Huaxi Securities: High-end lithium batteries + PCB products ramping up, copper foil industry enters a period of volume and profit growth

West China Securities research report states that copper foil is a clearly defined heavy-asset industry, and with copper—the core raw material—priced relatively high, it requires substantial cash flow. Therefore, the scale of new capacity added in the early stage was limited. In the subsequent trend of rapid growth in demand for power and energy-storage batteries, capacity supply is relatively tight, and processing fees have begun to show an upward trend. In addition, driven by the rapid development of AI technology, PCB copper foil is expected to achieve large-scale volume growth, which will further crowd out the capacity of lithium battery copper foil. Combined with higher product performance requirements and greater process difficulty, the space for processing fees is fairly attractive, which will improve the profitability of suppliers.

Full text as follows

【West China Electrical and New】Copper Foil Special Report: Volume Ramping of High-End Lithium Battery + PCB Products, Copper Foil Industry Enters a Cycle of Volume and Margin Upswing

(I) Lithium Battery Copper Foil: The ultra-thin trend is clear, and the supply-demand landscape gradually tightens

Demand is trending upward, and shipment volume is expected to maintain rapid growth. According to GGII data, in 2025, the shipment volume of lithium battery copper foil reached 940k tons, up 36% year over year. Benefiting from continued expansion of downstream demand, in 2026, shipments are expected to reach 11.5–940k tons, up more than 20% year over year.

Under cost optimization + performance improvement demands, the ultra-thin trend is clear. 1) With copper prices high, cost-reduction demands for copper foil are increasing. Based on our calculations, for a 1GWh battery, using a 4.5-micrometer product instead of a 6-micrometer product can significantly reduce the amount of copper by more than 100 tons and reduce costs by more than RMB 1.2M. 2) Performance upgrade requirements are continuously increasing. For every 1μm reduction in copper foil thickness, the battery energy density can improve by about 2%. According to GGII data, in 2025, within the domestic lithium battery copper foil shipment structure, the share of ultra-thin products of 5/4.5μm increased to 25%, and it is expected to further rise to 50% in 2026.

The 4.5μm processing fee offers greater advantages, and the ramp-up of ultra-thin products leads to thicker profitability. The price of 4.5μm lithium battery copper foil products saw a clear increase in 2025Q4, with a rise of about RMB 3,000 per ton. Compared with 6μm, the price gap is about RMB 7,000 per ton. Lithium battery copper foil manufacturers with the capacity to ramp up 4.5μm products will benefit from the industry’s volume-and-margin simultaneous improvement opportunity.

Limited capacity expansion leads to tighter supply and demand, reshaping the industry landscape of clearing the tail-end. Due to higher copper prices for raw materials, the lithium battery copper foil industry has a larger scale of cash flow usage and stronger heavy-asset characteristics. During the earlier stage when demand in the lithium battery industry was weak, companies were relatively cautious about expanding capacity, resulting in limited new capacity additions. Meanwhile, long-term losses at tail-end companies create substantial funding pressure, causing them to gradually exit the market, leading to an industry trend toward increased concentration. In 2025, the domestic lithium battery copper foil manufacturers’ CR5 reached 45.8%, up 2.3% from last year.

Expectations of tight capacity supply, high utilization rates, and customers signing multiple supply-guarantee agreements. According to SMM data, starting from September 2025, the overall utilization rate of the copper foil industry increased to above 80%, and it is expected to further rise to a high level of 90% in March 2026. Several battery manufacturers and copper foil suppliers signed supply-guarantee agreements to ensure stable supply. Under the trend of relatively tight supply-demand conditions, copper foil processing fees are expected to enter an upward channel.

(II) Electronic Circuit Copper Foil: Strong demand for high frequency and high speed; active domestic layout

AI computing power + electrification + iterative upgrades in consumer electronics drive the scale expansion of PCB-level copper foil. According to the copper-foil technology company’s prospectus and data from Frost & Sullivan, it is expected that by 2029, the global PCB-level copper foil market size will grow from RMB 47.7 billion in 2024 to RMB 71.7 billion in 2029, with a CAGR of 8.5%. By 2029, PCB-level copper foil for global artificial intelligence and high-performance computing will reach RMB 6.77 billion, with a CAGR of 36.1% from 2024 to 2029.

Improved computing power performance—server architecture upgrades—PCB iteration—copper foil performance optimization. As copper foil is a basic component of PCBs, it serves as the carrier for signal transmission and directly affects the efficiency and stability of signal transmission in electronic devices. Therefore, it is necessary to develop and iterate copper foil product technologies and processes to meet the usage needs of downstream terminals. Among them, high-frequency and high-speed copper foils such as HVLP (ultra-low profile copper foil) and RTF (reversed/toggled copper foil) are expected to benefit from the breakout in computing power demand.

Domestic manufacturers actively lay out high-end PCB copper foil; higher processing fees thicken suppliers’ profit margins. Because the processing difficulty of high-frequency and high-speed PCB copper foil is high and product performance requirements are stringent, processing fees are relatively high. Moreover, influenced by factors such as high copper prices and tight supply, prices are expected to continue rising, which will help domestic copper foil suppliers enter the market and enhance profitability.

Investment recommendation

Copper foil is a clearly defined heavy-asset industry, and with copper prices for core raw materials relatively high, it occupies a large amount of cash flow. Therefore, the scale of new capacity added in the early stage was limited. Under the trend of rapid growth in demand for power + energy-storage batteries, capacity supply is relatively tight, and processing fees are showing an upward trend. In addition, driven by the rapid development of AI technology, PCB copper foil is expected to achieve large-scale volume ramp-up, which will further crowd out lithium battery copper foil capacity. Combined with higher product performance requirements and greater process difficulty, the space for processing fees is fairly attractive, which will improve suppliers’ profitability.

Benefiting targets: Nord Shares, Tongguan Copper Foil, Zhongyi Technology, De Fu Technology, Jianyuan Technology, etc.

Risk warning: 1) Changes in industry policies; 2) Significant fluctuations in raw material and product prices; 3) Rapid expansion of capacity leading to intensified competition; 4) New product release not meeting expectations; 5) Rapid changes in industry technology and process routes, etc.

(Source: First Finance)