AI data centers are 'copper eaters'?

Morgan Stanley stated in its latest report that with the rapid development of AI technology, the demand for copper will significantly increase, with AI data centers becoming a new growth point for copper demand. By the fourth quarter of 2024, the price of copper may rise to $10,500 per ton, representing an 18% increase from current levels.

According to the report, from 2024 to 2027, the demand for copper in AI data centers is projected to increase from 200,000 to 500,000 tons annually in 2023 to 500,000 to 1.2 million tons in 2027, with a compound annual growth rate of 26%.

By 2027, the demand for copper from AI data centers may account for 3.3% of global copper demand (in comparison, the demand from electric vehicles may only be 5.2%), which will drive copper prices higher and have a profound impact on the global copper market.

In data centers, copper is primarily used for power distribution equipment (accounting for about 75%) and grounding and interconnection (accounting for about 22%). Specifically, copper is used extensively in power transmission (such as cables, connectors, busbars), as well as heat exchangers and water tanks, grounding and interconnection, and piping and HVAC systems.

It is worth noting that despite the presence of fiber optic cables in data transmission, copper still dominates in power distribution and heat exchangers. The advantages of copper lie in its lower installation cost, lower power consumption, and minimal cooling requirements for heat design.

Taking this into account, is there a chance for Malaysia's copper manufacturers to experience a surge? Some that come to mind are $METROD / 6149 (METROD HOLDINGS BERHAD), $KSSC / 5192 (K.SENG SENG CORPORATION BERHAD), and $TAWIN / 7097 (TA WIN HOLDINGS BERHAD), especially given the recent boom in AI-related stocks.