BlockBeats News, June 23rd. Citigroup stated that AI server and high-speed network upgrades are reshaping the growth prospects of China's PCB industry, and has raised the target prices for Huaneng Power International and Sihui Technology. The reason is that AI-PCB demand may continue to expand rapidly over the next three years.

In a report released on June 21st, Citigroup raised its forecast for the total potential market size of AI-PCB from 2026 to 2028 to RMB 152 billion, 307 billion, and 562 billion, corresponding to year-on-year growth of 86%, 102%, and 83%, respectively. The bank stated that the new model includes CPU and optical module PCB demand, and provides a forecast for 2028 for the first time.

Citigroup expects that by 2027, AI-PCB demand will be led by ASIC, accounting for about 34%; Nvidia GPU-related demand accounts for 24%, CPU 16%, switches 14%, and optical modules 12%. In terms of growth rate, network-related demand is the strongest, especially the large-scale deployment of 1.6T optical modules and switches, which may drive optical module PCB growth by 135% and 178% in 2026 and 2027, respectively.

The report stated that Google TPU-related PCB procurement could become a key increment in 2028. Citigroup estimates that Google's TPU PCB procurement could reach $16 billion by 2028, surpassing Nvidia GPU-related PCB demand. Splitting the additional demand from 2027 to 2028, Google's TPU is expected to contribute about 30%, Nvidia 25%, switches and optical modules each contribute 14%.

With the rapid expansion of AI-PCB demand, capacity may become a new constraint. Citigroup predicts that the next round of PCB capacity expansion announcements may start in the second half of 2026 to support demand in 2028. The bank stated that Chinese mainland PCB factories usually take 13 to 15 months from greenfield projects to mass production, with a longer expansion cycle for upstream fiberglass and copper-clad laminate (CCL), possibly up to 18 months.

This means that AI-CCL supply may further tighten. Citigroup believes that as major AI-PCB projects start in the second half of 2026, first-line PCB manufacturers with raw material locking capabilities will see improved profit visibility in 2027. Related capacity expansion announcements may also serve as an industry catalyst, strengthening investors' confidence in the long-term growth of AI-PCB.

On individual stocks, Citigroup maintains a "Buy" rating for Huaneng Power International and Sihui Technology. The bank has raised Huaneng Power International's target price from 119 yuan to 189 yuan, citing the company's strong mass production and delivery capabilities in the data center switch and AI server PCB field. Citigroup expects Huaneng Power International's net profit for 2026 to 2028 to be 6.7 billion yuan, 12.1 billion yuan, and 23.2 billion yuan, respectively, and believes that its annual compound profit growth rate can reach 86%.

SMIC's target price has been raised from ¥415 to ¥456. Citi lowered its 2026 net profit forecast, mainly reflecting lower-than-expected revenue contribution from Rubin. However, it believes that profit will be relatively stable in 2027 and has introduced a net profit forecast of ¥23.2 billion for 2028 for the first time. The bank stated that SMIC's long-term relationship with NVIDIA, HDI capacity, and potential data center switch and ASIC opportunities still support its valuation premium.

However, Citi also warned that the AI-PCB market still faces multiple risks, including lower-than-expected GenAI-related order share, yield issues, price competition in the automotive supply chain, reduced capital expenditure by cloud vendors, weakening macro demand, rising material costs, and geopolitical risks between China and the U.S.

Overall, Citi's assessment is that AI-PCB demand is no longer just centered around NVIDIA GPUs but is expanding to ASICs, Google TPUs, high-speed switches, and optical modules. As demand for 2028 enters the capacity planning phase ahead of schedule, Chinese PCB leaders with high-end processes, customer resources, and material security capabilities may continue to be core beneficiaries of AI infrastructure expansion.