South Korean materials manufacturer Lotte Energy Materials announced this week that it will quadruple annual circuit foil output — from 3,700 to 16,000 metric tons by 2027 — making the Iksan-based company the only South Korean manufacturer formally expanding capacity in the material that sits at the very front of the AI server supply chain. The move comes as printed circuit board prices surged up to 40% in April alone, driven by copper foil shortages and Middle East supply disruptions — a crisis that puts Lotte's positioning in sharp relief for every company building AI infrastructure.
PCB Prices Hit Record Highs as Iran War Tightens Copper Foil Supply
The timing of Lotte's expansion could not be more pointed. In late April, Iran struck Saudi Arabia's Jubail petrochemical complex, halting output at SABIC — the supplier of roughly 70% of the world's high-purity polyphenylene ether resin used in PCB laminates. The resulting squeeze, combined with pre-existing copper foil shortages, sent PCB prices to record levels. Goldman Sachs analysts noted that PCB prices jumped as much as 40% in April compared with March, while copper foil prices climbed up to 30% in the first five months of 2026. South Korean PCB manufacturer Daeduck Electronics, which supplies Samsung Electronics, SK Hynix, and AMD, has begun price-increase negotiations with customers; a senior executive there told Reuters that epoxy resin lead times had stretched from three weeks to fifteen.
Copper accounts for approximately 60% of total PCB raw material costs, according to Victory Giant Technology, a major Chinese PCB supplier for Nvidia. The International Copper Study Group now forecasts a refined copper shortfall of around 150,000 tonnes in 2026 — reversing an earlier forecast of a 200,000-tonne surplus. S&P Global warns the deficit could reach 10 million metric tons by 2040, a trajectory the firm describes as a "systemic risk for global industries, technological advancement, and economic growth." Daniel Yergin, vice chair of S&P Global and co-chair of the study, stated: "Economic demand, grid expansion, renewable generation, AI computation, digital industries, electric vehicles, and defense are scaling all at once, and supply is not on track to keep pace."
Lotte Stands Alone in South Korea as Rivals Exit or Stand Pat
Against this backdrop, Lotte Energy Materials holds an unusual position: it is, as of May 2026, the only South Korean copper foil maker formally expanding circuit foil capacity for AI servers and semiconductor substrates. Two would-be competitors have stepped back. Solus Advanced Materials, previously a leading South Korean circuit foil supplier through its Luxembourg subsidiary Circuit Foil Luxembourg, sold that unit to a fund managed by its largest shareholder, Skylake Investment, for 301.4 billion KRW in late April. Solus plans to redirect those proceeds toward battery copper foil, including a manufacturing plant in Quebec, Canada.
SK Nexilis, another major copper foil producer, remains focused on battery copper foil — the business it has pursued since its days as KCFT — rather than entering the circuit foil segment. Industry observers note that new entrants would need more than two years to set up production lines and complete customer qualification processes, making the investment calculation unattractive given demand volatility.
A Five-Step Approval Chain Locks Out New Suppliers
The supply chain for AI semiconductor materials follows a strict hierarchy: copper foil feeds into copper-clad laminate (CCL), which goes into substrates, then to original equipment manufacturers, and finally to end customers such as hyperscale cloud providers. Sitting at the very front of this chain, copper foil manufacturers must survive a multi-stage verification process in which a product is evaluated not only by the CCL and PCB manufacturers, but by the final big-tech customer as well.
"Circuit foil is not a market where companies can simply meet performance specifications and begin supplying products," an industry official told The Elec. "Suppliers must pass consecutive evaluations from CCL makers, PCB manufacturers and end customers, making market entry extremely difficult." This sequential certification requirement — covering technical performance, manufacturing stability, and production yield — functions as the primary structural barrier protecting incumbents like Lotte from new competition, even as demand accelerates.
Lotte Locks In the AI Supply Chain with Two Key MOUs
Lotte has spent the past two years cementing its position inside that verification chain. In September 2024, it signed a memorandum of understanding with ISU Petasys — a major South Korean substrate manufacturer — to supply HVLP copper foil for AI and networking PCBs. Then in February 2026, it entered a second agreement with Doosan Electronics BG, a world-class CCL producer, to jointly develop and supply copper foil for high-performance PCBs destined for AI data centers and network equipment. Together, these two partnerships place Lotte at the front of an AI hardware supply chain that runs through some of South Korea's most critical electronics manufacturers before reaching global big-tech customers.
