Behind Samsung Electro-Mechanics' exit, what is the market demand for rigid-flex PCBs?

Just one year after its exit from the HDI market at the end of last year, news has been gaining momentum that Samsung Electro-Mechanics will exit the RFPCB market.

In the era of the Internet of Everything driven by 5G, HDI and RFPCB, as two relatively advanced products in the PCB industry, have seen a growing market demand in recent years. "With more and more manufacturers entering this field, intensified competition has led to the rampant low-price strategy, and the profit margins of leading manufacturers have been continuously compressed. When profitability declines, giant manufacturers are forced to leave the market," said an industry insider.

In contrast, the types of consumer electronics are becoming more and more diversified, and the demand for segmented application areas is growing. Domestic PCB manufacturers also see opportunities in their layout.

Giants leave

Recently, it has been rumored that Samsung Electro-Mechanics will withdraw from the rigid-flex PCB market. The industry predicts that Samsung Electro-Mechanics' market share may be divided among Korean manufacturers YP Electronics, Interflex, and Taiwanese manufacturer Unimicron.

It is reported that Samsung Electro-Mechanics RFPCB is mainly used in OLED panels produced by its related company Samsung Display. These OLED panels are adopted by Samsung Electronics, Apple, and Chinese smartphone manufacturers. Currently, Samsung Display RFPCB suppliers include Samsung Electro-Mechanics, BH, YP Electronics, Interflex, and Xinxing.

However, RFPCB brings Samsung Electro-Mechanics approximately US$362 million in revenue each year, but due to declining profits, Samsung Electro-Mechanics has begun to consider withdrawing.

It is worth noting that just one year ago, Samsung Electro-Mechanics decided to close its HDI factory in Kunshan, China, and officially withdrew from the high-density interconnect board (HDI, high-density PCB) market.

It is understood that Korean brands have a high demand for rigid-flex PCBs, which has led to relatively concentrated and advanced investment in the field of rigid-flex PCBs by Korean PCB manufacturers such as Samsung Electro-Mechanics and BH Flex, but they also mainly serve the needs of their own brands.

However, in recent years, the demand for rigid-flex PCBs from non-Korean manufacturers has also begun to grow, and the supply systems of Taiwanese and Chinese manufacturers have gradually improved, with production capacity gradually expanding, from battery modules, mobile phone lens modules, etc. to automotive electronics ADAS lens modules and other component modules. It is not easy for Korean manufacturers to obtain non-Korean orders.

At the same time, price war is also one of the influencing factors. "RFPCB is one of the three major sectors of Samsung Electro-Mechanics' PCB business. After withdrawing from the HDI market last year, abandoning the RFPCB business was also a helpless move. The decline in profitability is a hard flaw. Finally, the remaining packaging substrates in the PCB business are also expanding the domestic mobile phone brands of OLED displays, trying to improve profitability." Industry insiders said.

"Where there is a market, there is competition. Where there is competition, there is lethality." When the giants left the market, domestic manufacturers saw more opportunities. Driven by market demand, many manufacturers have entered the market or expanded production in recent years.

Rush to join

The birth and development of FPC and PCB gave birth to the rigid-flex board, a circuit board that has the characteristics of both FPC and PCB.

At that time, the AirPods released by Apple led the trend of wireless Bluetooth headsets. As the mainstream technology used by AirPods, Taiwan-based supply chain manufacturers such as Xinxing, Huatong, and Yaohua benefited greatly from the soft and hard combination board. When the second generation of AirPods was released, it also led the hard and soft combination board technology to a peak.

However, the good times did not last long. At the end of 2019, