1. PCB industry research
(1). In 2019, the global PCB market space is 61.3 billion US dollars, and the compound growth rate is expected to be 4.3% in 2019-2024. In 2024, the global PCB industry will reach 75.8 billion U.S. dollars.
(2). In 2006, my country’s PCB output value surpassed Japan to become the world’s largest. At present, my country’s share of global PCB output value has increased to 52%.
(3). It is estimated that my country’s PCB output value will reach 37.052 billion U.S. dollars in 2021, and the future growth rate will be 4.9% higher than the global 4.3%, and the proportion will further increase.
(4). Among PCB products in mainland China in 2019, the output value of multilayer PCBs accounted for 45.97%; the output value of HDI PCB and FPC accounted for 16.59% and 16.68%, respectively; and the output value of single/dual panels accounted for 17.47%.
From the perspective of downstream applications: communications, computers, and automotive electronics are still the main PCB application markets in 2019, with applications accounting for 33%, 29%, and 11.2%, respectively.
From the perspective of future development potential: communications, servers/data storage, and automobiles are the best subdivision tracks for PCBs in the future. Among them, communications and data centers have the fastest growth rates, reaching 8% and 6.4% respectively.
Therefore, we focus on analyzing the demand for communication, data center, and automotive-related PCBs.
1.1. Communication PCB
In the 5G era, communication frequency bands have increased, and the number of base stations has increased by 1.5-2.5 times compared with 4G.
In 2019, the total number of 4G base stations nationwide exceeded 5.44 million, and the total number of 5G base stations is expected to exceed 10 million. At least 1 million base stations will be added every year in the next 5 years.
Because of the increased demand for high frequency in 5G, the cost of a single base station 5G PCB has increased from about 3,000 yuan to about 10,000 yuan. Therefore, the annual base station PCB demand exceeds 10 billion yuan.
In the 5G era, the amount of data has soared, and the demand for data centers is strong. In 2019, the global IDC scale was about 750 billion yuan, a year-on-year growth rate of 21%.
The scale of China’s IDC market is 158.4 billion yuan, a year-on-year growth rate of 29%. China’s growth rate is much higher than that of the world.
By mid-2020, the number of ultra-large-scale data centers in the world has increased to 541, which has more than doubled in 2015.
The prosperous demand for data centers has increased the demand for computers/servers and data storage PCBs.
1.3. Automotive PCB
The trend of vehicle electrification and intelligence has promoted the demand for automotive PCBs. Traditional automotive PCBs are mainly distributed in power systems, body electronics, security systems, navigation, and entertainment, etc.
The price of PCBs for bicycles increased from US$56 in 2015 to US$63.2 in 2018.
Due to a large amount of PCB used in new energy vehicles such as inverters, chargers, BMS, and electronic control links, such as battery modules and electronic controls, the amount of PCB used in bicycles is 800-1000 yuan higher than that of traditional vehicles.
Combining the expected sales of new energy vehicles and traditional vehicles to be 3.66 million and 101.24 million units in 2022, the automotive PCB market space will reach 67.4 billion yuan in 2022.
2. Analysis of PCB industry leader
The PCB industry is a fully competitive industry. In 2019, the global CR10 (the proportion of the largest 10 items) is only 38%, and the CR30 is only 70%. And the downstream applications are relatively scattered, so major manufacturers have large differences in product preference.
In 2019, Pengding Holdings, the world’s largest PCB leader, had revenue of 26.6 billion and a net profit of 2.9 billion, with a market share of only 7.2%. Pengding is mainly supporting Apple. In 2019, Apple’s revenue accounted for 65%. Therefore, it is more focused on FPC, accounting for up to 80%.
The Chinese domestic-funded leader Shennan Circuits is more focused on rigid PCBs, focusing on the communications field. Its main customers include communications giants such as Huawei, ZTE, and Ericsson.
