Taiwan PCB & Laminates — CCL sector: 3Q26 quality beat; price hike for AI products; Buy

Despite recent concerns about the CCL sector—including PTFE adoption, de-specification and potential new suppliers—Citi believes the expected CCL undersupply in 2027 and beyond remains unchanged as more customers seek long-term agreements to secure supply. Following 3Q26 results beats, Citi expects 4Q26E price hikes to drive growth at EMC and TUC, both of which are expanding capacity. EMC's 3Q26 sales rose 29% QoQ, with infrastructure sales up 32% QoQ; gross margin reached 37.7%, beating Citi/consensus forecasts of 36.3%/35.7%, and earnings beat by 20%/15%. Management guided 4Q26 sales up 15-20% QoQ with a 38-39.5% gross margin and plans price hikes across AI/non-AI products. TUC's 3Q26 sales also grew 29% QoQ, with gross margin of 36.9% (+7.2ppt QoQ) beating Citi/consensus by 4.3ppt/5.1ppt;