On January 17, 2023, the A-share market showcased a moment of resilience as major stock indices turned positive just before the end of tradingThe session began with some fluctuations, but momentum was notably gained due to the semiconductor sector, leading to an overall uptick in the market's figures.

By midday, the Shanghai Composite Index had climbed by 0.4%, while the Shenzhen Component Index and the ChiNext Index saw even more significant gains of 0.68% and 0.74% respectivelyHowever, the total trading volume was reported at approximately 679.75 billion yuan, reflecting a decrease of over 180 billion yuan when compared to the previous day's figures.

A key factor influencing this positive trend was the impressive surge in the semiconductor sector as trading neared its closure

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Notable stocks like Rockchip Technology reached their daily limit close, while others such as SZ DJI Technology and Chipone Technology witnessed increases exceeding 10%. Market leaders, including SMIC (Semiconductor Manufacturing International Corporation), saw A-shares soar by 5.9%, and Hong Kong shares rose by 10.56%—showing the robust recovery within this segment.

The PCB (Printed Circuit Board) sector was another standout performer during the trading session, leading gains across both marketsStocks such as Auspicious and Shengyi Technology hit their daily upper limits, while Jin'an Guoji saw a fourth consecutive limit-up, highlighting intense investor interest and a potential boom within the sector.

This surge is primarily driven by the rapid expansion of demand in the AI (Artificial Intelligence) landscapeAs AI technologies gain traction globally, the PCB market is expected to grow as more AI servers and hardware tools are procured

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The sustained increase in high-performance server shipments is providing a strong impetus for heightened demand for advanced PCBs in the marketFurthermore, consumer electronics like smartphones are also witnessing renewed demand, with projections indicating an 8.6% year-over-year increase in shipments by Q4 of 2024, encouraged by consumer subsidy policies.

Beyond AI and consumer electronics, the automotive sector's increasing reliance on electronic components is also making wavesAs vehicles adopt more intelligent systems, the count of electronic products such as cameras and radars embedded in cars is set to rise significantlyHuashang Securities estimates that PCBs utilized in vehicles predominantly consist of 4 to 8 layers, but self-driving systems tend to favor HDI (High-Density Interconnect) boards, which can be up to three times the cost of standard boards, primarily because of the accompanying advanced sensing technology like LIDAR.

Research from Changjiang Securities suggests that we are in a phase of explosive growth in the AI industry, driven by a fervent need for high-performance servers and rapid network systems

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This need has led to an increased demand for larger, high-layer-count, and high-frequency PCBsThere is an evident uptick in demand for HDI products, reflecting an industry trend towards the sophistication of electronics in various applications.

According to forecasts from the China Business Industry Research Institute, the global PCB market is expected to reach $88 billion in 2024 and $96.8 billion in 2025. Notably, growth in the high-performance computing and AI communities is anticipated to serve as a primary driver for this expansion in the PCB sector in the coming years.

In terms of individual stock performance, the PCB sector's companies are generally regarded as being highly valued, featuring a median rolling price-to-earnings (PE) ratio of 47.87, with only seven companies falling below a PE of 30.

Among those, Oshan Technology holds the lowest valuation with a latest PE of 22.15, focusing on sectors such as AI servers, automotive electronics, and high-frequency communication devices as key areas for development.

Institutional interest has also been highlighted, with three PCB stocks this year having captured attention during institutional investigations

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Shenzhen South Circuit, for example, was surveyed by 31 entities, while companies such as Yibo Technology and Huadian Electronics followed with inquiries from nine and three institutions respectively.

During these investigations, Shenzhen South Circuit noted that with the rapid evolution of AI technologies and their deepening applications, the demand for high-performance and high-speed PCB products was increasingly critical, especially within sectors like high-speed communications and data centers.

Moreover, pet economics were noted to have led the rise earlier in the session, with the sector index reflecting a substantial increase of 3.49%. Companies within this domain, such as Zhongchong Coand Shitou Co., hit their daily limits, while others like Petty Coand Guaiqi Pet Products exceeded 5% increases.

Notably, Zhongchong Co., owning the second highest market value within the sector, announced a projected net profit of 360 million to 400 million yuan for 2024, indicating a staggering increase of 54.4% to 71.55% from the prior year—this could mark an all-time high since the company's IPO