A pivotal shift is underway in the global electronic fiberglass fabric industry. On February 10, 2026, Ta Yao Technology (TUC), a key global supplier of copper-clad laminates, announced it would reduce production of certain CCL product lines and cease all operations by the end of 2026. The primary catalyst is the decision by upstream Taiwanese fiberglass fabric producers to halt supply of standard electronic-grade glass fabric (E-glass) and fully transition to producing high-end, low-dielectric (Low-DK) fabric for AI servers.

This event is not an isolated corporate action but a landmark signal of structural capacity realignment within the global electronic fiberglass fabric sector. The explosive growth in AI computing power is triggering an irreversible migration of production capacity upstream. High-end electronic fabrics are continuously drawing capacity away from traditional products, leading to a complete reversal in industry supply and demand dynamics. A shortage and price increases for traditional electronic fabric have already commenced. Leading A-share companies with advantages in production capacity, technology, and distribution channels are poised to benefit from a mid-term investment opportunity characterized by rising volumes and prices.

**I. Core Investment Thesis: AI-Driven Capacity Restructuring and Supply-Demand Mismatch Initiate Mid-Term Price Increase Cycle**

Electronic fiberglass fabric is the core reinforcing material for copper-clad laminates (CCL), directly determining the structural strength, signal transmission performance, and packaging stability of PCBs and IC substrates. It is an upstream "industrial cornerstone" of the electronics information industry chain. Its generational evolution is entirely driven by demand upgrades in downstream electronic end-products, with key metrics being dielectric constant (Dk), dielectric loss (Df), and coefficient of thermal expansion (CTE). The industry is currently experiencing a historic reversal in its supply-demand balance, driven by three irreversible trends:

1. Extreme Structural Divergence in Demand: AI Spurs Rigid Explosion in High-End Needs Demand for electronic fiberglass fabric is showing a clear polarization. Traditional E-glass fabric serves ordinary PCB demand from consumer electronics and home appliances, exhibiting stable growth with no significant new increments. Conversely, the explosive growth in AI servers, high-end switches, data centers, and advanced packaging IC substrates is driving demand for high-end products like Low-DK fabric, low-CTE fabric, and quartz fabric into a high-growth trajectory. High-end products feature significant technical barriers and gross margin levels far exceeding those of traditional products, making them the sole focus of global manufacturers' capacity planning.

2. Hard Constraints on Supply: High-End Capacity Siphoning Expands Supply Gap for Traditional Products The fiberglass fabric industry faces clear rigid capacity constraints. The entire expansion cycle, from glass fiber yarn to fabric, takes 12-24 months, preventing rapid short-term increases in total industry capacity. Against this backdrop of limited total capacity, leading Taiwanese fiberglass producers are spearheading a permanent capacity shift, fully exiting the low-margin standard electronic fabric market to produce high-margin, high-end fabric for AI. This directly causes a rapidly expanding global supply gap for standard electronic fabric. Unexpected price increases have already emerged for mainstream standard fabrics like the 7628 model, confirming that the supply-demand reversal has moved from expectation to reality. Unlike short-term fluctuations in traditional cyclical goods, this supply contraction results from manufacturers' long-term capacity switching based on profitability. Given the significant profit advantage of high-end products, manufacturers are unlikely to return to low-margin traditional segments once transitioned. Therefore, this industry supply-demand reversal possesses strong sustainability, with the price increase cycle expected to last throughout the capacity adjustment period driven by AI computing expansion.

3. Dual Golden Window for Domestic Substitution Global electronic fiberglass fabric capacity is concentrated mainly in Mainland China and Taiwan. As Taiwanese manufacturers voluntarily exit the traditional segment and prioritize supplying high-end capacity to leading overseas clients, domestic leaders are presented with a dual substitution opportunity. They can fill the global supply gap for standard electronic fabric, rapidly capturing market share and benefiting from price increases, while simultaneously accelerating technological breakthroughs and customer certification for high-end products to capture incremental demand from AI computing, achieving a transition from "scale leadership" to "technology leadership."

