Kingboard Laminates Holdings surged against the market trend in Hong Kong stocks on Wednesday, climbing over 6% to HK$49, making it a striking signal in the AI infrastructure materials chain. Behind this rally lies a structural opportunity revealed in a deep-dive industry report from Morgan Stanley — copper-clad laminates (CCL) and copper foil, two foundational materials long absent from the AI investment narrative, are becoming the indispensable "invisible framework" for computing power expansion.

According to trading desk data, Morgan Stanley stated in its latest report that it projects the global CCL total addressable market (TAM) will grow from $19 billion in 2025 to $47 billion by 2030, representing a 20% compound annual growth rate, significantly above the market's general expectation of $35 billion to $40 billion. AI and data center applications are expected to contribute 90% of the incremental growth.

Meanwhile, Morgan Stanley initiated coverage on Elite Material, Taiwan Union Technology, Co-Tech, and Kingboard Laminates, all with Overweight ratings and target prices of NT$8,400, NT$2,700, NT$730, and HK$75, respectively.

Previously, JPMorgan also initiated coverage on Kingboard Laminates with an Overweight rating and a target price of HK$65, with analysts including Parsley Ong projecting earnings per share growth of eight times between 2025 and 2028, driven by factors including copper-clad laminate price increases, capacity expansion, and a 75% scale-up in loom equipment. The simultaneous bullish stance from both investment banks has rapidly intensified market attention on this sector.

Underestimated TAM: The CCL Market Goes Far Beyond a Commodity Cycle

Morgan Stanley's core assessment is that the current rally is not a broad commodity upcycle but rather a selective materials cycle driven by specification upgrades.

The firm projects the CCL market will grow at a 20% compound annual growth rate from 2025 to 2030, expanding from $19 billion to $47 billion, while consensus expectations sit at only $35 billion to $40 billion. The key difference lies in Morgan Stanley's approach, which not only factors in the growth in volume of AI servers and data centers but also quantitatively weighs the continuous increase in material intensity across next-generation computing and networking platforms.

The report points out that content value growth, rather than volume growth, is the primary engine driving AI-related CCL demand, expected to contribute 84% of AI-related CCL growth through 2030. As AI motherboards migrate toward higher layer counts and lower-loss materials, the CCL value per system will continue to climb. Taking the Nvidia platform as an example, Morgan Stanley calculates that CCL content per rack jumps from $6,695 in GB300 to $18,750 in VR200, and further to $35,601 in VR300, representing generation-over-generation increases of 90% to 180%. AMD, TPU, and Trainium platforms also show similar cross-generation value leaps.

Morgan Stanley extends this framework further downstream, projecting that the global PCB TAM will rise from $58 billion in 2025 to $135 billion by 2030, corresponding to an 18% compound annual growth rate.

Supply Bottlenecks: Certification Hurdles and Yield Constraints Will Persist Through 2028

Morgan Stanley emphasizes that what is truly scarce is certified, high-yield production capacity, not nominal capacity.

In the high-end CCL space, only a handful of global suppliers hold M8+ grade certification, including Elite Material, Panasonic, Taiwan Union Technology, Doosan, and Shengyi Technology. Upgrading from M7 to M8 grade CCL is not a simple incremental improvement; it requires simultaneously meeting multiple requirements such as improved low-loss resin systems, smoother HVLP copper foil, higher-specification low-dielectric-constant glass fabric, and tighter manufacturing tolerances. This significantly narrows the process window, reduces yields, and raises certification costs. Report data shows that M8 grade CCL average selling prices exceed more than double those of M7, while M9+ grades reach 12.1 times the baseline price.

Supply constraints on the copper foil side are even more pronounced. Morgan Stanley calculates that the HVLP4 copper foil market will grow from under $50 million in 2025 to $2.8 billion by 2030, a compound annual growth rate of 123%. Currently, effective capacity is held by only five suppliers: Mitsui Kinzoku, Co-Tech, Furukawa, Fukuda, and Copper Foil Luxembourg, totaling approximately 1,000 tons per month, with Mitsui Kinzoku alone accounting for 41% of 2026 capacity.

The supply-demand gap will widen significantly in 2027. Morgan Stanley projects HVLP4 demand will rise from 12,300 tons in 2026 to 39,200 tons in 2027 (up 218% year-over-year), and further to 52,000 tons in 2028, at which point the market will face a 31% supply deficit, with a 20% gap still remaining in 2028. Production line conversion is not one-to-one; converting an HVLP2 line to HVLP4 reduces effective output by more than 40%. New lines are also constrained by queues for surface treatment equipment delivery, with such equipment concentrated among a few Japanese suppliers.

Cycle Positioning: Earnings Realization Has Not Yet Fully Materialized

Morgan Stanley positions high-end CCL and HVLP copper foil as being in a phase that has "emerged from the trough but has not yet reached full earnings realization or cycle peak," expecting product mix, pricing, and margins to continue improving through 2027 to 2028.

The firm also cautions that this is a stock-picking cycle rather than a sector-wide rally — even with tightening supply of qualifying high-end materials, commodity-grade CCL could still face oversupply.

Within high-end CCL, Morgan Stanley is most bullish on Elite Material, projecting revenue will achieve a 76% compound annual growth rate from 2025 to 2028, with net profit growing even faster at 117%. The target price of NT$8,400 corresponds to 20 times 2028 earnings. Taiwan Union Technology has a differentiated advantage in high-end network switching, with EPS projected to grow at a 138% compound annual rate from 2025 to 2028, and a target price of NT$2,700. Co-Tech, as a key second source of supply in HVLP4 copper foil, is expected to see its global capacity share rise from 13% in 2026 to 21% in 2028, with a target price of NT$730.

Kingboard Laminates' thesis leans more toward cyclical recovery. The company holds a clear cost-control advantage through its vertically integrated system covering copper foil, fiberglass yarn and cloth, and epoxy resin. Morgan Stanley expects its net profit in the second half of 2026 to grow 97% year-over-year, driven by rising E-glass cloth prices — which have already increased roughly fourfold over the past year. The target price of HK$75 corresponds to 14 times 2028 earnings, implying significant re-rating headroom from the current 8.5 times valuation.