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Panoramic analysis of PCB industry chain

At present, PCB is in the fifth round of growth cycle. 5G mainly brings technological changes such as cloud computing and the Internet of things, helping the growth of 5G base stations, communication equipment and new energy vehicles. In 2020, China’s PCB output value was $35.2 billion, with a year-on-year growth rate of 7%, accounting for more than half of the global PCB output value. Industry professionals predict that the compound annual growth rate of the global PCB industry from 2020 to 2025 is expected to be 5.8%, and the output value of the global PCB industry is expected to reach 86.33 billion US dollars in 2025.

PCB industrial chain upstream materials

The main raw materials in the upstream of PCB industrial chain are copper clad laminate and bonding sheet. The three main materials in the upstream of copper clad laminate include copper foil, glass fiber cloth, epoxy resin materials, etc. Downstream communication and computer are still the two main application fields, but the trend of automotive electronization in recent years is very clear (the electronic system of new cars accounts for more than 40% of the total vehicle cost on average), and the demand for Automotive PCB has increased significantly.

Copper clad laminate (CCL): highly concentrated market pattern

Copper clad laminate is the product of glass fiber cloth and copper foil pressed together with epoxy resin as fusion agent. It is the direct raw material of PCB. It is made into printed circuit board after etching, electroplating and multi-layer board pressing. As the competition pattern of the CCL industry is relatively better than that of the downstream PCB industry, CCL companies can generally transfer costs to the downstream, and leading companies can achieve upward profitability with the help of capacity scale advantages and self-made upstream main materials.
Copper clad laminate industry is an industry with large capital demand and relatively high concentration. 

CR10 and Cr5 of the global copper clad laminate industry reach 75% and 52% respectively. The top 3 market share of spherical copper clad laminate are: Kingboard market accounts for 15%, Shengyi Technology market accounts for 12%, and South Asia plastic market accounts for 11%. Global copper clad laminate market pattern: there are mainly five copper clad laminate manufacturers in China.

In 2019, the output value of five copper clad laminate manufacturers including Kingboard laminate, Shengyi technology, Jin’an Guoji, Nanya New Material and Wazam New Materials accounted for 34% of the world, while the output value of PCB in China exceeded 50%. Considering the supply chain supporting raw materials in the upstream of PCB, Chinese copper clad laminate manufacturers are expected to fill the gap.

Copper foil

Copper foil

 

In terms of cost, copper clad laminate accounts for about 30% – 40% of the whole PCB manufacturing. Copper foil is the main raw material for manufacturing copper clad laminate, and the cost accounts for 30% (thin plate) and 50% (thick plate) of copper clad laminate. 

According to different application fields, it can be divided into lithium copper foil and standard copper foil. Standard copper foil is a thin layer of copper foil deposited on the base layer of the circuit board. It is one of the important basic materials of copper clad laminates and printed circuit boards. It plays the role of a conductor. It is generally thicker than lithium copper foil, mostly 12-70 μ m. One side is rough and the other side is bright. The smooth surface is used for printed circuits, and the rough surface is combined with the substrate.

 From the perspective of the global market pattern of copper foil, the production technology, equipment manufacturing technology and market share of high-performance PCB copper foil market are still monopolized by Japanese copper foil manufacturers. The China’s production capacity of copper foil for high-frequency and high-speed substrate has not been formed. 

The top five enterprises of high-end copper foil in the world are Guhe Electric Industry, Mitsui Metal Mining , Fukuda metal foil powder industry , Japan electrolysis and Japan energy company, all of which are Japanese enterprises. 

The profit of standard copper foil is worse than that of lithium battery. 

The competition pattern of lithium battery copper foil is relatively scattered.

 On the contrary, the pattern of downstream customers’ lithium battery is more concentrated, and it is difficult for enterprises to have a strong voice in the face of customers. However, the copper foil technology continues to iterate, so for the copper foil link, having the advantage of R & D capability and being able to take the lead in the technical iteration, so as to obtain phased profit advantage is the best way to take the lead.

Glass fiber yarn: the formation of oligopoly pattern

class fiber yarnthe formation of oligopoly

 

 

Glass fiber yarn can be made into glass fiber cloth for the production of copper clad laminate, the core substrate of printed circuit board (PCB). Electronic glass fiber yarn accounts for about 25% – 40% of the cost of copper clad laminate. It is an important material for preparing PCB, and the demand is large. 

