China PCB industry reshuffle speeds up in 2021

If one sentence is used to describe the PCB industry in 2021, the term "polarization" is particularly appropriate.

A few are happy and a few are sad.

On one hand, due to the outbreak of 5G communications and terminals, new energy vehicles, energy storage and other markets, the demand for the entire circuit board industry chain is very fierce. Many circuit board factories show a prosperous scene of full orders and full-loaded workshops.

Chairman of an electronics company said: “At present, our products are mainly mass-production. The circuit boards of consumer electronics and consumer communications account for more than 50%. At the same time, we have some other products such as automotive electronics, medical equipment, HDI and Mini LED boards. Due to the wide products variety and large scale of production, orders have been saturated for a long time, and even a burst of orders has appeared this year."

The general manager of another big PCB manufacturing company said: "Since this year, we have been overwhelmed with orders and are in a severely saturated state. Due to the limited load capacity of the production line, many orders have been rejected."

On the other hand, due to the continuous interference of many problems such as the COVID-19, lack of transport cabinets, and limited source supply, the price of upstream raw material of circuit boards has continued to rise, coupled with high end customer demand, many PCB companies have experienced the phenomenon of increasing revenue but not increasing profits and decreasing orders.

In the semi-annual reports published by PCB industry listed companies in 2021, some companies have achieved both revenue and profit growth, while some PCB companies have increased revenue but not profit increase.

Regarding the situation of increasing revenue but not increasing profits, most PCB companies believe that it is closely related to the rise of raw materials price. It is known that the main raw materials of the PCB industry include copper clad laminates, copper balls, copper foil, prepregs, and gold salts. Since April 2020, domestic copper prices have fluctuated upwards, and the first half of this year even hit a new high record in recent years.

So, the current situation of large PCB companies is so, and what about small and medium-sized enterprises?

It is known that in addition to fluctuations in raw material prices, the government's environmental protection department is also increasing supervision. Multiple factors have made many PCB small and medium-sized enterprises weak in profit or even loss in orders, struggling to move forward, and speeding up the industry reshuffle.

An electronics factory director said frankly: “our factory suffered from loss in February, May and June this year, and it started to be in a balance of cost and profit until July and August. With the continuous increase in raw materials, our factory will no longer accept too many orders at the current stage."

Strong demand for automation

Echoing the circuit board market, the automation demand of the PCB industry is also continuously increasing.

At present, China labor costs continue to rise and competition is becoming increasingly fierce. Improving efficiency and reducing costs have become important issues faced by circuit board companies. Therefore, automated and intelligent production is becoming the direction of PCB industry to upgrade.

The director of a China PCB factory marketing management department said that the automated production level of most small and medium-sized circuit board factories is not high at present, and the labor force is still intensively distributed in all links of the production workshop, especially in the middle and late stages. Under the industry background that recruitment is difficult, "robot substitution" is the inevitable direction.

But it is worth noting that the penetration rate of robots in the circuit board industry is not high.

In fact, it is still quite difficult for current circuit board factories to fully introduce robots to complete automated output. Most manufacturers have relatively small existing sites, the automation investment amounts relatively large, which make many small and medium-sized PCB enterprises daunting and step back.