Review And Outlook of The PCB Market

News on January 22: This morning, at the invitation of Kunshan Huaqin Electronic Group Co., Ltd., Dr. Jiang Xugao from the global industry consulting authority Prismark delivered an online report titled "Review and Outlook of the PCB Market." The report summarized the development of the global and mainland China PCB industries in 2023 and made predictions for industry trends in 2024.

The report highlighted that following the outbreak of the pandemic in 2020, the industry experienced a period of illusory growth. Particularly in 2021, the explosive growth of the global electronics industry led many to believe that the electronics sector would be the most resilient and promising sector of the global economy. However, this excessive optimism resulted in over-expansion of industry capacity, eventually causing severe internal competition within the domestic PCB industry.

Additionally, the three-year pandemic had a significant impact on financial and social order, leading to a noticeable decline in global consumer power. Geopolitical conflicts further disrupted the entire supply chain, making 2023 a particularly challenging year for the industry. Problems accumulated over the years due to various factors, such as the excessive expansion of consumer products like PCs and TVs driven by early pandemic demand, had not been fully resolved by last year. For instance, the PC market declined nearly 15%, and the TV market fell 6% in 2023.

Overall, the PCB market significantly declined in 2023, with demand in many sectors such as PCs, mobile phones, and TVs remaining weak. Overcapacity, falling prices, and declining market value were evident. Only AI-related products, automotive-related products, and certain network communication devices performed relatively well in 2023.

Entering January 2024, feedback indicates that issues like price declines (especially significant for HDI), overcapacity, insufficient demand, and future uncertainties are still ongoing but are nearing their end stages.

Notably, AI applications brought significant changes to the industry in 2023, and the AI trend is expected to continue and expand its influence in 2024.

In the first half of 2024, there is a general conservative outlook for the industry, with some product areas showing no clear signs of recovery. However, there is more optimism for the second half of the year, with expectations of improvement compared to 2023.

From a global macroeconomic perspective, theU.S.economy is likely to experience a soft landing in the first half of this year, meaning a gradual slowdown. After restructuring in the first and second quarters, a new growth phase may begin.

In terms of inventory, PCB stocks have relatively stabilized, and many upstream raw material companies have started to recover their momentum in the latter half of 2023.

An important point to note is that the main factors affecting industry development this year are not capacity or inventory but regional conflict risks and interest rates. As China's PCB industry grows stronger, with a more mature supply chain and increasing global market share, it is inevitably impacted by global economic and demand fluctuations.

From a market perspective, the PCB industry has experienced ups and downs over the years. The estimated market value decline of about 15% in 2023 is significant but not unprecedented (20% in 2001) and likely not the last.

Overall, the cumulative issues in global demand, economic, and financial aspects caused by the pandemic are expected to be resolved by 2024, with some sectors already stabilizing in the first half of the year. The industry is expected to enter a new growth phase. AI and AI-related applications are particularly noteworthy, with AI server growth being remarkable last year. Additionally, the automotive sector, especially new energy vehicles, will be a significant change.

Looking ahead to 2024, the PC market and most other sectors are expected to see slight growth after adjustments, and the overall PCB industry will gradually recover. The biggest driver of market value changes this year will be servers, especially AI servers, and military products with strong growth. The automotive sector, after strong growth last year, may see single-digit growth this year.

In terms of products, the growth outlook for rigid boards in 2024 is relatively optimistic. HDI and flexible boards, closely tied to mobile phones and consumer products, maintained a growth rate of -20% or lower for most of 2023 but showed strong recovery towards the end of the year.

So far, substrate products remain significantly affected, having been major contributors to industry growth. These companies felt the severe downturn only at the end of 2022 and have shown no signs of recovery throughout 2023.

Regarding industry value predictions for 2024, AI system growth is expected to drive a 6% increase in overall system value, with the chip industry growing by about 11%, and PCB by about 4%.

Dr. Jiang analyzed that the weaker growth of PCBs compared to system and chip industries is mainly due to severe price competition in 2023, leading to significant price drops. Even with increased value, PCB product prices are expected to rise only modestly in 2024, resulting in relatively weak industry growth.

In his sharing, Dr. Jiang also mentioned the current investment trend in Southeast Asia's PCB industry. He noted that there have been many new investment cases in South Asia in recent years, focusing on computer, communication, and automotive products. However,Chinaremains the global center of PCB manufacturing due to its advanced processing technology, mature supply chain, production costs, and labor advantages. Even in the coming years,China's PCB market value will maintain at least half of the global share.

Finally, Dr. Jiang emphasized that the PCB industry will undoubtedly remain crucial in the coming years. He encouraged everyone to find the right track for themselves to survive and thrive.