From the perspective of global glass fiber production capacity, by the end of 2019, Cr6 (China Jushi, American OC, Japan neg, Taishan glass fiber,Chongqing Polycomp International , American JM) accounted for more than 70% of the total global glass fiber production capacity; China’s CR3 (China Jushi, Taishan fiberglass, Chongqing International) accounted for more than 60% of the country’s total capacity at the end of January 21, and Cr6 (CR3 and Shandong fiberglass, Sichuan Weibo, Changhai shares) accounted for about 80% of the country’s total capacity. Globally, the oligopoly pattern of glass fiber supply side has basically taken shape.

PCB ink: prominent advantages of Chinese brands

According to a report from the industry, although the difference in PCB types and layers will lead to the difference in the proportion of PCB ink in PCB output value, from the overall situation, the proportion of PCB ink in PCB output value is about 3% on average. Therefore, the market scale of PCB ink and PCB market scale basically maintain a certain proportion of the same direction. 

From the perspective of market structure, the high-end market of PCB ink in China is still dominated by foreign-funded enterprises such as Japan sun. With the accelerated transfer of the global manufacturing industry to China, some Chinese suppliers have gradually mastered the synthesis technology of synthetic resin, the key raw material of PCB ink, changing their dependence on imported synthetic resin in the past. 

At the same time, due to the disadvantages of transportation distance and high production cost, foreign suppliers’ market share is gradually reduced, and the cost performance advantage of Chinese product brands is gradually highlighted. 

Chinese PCB ink suppliers represented by Kuangshun materials and RongDa Photosensitive have gradually developed and expanded, and related products have gradually entered large PCB manufacturers such as Foxconn, Shennan circuit and Kinwong Electronic . 

At present, the solder resist ink products of Kuangshun materials rank first in the market share of Chinese brands.

PCB industry chain midstream manufacturing

PCB industry is a capital intensive industry, and has high requirements for the technical strength of PCB manufacturers. It needs to invest hundreds of millions of RMB to build a new production line with an annual capacity of more than one million square meters, and PCB manufacturers also need to maintain a continuous high investment in raw materials, research and development, so as to meet the requirements of downstream customers in customized production, product upgrading, batch and rapid delivery. 

There are many kinds of PCB products, which are generally divided into rigid circuit board, flexible board and rigid flex combined board according to hardness. 

According to the number of conductive layers, it can be divided into single panel, double-sided board and multi-layer board. Multi-layer board can be divided into ordinary multi-layer board and laminated multi-layer board according to the number of lamination times. 

Among ordinary multi-layer boards, those with more than 12 layers are generally called high multi-layer boards. Multi-layer boards are represented by HDI (high-density interconnection circuit board). Due to its high wiring density, HDI is mostly used in portable consumer electronics products. High end smartphones are mainly 3-level HDI boards with more than 10 floors. 

In automotive circuit boards, traditional single-layer PCB, double-layer PCB and multi-layer PCB are widely used. In recent years, the wide application of HDI has also become the first choice of automotive electronic products.

PCB chian midstream manufaturing
From the perspective of the competition pattern at the PCB manufacturing end, the global market share is relatively scattered. With the support of technology dividends, high-end PCB manufacturers further expand market share and improve the profitability of the company, while the middle and low-end companies gradually withdraw due to slow technology upgrading and compressed profit space.

 Although the current global PCB market pattern is still relatively scattered (there are more than 2000 manufacturers in the world), the capital, technology, supply chain and environmental protection management capabilities still build a high moat for the PCB industry, and the industry barriers continue to rise with the iteration and upgrading of downstream customers’ products. The top of PCB industry in 2019 are: Zhending accounted for 6%, Xinxing Technology accounted for 5%, and XunDa accounted for 4%.
Industry professionals expect that in the 

future, the promotion of server ,data storage and wired or wireless infrastructure construction will bring high-speed growth in PCB demand. With the gradual popularization of innovative applications of automobiles and other consumer electronics, it will also drive the growth of PCB output value in related fields.

After 2000, the PCB industry has an obvious trend of transferring to China. The trend of industrial capacity transfer to China will continue in the future. Industry professionals predict that by 2024, the output value of PCB in China is expected to reach US $41.77 billion, accounting for 55.1%, and the industry is expected to usher in high-speed development.

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