(July, 2023 - Taoyuan)
        The world has been gripped by AI fever since the launch of ChatGPT. Jensen Huang, NVIDIA CEO, described this as the ‘iPhone moment’ for AI so its future growth potential should not be underestimated. The large language models developed by generative AI in particular require massive amounts of computing power and this is driving up demand in the AI server market. TrendForce is now expecting the AI server market to grow at a compound annual growth rate of 22% each year. Total shipments in 2023 is projected to reach 1.18 million units and account for 9% of all servers shipped.
        The production output of Taiwanese PCB manufacturers in 2022 was 924.6 billion TWD, with server PCB accounting for 6.8% or approximately 62.8 billion TWD. The majority (56%) came from Multilayer PCB followed by Carrier Boards (33%) and HDI (11%). Server PCBs currently accounts for a relatively small fraction of Taiwanese PCB production output, but it has been one of the few growth areas in the Taiwanese PCB industry this year amidst a weak consumer market. The main beneficiaries are expected to be Ajinomoto Buildup Film (ABF) and High-layer Count (HLC) PCBs.
        In terms of hardware, AI servers are the terminal applications of high-end and high-value PCBs. The relatively high technical threshold for its production process limits the number of available manufacturers, and products also have a high unit price so it can be considered a new blue sea for the Taiwanese PCB industry.
        The mainstream configuration for AI servers is currently based around NVIDIA graphic processing units (GPU), and consists of GPU modules, CPU modules, and accessories (such as cooling, hard disks, and power supply modules). High-end ABF PCBs with a larger surface area and higher layer count must be used for packaging the GPU and CPU chips while the GPU OCP Accelerator Module (OAM) requires rank 5 HDI PCBs. Increased chip performance means that PCIe5 is used for the hardware bus while Ultra Low Loss grade copper clad laminate (CCL) must be used for the mainboard.
        Generally speaking, demand for increasing AI computing power will see a trend towards higher layer counts and larger surface areas in the development of ABF PCBs. The high technical threshold makes yield critical to PCB makers. More advanced server platforms are also driving improvements in server PCB performance. PCBs are now trending towards more wiring, higher density, and greater layer counts that have already gone from less than 10 layers to more than 16 layers. At the same time, every new generation of the platform requires a doubling of the transfer rate, so this is driving the demand for high transfer rates by PCBs. CCL grades have also been upped from Mid-Loss to Low Loss and Ultra Low Loss.
        AI servers encompass high-end PCBs and rigid PCB products. While Taiwanese vendors are competitive against their international peers in terms of technical expertise and mass production experience, there are some gaps in development that should be noted - namely, inadequate localization of the high-end PCB supply chain including high-frequency and PCB materials (e.g. BT resin PCB, ABF, Ultra Low Loss grade CCL PCB), special-purpose chemicals (e.g. electroplating chemicals and additives), and advanced equipment (aligner, laser via drilling, electrical testing).
        AI servers are also sensitive products in terms of national security. Factors such as the US-China tech war and geopolitical risks will force international customers to rethink their supply chain strategy. In the long-term, US-aligned customers will mainly diversify their supply chain risk by concentrating production in Southeast Asia and the Americas. On the other hand, China is doing everything it can to build up its own AI industry and high-end manufacturing capability.
        Soaring demand for AI servers comes as a welcome boost after the economic correction this year. The Taiwanese PCB industry may retain the initiative right now, but challenges such as inadequate localization of the high-end supply chain, the regional restructuring of production bases, and competition environment all require short, medium, and long-term thinking and planning by the government and businesses. Nevertheless, the resilience built up by the Taiwanese PCB industry over the years will no doubt give it a decisive advantage in the AI marathon.