**II. Core A-Share Investment Targets and Rationale**

**China Jushi** is the absolute global leader in the fiberglass industry, holding the top global position in both glass fiber yarn and electronic fabric capacity. It possesses a core cost advantage through its fully integrated industrial chain layout, making it the most certain beneficiary in this industry shift. The company has a comprehensive layout in high-end products, ranking second domestically in Low-DK fabric capacity. It can leverage its world-leading electronic fabric capacity to fully benefit from earnings growth driven by price increases in standard fabric, while also directly entering the high-end AI server supply chain to capture exploding demand for premium products. Its integrated, self-sufficient model from yarn to fabric gives it superior margin expansion elasticity compared to peers during an industry upcycle. It can also rapidly capture global market share as Taiwanese players exit, consolidating its leadership with both earnings certainty and long-term growth potential.

**Sinoma Science & Technology** is the absolute domestic leader in high-end electronic fabric. Its subsidiary, Taishan Fiberglass, holds the top domestic position in both Low-DK and low-CTE fabric capacity and ranks second in quartz fabric capacity, precisely targeting the core demand driven by AI computing upgrades. The explosion in AI servers, high-end switches, and advanced packaging IC substrates fundamentally increases demand for high-end fiberglass fabrics with low dielectric constant and low thermal expansion. The company's leading domestic capacity layout and deep technical barriers in this area, coupled with its supply chain status among global leading PCB and CCL manufacturers, position it to benefit directly from volume and price increases for high-end products. Concurrently, it maintains substantial standard electronic fabric capacity, allowing it to enjoy earnings benefits from price hikes in ordinary products. Supported by the earnings safety net from its core businesses like wind turbine blades and lithium battery separators, the company offers a combination of high growth potential and high certainty.

**Philite** is the absolute domestic leader in third-generation high-end electronic fabric. Through its control of Zhongyi Advanced Materials, it holds the number one domestic position in quartz fabric (Q-cloth) capacity, making it a rare player in the AI high-end substrate field. Quartz fabric represents the highest tier of Low-DK fabrics, offering optimal dielectric properties and signal transmission efficiency. It is a core material for high-end AI servers, ultra-high-speed PCBs, and advanced IC substrates, with extremely high technical barriers and very few domestic companies capable of mass production. As AI computing power advances to higher levels, demand for quartz fabric is set for explosive growth. As the domestic leader, Philite virtually monopolizes core domestic quartz fabric supply, granting it strong bargaining power and pricing authority. It is positioned to fully benefit from the industry's highest gross margins and fastest demand growth, representing a core scarce asset in the AI computing upstream substrate chain.

**International Composite Materials** is the second-largest domestic player in electronic fabric, with a deeply integrated yarn-to-fabric industrial chain. It holds the second-largest domestic electronic fabric capacity and ranks third in Low-DK fabric capacity, making it a company with strong earnings elasticity during the current standard fabric price increase cycle. It has deep relationships with leading domestic CCL and PCB manufacturers, enjoying high market share and customer loyalty in the standard fabric segment. Price increases resulting from the expanding industry supply gap will translate directly into earnings growth. The company is also steadily advancing the release of high-end Low-DK fabric capacity and customer certification, gradually entering the AI server supply chain and transitioning from a traditional scale leader to a contender in the high-end segment, combining short-term earnings elasticity from price hikes with long-term growth potential from premiumization.

**Honghe Technology** is the global leader in ultra-thin electronic fabric, boasting world-leading technology in this niche. It holds the second-largest domestic capacity for low-CTE fabric, and its quartz fabric capacity is currently ramping up, positioning it to benefit precisely from the domestic advanced packaging industry boom. Low-CTE fabric is a core reinforcing material for IC substrates. With the rapid adoption of AI chip advanced packaging and Chiplet technology, the domestic IC substrate industry is entering a golden period of import substitution, driving sustained high demand for Low-CTE fabric. The company has a leading position in fiberglass fabric for IC substrates and has passed certification by leading domestic substrate manufacturers, positioning it to capture demand from this substitution trend. Additionally, its ultra-thin electronic fabric maintains a stable base in high-end consumer electronics and automotive electronics, ensuring strong earnings growth certainty.

**III. Investment Outlook Summary**

The production halt by Ta Yao Technology marks merely the beginning of capacity restructuring in the global electronic fiberglass fabric industry. The irreversible expansion of AI computing power will continue to drive the siphoning of traditional capacity by high-end fabrics. The reversed supply-demand dynamics will support a mid-term product price increase cycle, while the domestic substitution of high-end products will also accelerate. Leading A-share companies, leveraging their integrated layouts, technological breakthroughs, and capacity advantages, are set to benefit from both the earnings boost of traditional product price increases and the growth红利 of high-end product import substitution, presenting significant medium-to-long-term investment value.