Shennan Circuit’s revenue in 2019 was 10.5 billion yuan, ranking eighth in the world. Revenue of 11.6 billion in 2020, an increase of 10%.
There are about 30 domestic PCB-listed companies with a total market value of 454.8 billion. In 2019, total sales were 137 billion yuan, accounting for 33% of the global share.
Pengding Holdings focuses on FPC, and its main customer is Apple. Shennan Circuit, Shanghai Electric Power Co., Ltd., and Shengyi Electronics are the top three in domestic communications. 30% of Shennan Circuit’s 2019 revenue of 10.5 billion yuan is contributed by Huawei. Shengyi Electronics had a revenue of 3.1 billion in 2019, and only one customer of Huawei contributed 1.4 billion in revenue, accounting for 45%.
Analysis of Shennan Circuit in China
In 1984, Shennan Circuit was established, relying on the first pot of gold made by the popular game board PCB. In 1993, transferred to the double-sided multilayer board in the communications industry. In 2017, A shares were listed. It is the PCB manufacturer with the largest revenue and market value among Chinese domestic-funded enterprises.
In 2020, Shennan Circuit’s revenue is 11.6 billion. Among them, PCB business revenue is 8.3 billion, accounting for 72%. In addition, the packaging machine board and electronic assembly business accounted for 13% and 10% respectively, which are also highly related to the PCB business. Shennan Circuit’s revenue increased from 3.5 billion in 2015 to 11.6 billion in 2020, an increase of more than three times, with a compound growth rate of 27%. Net profit increased from 160 million in 2015 to 1.43 billion in 2020, an increase of nearly 10 times, with a compound growth rate of 55%.
The growth rate of net profit is much higher than the growth rate of revenue, mainly due to the improvement of the company’s product structure, and the increase in the proportion of high-value high-level boards has increased the gross profit margin. The gross profit margin increased from 20% in 2016 to 28.4% in 2020, a full increase of 8.4%.
Shennan Circuits has continuously increased its R&D investment in recent years. R&D investment has increased from 300 million in 2015 to 640 million in 2020, an increase of 110%. In 2020, Shennan Circuit’s research and development expenses were 640 million, a year-on-year increase of 20%, accounting for 5.6% of operating income, a record high.
The high R&D investment allows Shennan to maintain its technological leadership. The high-rise board has obvious advantages. The maximum number of backplane samples is 120, and the highest mass production capacity can reach 68 floors, far exceeding 56 floors in the industry. In China’s PCB market, the compound growth rate of PCBs with more than 18 layers in 2019-2024 will reach 8.8%.
In terms of unit price, Shennan Circuit averaged 3900 yuan/㎡, much higher than its peers at 1300 yuan/㎡. It can be seen that Shennan Circuits has mastered core technology and is expected to gain further competitive advantages on high-end PCBs in the future.
Global server shipments lag behind manufacturers’ capital expenditures by one quarter, and cloud computing manufacturers’ spending accelerated in the fourth quarter of 2020, driving a growth of more than 6% of global servers. Leading cloud computing manufacturers have increased their capital expenditures, and server equipment purchases have driven the demand for server PCBs.
3. Industry development opportunities
3.1. The direction of PCB production capacity is changing
The direction of production capacity is to expand production and increase capacity, and to upgrade products, from the low-end to the high-end. At the same time, downstream customers should not be too concentrated, and risks should be diversified.
3.2. The PCB production mode is changing
In the past, production equipment mostly relied on manual operation, but at present, many PCB companies have been improving production equipment, manufacturing processes, and advanced technology in the direction of intelligence, automation, and internationalization. Coupled with the current situation of labor shortage in the manufacturing industry, it is forcing companies to speed up the process of automation.
3.3. The PCB technology is changing
PCB companies must integrate internationally, strive to obtain larger and more high-end orders, or enter the corresponding production supply chain, the technical level of the circuit board is particularly important. For example, there are many requirements for multi-layer boards at present, and indicators such as the number of layers, refinement, and flexibility are very important, which all depend on the level of the circuit board production process technology.
