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70 I-CONNECT007 MAGAZINE I AUGUST 2026 AI applications, we see secondary constraints in conventional PCB materials. Rising inventory values are placing unprecedented demands on working capital throughout the supply chain. For example, major vertically integrated groups such as Kingboard Holdings and Nan Ya Plastics Corporation are reducing merchant sales of glass yarns and fabrics in favour of internal consump- tion. They operate extensive downstream prepreg, copper-clad laminates (CCL), and PCB manufac- turing businesses, and given their scale and reach across the value chain, these groups can shape pricing dynamics throughout the broader PCB industry. The consequence is less material reaching the merchant market, increased pressure on inde- pendent manufacturers, and a further acceleration of allocation-driven supply conditions. So, for many organizations, the greatest competi- tive advantage over the coming months may not be simply securing material, but having the finan- cial resilience and supply chain strategy to secure it before constraints become critical. Key Industry Developments 1. AI Demand Is Reshaping the Entire Electronics Materials Supply Chain The rapid deployment of AI servers and support- ing infrastructure extends well beyond semicon- ductors and packaging, and is driving substantial increases in consumption of CCLs, prepregs, cop- per foils, glass yarn and glass fabric, and high- performance resin systems. Industry analysts view AI infrastructure as the dominant demand driver across the PCB and laminate sectors for the re- mainder of the decade. 2. Lead Times Continue to Extend Industry reports indicate significant increases in lead times for laminate materials, up to 140 days for advanced laminate grades, and beyond historic norms for FR-4 products. PCB manufacturers are placing unusually large forward orders to increase inventory holdings, indicating a shift toward allo- cation-based supply management and a higher priority than short-term price optimisation. 3. Capacity Expansion Is Underway Across the Industry Major laminate manufacturers throughout Asia have announced significant investment pro- grammes designed to expand prepreg and lami- nate capacity. However, industry participants report long lead times for new laminating equipment, and 18–24 months for capacity expansion projects to become fully operational. 4. Upstream Raw Materials Remain the Primary Constraint The most significant risks are concentrated upstream. Industry reports consistently identify shortages and allocation measures affecting glass yarn, glass fabric, very low profile (VLP) and hyper very low profile (HVLP) copper foils, specialty resin systems, and certain chemical intermediates. These constraints directly impact prepreg and laminate production regardless of downstream manufacturing capacity. Consequently, the indus- try's ability to increase output is becoming increas- ingly dependent on the expansion of raw mate- rial supply rather than on laminate manufacturing capacity alone. The Hidden Working Capital Challenge As demand shifts toward premium laminate sys- tems, advanced resin technologies, and HVLP/VLP copper foils, companies face a double financial bur- den. Not only are they being forced to carry higher inventory levels to mitigate supply risk and secure allocation, but the value of every square metre of inventory is increasing significantly. This combination means working capital require- ments can rise substantially faster than revenue growth. Inventory that previously represented weeks or months of supply may now tie up as much as four times the capital. The result is additional pressure on the balance sheets of distributors, PCB manufacturers, CCL producers, and OEMs alike. For many organisations, access to material may not be the only constraint and could become an equally important competitive differentiator. In these situations, financial risk also increases, so greater vigilance over debtor exposure, credit