The cost of the new iPhone SLP is high. How can domestic manufacturers enter the market?

In recent years, as a bellwether of the mobile phone industry, Apple has continued to promote design innovation in niche areas, increasing its penetration rate and leading more and more Android brand manufacturers to follow suit, from internal components, antennas to surface mount boards (SLPs).

Recently, TF International analyst Ming-Chi Kuo reported that Apple stopped selling iPhone models equipped with Any-layer HDI motherboards at the end of the third quarter of 2019. During the same period, all iPhone models began to be equipped with SLP, which has a higher unit price, to meet the demand for larger battery capacity under increased power consumption. 

For a long time, the battery capacity and endurance of smartphones have been a major drawback. With the development of 5G communication technology and the addition of innovative features such as foldable screens, 3D imaging, and wireless charging, the integration of components on PCB boards has continued to increase, while the size, weight, and volume have continued to shrink. SLP has become a new choice for technology iteration.

In addition to Apple, terminal brand manufacturers such as Samsung and Huawei have also followed suit. Samsung's Galaxy series and Huawei's P30 series also use SLP. However, due to factors such as cost, technology, and yield, this technology has not yet been widely used in other terminal brands, but it has also attracted domestic PCB manufacturers to start increasing their investment.

Technology iteration from HDI to SLP

In recent years, as smartphones, wearable devices, etc. have developed towards intelligence, miniaturization, and multi-functionality, the number of integrated components has doubled, resulting in a significant compression of the space on circuit boards.

As an advanced product of HDI, SLP is a new generation of fine circuit printed circuit board that uses M-SAP process to further refine the circuit based on HDI technology, greatly improving the integration of components and reducing the physical space of PCB boards, thereby leaving more space for batteries.

Data shows that for PCBs with the same functions, SLP has a 30% reduction in thickness and a 50% reduction in area compared to HDI.

It is understood that in 2017, due to component upgrades, the iPhone X began to use a double-layer stack of 2 SLPs plus 1 HDI board for connection. The total FPC usage is as high as 24 pieces, which is about 10 more than the iPhone 7 model. The value of a single machine has also increased from about US$30 in the past to more than US$40.

Then, in 2018, the iPhone XS MAX used 27 FPC boards, including 3 SLP motherboards and 24 soft boards, with a predicted value of more than $70. Compared with the iPhone X, the PCB cost increased by nearly half.

At that time, when Apple used SLP-like substrates on iPhone 8 and X, some research institutions predicted that the application of SLP would completely change the base substrate and PCB market.

Now, in 2020, in order to adapt to the 5G network, the SLP motherboard area of ​​the new iPhone will increase by 10%-15%. This will result in the new generation of products costing at least 30% more than the iPhone 11, and the final selling price may see a substantial increase.

From this point of view, with the advent of 5G, higher requirements on integration and performance will make it more possible for other mid-to-high-end smartphones to use SLP, in addition to Apple, Samsung and Huawei. This will also extend new technology iteration needs and promote the transition from PCB to SLP.

Demand growth and suppliers taking their place

Currently, smartphones use SLP boards based on the upgrade of semiconductor packaging technology and processes. SLP is close to the IC substrate used for semiconductor packaging.

 Yole analysts said that SLP is actually a large substrate, made with mSAP, with the size and functionality of a circuit board. Compared with standard HDI boards, SLP's advantages include higher line resolution, better electrical performance, and the potential for space and energy savings, which is very important in the cramped, power-limited smartphone environment.

According to statistics from the Zhanxin PCB Industry Research Institute, the global SLP market size reached 6.7 billion yuan (nearly 1 billion U.S. dollars) in 2018, and the market almost entirely came from Apple. It is expected that the global market size will reach 10.4 billion yuan in 2019, a year-on-year increase of 54.68%, accounting for 10.6% of the total market size of mobile phone PCBs. In 2019, with the increase in the adoption rate of SLP in mobile phones and other core mobile smart terminal products of mainstream companies such as Samsung and Huawei, it is expected that by 2022, the global SLP market size will reach 27.4 billion yuan, and the proportion of mobile phone PCB output value will rise to 26.6%.

However, it cannot be ignored that compared with HDI, SLP has a very high precision. Its number of layers, number of drill holes, and line density are all a level higher. Its production line manufacturing cost is high and the yield is unstable, resulting in high product prices. Its suppliers are concentrated in Japan, South Korea and Taiwan, including Pengding Holdings/Zhen Ding, AT&S, TTM, Xinxing, Huatong, etc.

As predicted by Guo Mingchi, the SLP suppliers of Apple's new phone are expected to have the highest order proportion from Pengding/Zhending and AT&S, both accounting for 25-30%, and are the biggest beneficiaries. Unlike Apple, the SLP suppliers of Samsung Galaxy S series are generally selected from manufacturers such as Samsung Electro-Mechanics and Korea Circuit. As the third terminal brand to use SLP boards in large quantities after Apple and Samsung, Huawei's supplier system is rare in the A-share market.

As we all know, the iteration and application of technology require the supporting support of the industrial chain. At present, in addition to Pengding Holdings, in the A-share market, Ultrasonic Electronics, as a beneficiary of 5G PCB in the field of terminal products, once stated on the interactive platform that the company is a manufacturer with SLP manufacturing technology. SLP is widely used in electronic products such as smartphones, tablets and wearable devices, and is currently mainly used in large quantities in mid-to-high-end smartphones.

In addition, in this year's Zhuhai 5G communication electronic circuit project, Zhongjing Electronics plans to mainly produce high-layer, arbitrary-layer HDI, SLP (mSAP), RF (rigid-flexible) and other products, which will be mainly used in 5G communications, automotive electronics, new displays and the Internet of Things and other related application products. It is expected to be put into production before June 2021.