TTM Technologies (TTMI US): A Capable PCB Fast-Follower Leveraging a Low Base to Drive Margin Expansion
Ramping ASIC exposure and fab utilization, while navigating rising industry competition.
We have observed growing investor interest in TTM Technologies (TTMI US). In our view, TTM is well-positioned to benefit from the ongoing shift among U.S. hyperscalers toward non-China PCB suppliers, offering near-term upside from accelerating ASIC demand and longer-term margin expansion potential. While industry-wide overcapacity and intensifying competition present risks, TTM’s distinctive U.S.-based footprint may provide a degree of insulation over the medium term.
Here are our checks and thoughts:
1. ASIC Momentum is Heating Up:
TTM is gaining traction in the ASIC space, as it is the only US-based PCB manufacturer with meaningful capacity. Our checks suggest the following:
New Customers:
AWS: TTM’s share of AWS ASIC PCB was close to zero in 2024 (AWS ASIC wasn’t big either though). But, its share increased to 10–15% in 2025, and for 2026, it is expected to exceed 15%. AWS is so far the most aggressive hyperscaler in shifting away from Chinese vendors (not only on PCBs but also on other components like optical transceivers), and we believe this trend will continue.
Meta: Meta is likely the second biggest upside for TTM after AWS. TTM is expected to secure a 20%+ share in Meta’s ASIC projects in 2026. Over time, TTM is expected to become the primary supplier.
OpenAI: As OpenAI’s Stargate project receives US government subsidies, OpenAI is very likely to prioritize U.S.-based suppliers. We expect TTM to secure a very meaningful share, though material revenue contribution will likely begin in 2H26 and expand across 2027.
Existing Customers:
Google: TTM has historically supported Google’s TPU PCB supply chain alongside Korea’s ISU (007660 KR), maintaining a 20–30% market share.
NV Switch board / Mellanox: TTM maintains a stable 50% market share, competing primarily with Chinese vendors like WUS (002463 CN) and Shenghong (300476 CN).
2. Gross Margin Expansion:
Product Mix Improvement: In 1Q25, Aerospace & Defense (A&D) contributed approximately 50% of TTM's total revenue. However, due to high customer concentration, TTM’s pricing power in this segment remains limited, capping gross margins at around 10%.
By contrast, ASIC-related PCB programs carry significantly higher gross margins, typically in the range of 25–30%. As ASIC demand scales, we expect the revenue mix to shift toward these higher-margin categories, supporting structural profitability improvements over the next few years.
Capacity Utilization Ramp-Up: Currently, TTM’s Asia fabs are running at ~60% utilization, while US fabs at ~35%. We expect a steady ramp in Asia driven by ASIC demand. Additionally, as TTM expands drilling and testing capacity (currently the key bottlenecks) in its U.S. fabs, UTR should improve meaningfully, further boosting operating leverage and margin growth.
3. Capacity Expansion:
TTM is expanding capacity at two sites: Penang and Syracuse.
Penang (Malaysia): This new site is dedicated to AI/ASIC products. Management has indicated a breakeven point of $30–35 million in quarterly revenue, which appears achievable by the end of Q3 2025 due to strong ASIC demand. With Phase 1 capacity only, Penang facilities will contribute up to $200 million in annual revenue. While initial ramp-up costs may pressure margins in early 2025, Penang is expected to be a meaningful contributor to margin expansion thereafter.
Syracuse (U.S.): This site supports A&D production for U.S. customers. Although strategically important, the scale is much smaller than Penang’s and will not significantly alter TTM’s earnings structure.
4. Risks:
Aggressive Capacity Expansion by Competitors: All major PCB players in China and Taiwan are expanding aggressively, raising concerns of a potential overbuild, similar to the ABF substrate cycle during COVID and the 5G cycle for CCL/PCB, which led to prolonged oversupply, but we believe this issue will not be relevant until 2028.
Intensified Competition: Nvidia and ASIC vendors are actively qualifying more suppliers, making the PCB market increasingly competitive. However, for TTM, the impact may be more moderate in the near term since it is still ramping from a small base, and ASIC customers may prioritize TTM given its largest non-China capacity.
Summary and Outlook
Over the past year, PCB manufacturers in China and Taiwan have benefited from tight capacity conditions, leading to strong gross margins, premium pricing, and significant share price re-ratings. We believe TTM, as a capable fast-follower, is well-positioned to close the gap and potentially outperform peers.
We estimate TTM could capture approximately 20% of incremental PCB TAM between 2025 and 2026, expanding its market share in high-end applications. Additionally, as a U.S.-based manufacturer, TTM stands to benefit from the “Made in USA” trend—not only through AI and ASIC opportunities, but also in defense, where demand is underpinned by favorable structural tailwinds.