At the same time, only companies with strong technology can strive for more living space under the background of rising materials, and can even transform to the direction of replacing materials with technology to produce higher-quality circuit board products.
To improve technology and craftsmanship, in addition to establishing your own scientific research team and building a good talent reserve, you can also participate in the local government’s scientific research investment, share technology, coordinate development, accept advanced technology and craftsmanship with a mindset of inclusiveness, and make progress in the process. Innovative changes.
3.4. Circuit board types are broadening and refined
After decades of development, circuit boards have developed from low-end to high-end. At present, the industry attaches great importance to the development of mainstream circuit board types such as high-priced HDI, IC carrier boards, multilayer boards, FPC, SLP type carrier boards, and RF. Circuit boards are developing in the direction of high density, flexibility, and high integration.
High-density is mainly required for the size of the PCB aperture, the width of the wiring, and the number of layers. The HDI board is the representative. Compared with ordinary multi-layer boards, HDI boards are precisely equipped with blind holes and buried holes to reduce the number of through-holes, save the PCB wiring area, and greatly increase the density of components.
Flexibility mainly refers to the improvement of PCB wiring density and flexibility through static bending, dynamic bending, crimping, folding, etc. of the substrate, thereby reducing the limitation of wiring space, represented by flexible PCBs and rigid-flex PCBs.
High integration is mainly to combine multiple functional chips on a small PCB through assembly, represented by IC-like carrier boards (mSAP) and IC carrier boards.
In addition, the demand for circuit boards has skyrocketed, and the demand for upstream materials has also increased, such as copper-clad laminates, copper foil, glass cloth, etc., and production capacity needs to be continuously expanded to meet the supply of the entire industry chain.
3.5. Industrial policy support
The “Industrial Structure Adjustment Guidance Catalogue (2019 Edition, Draft for Comment)” issued by the National Development and Reform Commission proposes to manufacture new electronic components (high-density printed circuit boards and flexible circuit boards, etc.), and new electronic components (high-frequency microwave printing). Materials used in electronic products such as printed circuit boards, high-speed communication circuit boards, flexible circuit boards, etc.) are included in the encouraged projects of the information industry.
3.6. Continuous promotion of downstream industries
Under the background of my country’s vigorous promotion of the “Internet +” development strategy, emerging fields such as cloud computing, big data, Internet of Everything, artificial intelligence, smart homes, and smart cities are booming. New technologies and new products continue to emerge, which vigorously promote the PCB industry. development of. The popularization of new-generation smart products such as wearable devices, mobile medical devices, and automotive electronics will greatly stimulate the market demand for high-end circuit boards such as HDI boards, flexible boards, and packaging substrates.
3.7. The extended mainstreaming of green manufacturing
Environmental protection is not only for the long-term development of the industry, but also can improve the recycling of resources in the circuit board production process, increase the utilization rate and reuse rate, and it is an important way to improve product quality.
“Carbon neutrality” is China’s main idea for the development of industrial society in the future, and future production must conform to the direction of environmentally friendly production. Small and medium-sized enterprises can find industrial parks that join the electronic information industry cluster, and solve the high environmental protection cost problem through the conditions provided by the huge industrial chain and industrial parks. At the same time, they can also make up for their own shortcomings by relying on the advantages of centralized industries. Seek survival and development in the tide.
Only by upgrading the production line, adding high-end production equipment, and continuously improving the degree of automation, the company’s profit margin will be further improved and become a superior enterprise with a ’wide and deep moat‘.
RCY PCB is a professional PCB manufacturer with more than 20 years of professional experience leading process capability in the field of Rigid PCB, Flex PCB, Rigid-flex PCB, etc. If you have any PCB/PCBA demands, feel free to contact us. Email: firstname.lastname@example.org