Lotte began delivering its HVLP copper foil for AI accelerators to a major customer in March 2026. HVLP — hyper very low profile — foil is engineered with ultra-low surface roughness to minimize high-frequency signal loss, a property that becomes more critical as AI servers push data transmission speeds higher. Doosan Corp. is investing 244.5 billion KRW ($166 million) in its CCL facilities this year — a 2.8-fold increase year on year — underscoring how the AI infrastructure buildout is driving simultaneous investment across every tier of the supply chain. Industry insiders have speculated, without official confirmation, that Lotte's HVLP4 components are destined for Nvidia's Vera Rubin platform, which Nvidia CEO Jensen Huang confirmed entered full production in January 2026.
From 8% of Revenue to 27%: The Financial Wager Behind the Iksan Expansion
Lotte is backing its position with 49 billion KRW (approximately $33 million) invested in its Iksan Plant 1 facility in North Jeolla Province, with the investment period running from May 2026 through November 2027. The plan is to convert existing battery copper foil production lines into circuit foil lines — avoiding greenfield construction costs — and bring annual circuit foil capacity from 3,700 tons to 16,000 tons by 2027. The Iksan plant's utilization rate for circuit foil has already reached 90%, the company told The Korea Times.
Circuit foil represented only 8% of Lotte's total revenue in 2024. The company projects that share will rise to 27% by 2028, with circuit foil revenue growing 2.6 times year-on-year in 2026. DS Investment & Securities analyst Choi Taeyong projects total 2026 revenue at 976.3 billion KRW — a 44% increase over the prior year — driven by AI circuit foil and energy storage system battery foil. The company posted a first-quarter 2026 operating loss of 5 billion KRW, an 85% improvement from an operating loss of 46 billion KRW a year earlier.
"We expect 2026 to be a breakthrough year for Lotte Energy Materials," CEO Kim Yeon-seop said in the company's Q1 earnings statement on May 11, 2026. "We will make a quantum leap as a global leading materials provider based on differentiated high-end products — ranging from high-value-added AI circuit foils to next-generation all-solid-state battery materials."
Supply Chain Concentration and Geopolitical Shocks Threaten the Bet
The bull case for Lotte rests on a supply chain that is itself fragile. The PCB crisis of April 2026 demonstrated how a single geopolitical event — a strike on one Saudi petrochemical complex — can ripple immediately into the materials that Lotte supplies. Because the AI server supply chain runs sequentially and each tier depends on approved suppliers from the tier above, a disruption at any point propagates rapidly to the end product.
A Turner & Townsend survey of more than 280 industry experts, published in November 2025, found that 83% did not believe supply chains were equipped to deliver the advanced cooling and materials systems required for AI data centers. The consultancy warned that without urgent adaptation, supply pressures risk delaying AI infrastructure delivery and inflating costs across the sector.
Wood Mackenzie analyst Charles Cooper, speaking to the Financial Times, has said hyperscalers are "outbidding grid suppliers on things like transformer units," signalling that the competition for every AI infrastructure material — copper foil included — is intensifying. For Lotte, the same shortage that validates its expansion strategy also raises the cost of executing it: copper prices have risen above $11,000 per tonne, compared with around $8,500 two years ago. The company's ongoing operating losses reflect that pressure, even as the revenue outlook improves.
What This Means for Anyone Buying or Building AI Infrastructure Now
For technology procurement teams, enterprise IT buyers, and investors watching AI infrastructure costs, the concentration of approved HVLP copper foil supply in a single South Korean producer — at a moment when PCB prices have just hit record highs — is a concrete supply chain risk, not an abstraction. If Lotte's Iksan expansion encounters production delays, customer recertification hurdles, or geopolitical disruption, there is, by the company's own reckoning, no domestic South Korean alternative. The two-year minimum qualification timeline for new entrants means that gap cannot be closed quickly.
Cloud service providers, according to Goldman Sachs, are currently willing to absorb rising PCB costs because they expect AI server demand to outstrip supply for years. That willingness transfers rising material costs — copper foil, CCL, finished PCBs — into the operational expenses of every organization running AI workloads. For those organizations, the price of building or renting AI compute capacity now has a direct, traceable link to a plant in Iksan, South Korea, and a single material: a 0.05-millimetre sheet of ultra-smooth copper foil.
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