Morgan Stanley: 40% Shortfall in High-End Glass Cloth, Material Strength Underestimated

TechFlow reports that, according to Chaoxiang Research, a September 13, 2026 research report from Morgan Stanley indicates that the supply gap for high-end glass cloth will be approximately 40% in 2026, widen in 2027, and ease to around 30% in 2028. Shortages of HVLP4+ copper foil are projected to reach about 31% in 2027 and approximately 20% in 2028. Driven by AI, demand for data center optical fibers is expected to grow at an annual compound growth rate exceeding 20% between 2025 and 2030, with fiber prices already hitting a seven-year high. The global CCL market is forecast to expand from roughly $19 billion in 2025 to approximately $47 billion in 2030.

Morgan Stanley notes that the AI materials sector has gained 91% over the past 12 months, corrected roughly 36% from its highs, and trades at a 2026 P/E ratio of approximately 26x, compared to around 35x for PCB/CCL peers, indicating room for the valuation gap to narrow. The market has underestimated the increased material intensity with each generation of AI systems, meaning material demand growth will outpace AI system shipments. Supply constraints for high-end glass cloth, HVLP4+ copper foil, and optical fibers are unlikely to ease in the near term.