Morgan Stanley: CPO Technology Unlikely to Displace High-End CCL Demand Before 2028
nashnova research
Morgan Stanley said on Sept 17 that co-packaged optics (CPO) technology won't materially threaten the high-end copper-clad laminate (CCL) market before 2028, reaffirming that AI-driven demand and tight supply persist — and maintaining Overweight ratings on Elite Material (台光電) and TUC (台燿).
Why did Elite Material and TUC sell off so sharply?
On Sept 17, Elite Material fell 7.7% and TUC fell 6.7%, while Taiwan's TAIEX rose 0.8%.
The trigger: fears that CPO's accelerating adoption in AI infrastructure could erode demand for high-end CCL.
This means → both stocks underperformed the broader market by more than 7 percentage points in a single session — driven by a long-term technology-substitution fear, not any near-term order deterioration.
What is CPO, and why does it threaten CCL?
In today's AI servers, high-speed electrical signals travel relatively long distances across printed circuit boards (PCBs) between chips and optical modules — and lose strength along the way.
To cut that signal loss, PCBs must use high-end CCL with ultra-low dielectric constant (Dk) and ultra-low dissipation factor (Df) — the core product of Elite Material and TUC.
CPO — co-packaged optics, mounting the optical engine right next to the chip package — dramatically shortens the electrical path on the PCB. In plain terms = shorter path, lower material demands, and potentially less high-end CCL per server.
Why does Morgan Stanley say 2028 is too early to worry?
The report argues the market underestimates the engineering hurdles to CPO at scale: cost, manufacturing yield, reliability, serviceability, and thermal management — five barriers still uncleared.
Within the 2026–2028 forecast window, the risk of CPO broadly eroding AI-system CCL demand remains limited.
This means → rapid AI-compute infrastructure buildout is still the dominant demand driver for high-end CCL; CPO's potential material-substitution effect cannot yet change that trajectory.
What is Morgan Stanley's call on the two stocks?
The bank maintains Overweight ratings on both Elite Material and TUC, stating it sees no visible CPO impact on near-term CCL demand or earnings forecasts.
Its earlier view that high-end CCL supply remains tight is also unchanged.
This reflects a deliberate separation of "long-term technology risk" from "next-two-year demand trajectory."
After this sell-off, what is the key thing to watch?
The report highlights a critical expectations gap: the market is pricing in a long-term technology-substitution thesis, yet that thesis has not translated into actual near-term order pressure or earnings downgrades.
In plain terms = the stock-price drop reflects a distant worry, not present-day bad news.
This means → whether the sell-off reverses depends on whether the market accepts that the CPO threat is distant rather than imminent — making this the pivotal validation point for the current pullback.
市场有风险，内容仅供研究参考，不构成投资建议。