PCBA circuit board Industry Recent Situation

Since 2017, the overall China PCB industry has picked up, and the supply demand of the industrial chain has undergone profound changes. We think the current PCB industry is in a new round of prosperous business cycle, from the following aspects:

Upstream raw materials:

Copper foil has entered the price increase cycle since the second half of 2017, and the highest price has reached RMB 110/KG (≈USD17.5/KG). Since April of this year, the price of copper foil has been reduced due to the downstream price pressure and inventory processing etc. other comprehensive factors. The current price is about RMB 60-70/KG (≈USD9.7-11.3/KG).

Recently, we have got exact news from the industry chain. A number of copper foil suppliers raised their order prices by RMB 1,000--2,000 per ton ((≈USD160 -- 320/ton), and the price increase effect is becoming more prominent. We believe that the previous price cuts for raw materials were oversold, taking into account that the industry's off-season will be overdue, and that copper foil manufacturers will surely adjust their production capacity. The unobstructed price transmission mechanism will enable leading CCL and PCB manufacturers with bargaining advantages to be able to pass on raw material costs, thereby gaining greater room for improvement in performance.

Downstream applications:

The market growth rate of PCB industry in multiple sub-sectors has reached double-digit growth rate, which has become a new kinetic energy driving the upward trend of the industrial chain.

① The trend of new energy and electronicization of automobiles is accelerating, and the market size of automotive PCBs will reach over one hundred billion yuan; the automotive electronics certification cycle will be long and the threshold is high; new energy vehicles are expected to drive the PCB market to increase by 10 billion;

② The market rate of small-pitch LED market continued to rise, and the demand for multi-layer PCBs was strong;

③ Mobile communication technology is iteratively fast, and the construction of high-density small base stations drives high-value-added PCB requirements;

④ The high-end server market in China has grown rapidly, and the demand for high-profile PCB products has increased. In addition, consumption/car electronics light and thin led FPC volumes and prices all to rise, and domestic excellent manufacturers are expected to take advantage of the situation.

We believe that in the future PCB listed companies will continue their development strategy of continuously adjusting product structure to meet the needs of the downstream market, and continue to enhance the company's overall profitability. On the other hand, compared with the upstream copper foil and copper clad laminate industries, there are many PCB companies in China, and product quality and production capacity are uneven, competition is excessively dispersed. Taking into account the dual considerations of resource acquisition and environmental protection factors, ineffective production capacity will be phased out in a certain period of time and the industry concentration will be further enhanced. China's high-quality PCB manufacturers are expected to emerge from the advantages of resource leaning and low cost to accelerate global PCB industry transfer, and replace overseas companies become global leaders.