The upstream raw materials of PCB mainly include copper clad sheet, copper foil, copper ball, semi-cured sheet, gold salt, ink, dry film and other chemical materials, and the downstream applications include communication equipment, computer, consumer electronics and automobile. Since 2016, the whole PCB industry has recovered, and the development of the industrial chain has also been transformed accordingly.
PCB industry chain upstream
The upper, middle and lower reaches of the PCB industry are clearly divided, and the upstream industries mainly include raw material suppliers such as copper clad plates and copper foil. Generally speaking, the raw material cost of the PCB industry accounts for more than 50% of the total operating cost, which is the largest part of the impact on the PCB enterprise’s gross profit space. Taking shennan electric circuit (002916) as an example, its direct material cost reached 2.349 billion yuan in 2017, accounting for 55.60% of the operating cost, which is far higher than the direct labor, manufacturing and outsourcing costs.
In the past two years, the effect of rising price of raw materials has been prominent, which has had some impact on PCB enterprises. Taking copper foil as an example, copper foil has entered the price increase cycle since the second half of 2016, with a peak value of up to 110 yuan /KG. In 2017, the price has been corrected, but it is still at a high level. However, with the capacity adjustment of copper foil capacity, a smooth price transmission mechanism will enable leading copper clad sheet and PCB manufacturers with bargaining advantages to pass on the pressure of rising raw material costs, thus gaining greater room for performance flexibility improvement.
PCB industry chain downstream
The downstream of PCB industry covers almost all electric circuit products, and the most core and largest application areas include communication equipment, computer, consumer electronics and automobile electronics. With the development of electrification and automation in human society, PCB has been applied more and more widely.
In 2016, communication, automotive electronics and consumer electronics were the three areas with the highest demand for PCB in China’s market. Among them, the communication field has the greatest demand for PCB application, accounting for 35%. Car electronics accounted for 16%. Consumer electronics came in third, at about 15%. In other fields, the proportion is below 10.
The following are the applications of the top three fields:
In the field of communication, different applications have different requirements for PCB. In general, FPC and HDI are more used for mobile communication terminals, while rigid PCB with large area and high number is more used for communication equipment.
Compared with the rigid copper clad sheet, FPC is commonly referred to as “soft plate”, and the core layer is generally flexible substrate such as polyimide (PI) and polyester film. FPC is characterized by being light and thin, flexible, with a high degree of wiring distribution, which achieves the effect of integrated component assembly and wire connection. The FPC was first used in the fields of space shuttle and military equipment. Due to its thinness, softness and resistance to folding, it quickly penetrated to civilian use at the end of the 20th century and was mainly used in consumer electronic products such as mobile phones, laptops, pdas and liquid crystal displays.
HDI is called high density interconnection printed circuit board, which is mainly characterized by carrying more devices and realizing more functions under as small an area as possible. The development of the HDI has driven the development of 2g-5g mobile communication terminals and made high-performance touch-screen phones possible. HDI is also used in avionics and military equipment. In 2016, the global output value of HDI board has reached 7.68 billion usd, accounting for 14% of PCB output value and the annual compound growth rate is 2.70%.
HDI requires extremely high wiring density and minimizes the footprint of the motherboard on the smartphone interior. The HDI is made of common core board superimposed lamination, which requires the use of drilling, electroplating and other processes to realize the connection between arbitrary layers. Therefore, HDI needs to be as thin and multi-layered as possible to greatly increase the density of components and components and save the wiring area required by PCB. HDI can be divided into first-order HDI, second-order HDI and higher-order HDI according to the number of adjacent layers connected directly through the blind hole. HDI laser drilling, electroplating hole plug and other processes more difficult, high added value.
— automotive electronics
In recent years, auto electronics PCB has remained stable, but driven by intelligent driving and new energy technologies, the car is increasingly like an electronic product, which is expected to become a new driver for PCB industry development. The annual compound growth rate of the automotive electronic PCB market is expected to reach 5.6% between 2017 and 2022.
However, there is no obvious cut-off standard for automotive electronics as there is for mobile communications equipment, which will not be updated periodically. At the same time, automobile supply chain is relatively closed, such as ADAS system and new energy vehicle electronic system are relatively insensitive to price, but the PCB yield is extremely high, and there is zero tolerance for quality accidents. As a result, the market demand for auto panels is unlikely to see a short, explosive growth in the coming years.
— consumer electronics
In the past two years, the market size of the PCB industry has declined, mainly due to a decline in the driving force of consumer electronics, such as PCS, tablets and smartphones. It is no doubt that the market of traditional consumer electronic products tends to be saturated, and the growth of many categories has slowed down or even suffered a decline, thus hampering the development of PCB industry. From 2017 to 2022, consumer electronics PCB demand growth is expected to be 2.5%, which further weakens the driving force of industrial growth.
The above data and analysis sources shall refer to the analysis report of market outlook and investment strategy planning of China’s printed circuit board manufacturing industry 2018-2023 released by forward industry research institute.