies including Guanghe Technology (001389.SZ, 01989.HK), Jingwang Electronics (603228.SH, 03228. HK), Ultrasonic Electronics (000823. SZ), and Xingsen Technology (002436. SZ) successively submitted their 2026 third quarter performance forecasts with doubled or even more than doubled profits.

However, the good performance report did not reverse the decline in stock price. Guanghe Technology disclosed a pre increase announcement on the same evening after its A-shares closed down 7.49% on October 9th. On the first trading day thereafter (October 12th), its A-shares and H-shares still closed down 9.42% and 9.33% respectively; On the first trading day after the release of the pre increase announcement (October 12th), Jingwang Electronics' H shares also closed down 10.44%, and the H shares of upstream specialized equipment supplier Dazu CNC (301200.SZ, 03200.HK) also fell 9.01% on the same day.

An electronic analyst from a large securities firm in southern China told Economic Observer reporters that the profit growth of PCB companies in the first three quarters of 2026 mainly comes from the transmission of upstream price increases to downstream, as well as overseas new generation AI computing platforms for sales; But after the stock price was included in the higher expectations in the early stage, the market began to worry that the profit growth rate of the PCB sector was approaching a temporary high, and the divergence around the sustainability of price increases, order pace, and huge expansion of production was increasing.

Price Increase Implementation

In recent performance forecasts, several PCB manufacturers have reported a quarter on quarter increase in profits in the third quarter of 2026.

Taking Jingwang Electronics as an example, the company expects to achieve a net profit attributable to the parent company of 912 million yuan to 1.089 billion yuan in the third quarter of 2026, with year-on-year and month on month growth exceeding double; The disclosure information of Ultrasonic Electronics and Xingsen Technology also shows that their net profit attributable to the parent company in the first three quarters of 2026 is expected to increase by about twice and more than twice respectively. Converted, the single quarter profit of these two companies in the third quarter of 2026 will increase by about twice compared to the second quarter of 2026.

The aforementioned analyst stated that PCB manufacturers will release significant profit elasticity in the third quarter of 2026, mainly due to product price increases implemented in mid-2026.

In the first half of 2026, many companies' non computing PCB business profits will be under pressure due to the pressure of upstream material price increases; By July 2026, customers in the fields of communication, automotive, etc. had gradually accepted PCB manufacturers' price increases of 20% to 30%, and some scarce orders had increased by more than 40%. The switch between new and old contracts happened to realize profits in the third quarter of 2026.

Midstream manufacturers collectively adjusted their prices, with the source being the continuous price increases of upstream electronic grade fiberglass cloth (referred to as "electronic cloth"), copper foil, and copper-clad laminates since the beginning of 2026. For example, the management of Shennan Circuit mentioned during an institutional survey on September 9th that the fluctuation of commodity prices in the first half of 2026, coupled with the increasing supply shortage of materials such as copper-clad laminates, electronic fabrics, and copper foils, led to an increase in procurement costs.

The marketing director of a PCB manufacturer in Shenzhen told reporters that considering the gradual mass production of Nvidia's new generation Rubin architecture starting from July 2026, and the concentrated sales of Amazon's self-developed chip Trainium 3 in the third quarter of 2026, it is expected that the computing power PCB orders will be more prosperous in the second half of 2026 than in the first half of 2026.

How long does it last?

The performance of the third quarter report is impressive, but the stock price is still falling. The reason for this may be related not only to rumors of overseas supply chain policies, but also to the valuation level of the sector after two years of sharp rise and changes in the quarterly profit growth rate of some companies.

Taking Guanghe Technology, whose stock price plummeted on October 9th, as an example, although the company expects its net profit attributable to shareholders to double year-on-year to 1.45 billion yuan to 1.5 billion yuan in the first three quarters of 2026, after deducting the profits already realized in the first half of 2026, its single quarter profit for the third quarter of 2026 is expected to be 494 million yuan to 544 million yuan, a slight decline from about 563 million yuan in the second quarter of 2026.

An industry insider told reporters that due to the rapid increase in AI server orders in the third quarter of 2026, which occupied the supply of upstream CPUs (central processing units) and storage chips, the assembly of some traditional general-purpose server cabinets in contract factories slowed down, delaying the revenue recognition of some traditional server PCBs by Guanghe Technology.

Therefore, against the backdrop of a stock price increase of about 90% this year, the single quarter profit failed to continue the month on month acceleration trend, prompting some market funds to take profits.

In addition, the aforementioned analysts believe that the stock prices of many second - and third tier PCB companies are currently around 15 times their expected profits in 2027. If there is no new round of unexpected product price increases in the fourth quarter of 2026 and the first quarter of 2027, the short-term upward space for their stock prices is limited.

At the same time, the intensive production expansion plans of top enterprises with billions of dollars have also raised concerns in the market about the digestion of long-term production capacity.

Since 2026, top manufacturers such as Shanghai Electric Power Co., Ltd. (002463. SZ), Shenghong Technology Co., Ltd. (300476. SZ), and Pengding Holdings Co., Ltd. (002938. SZ) have planned high-end expansion investments of over 10 billion yuan. Shennan Circuit is also promoting a private placement expansion plan with a fundraising of no more than 4.882 billion yuan.

On September 18th, during an institutional survey, the management of Shenghong Technology introduced that the equipment installation and connection of the fourth factory building of the Huizhou headquarters have been completed in the first quarter of 2026, and the equipment of the tenth factory building has started to be moved in and debugged. Recently, the adjacent industrial park has also been delisted for expanding high-end production capacity.

As the PCB sector bids farewell to the general upward trend, whether the sector can digest high valuations and new production capacity in the next two years ultimately depends on the driving force of downstream computing power demand and the ability of companies within the sector to deliver on high-end materials and advanced processes.

(Author Zheng Chenye)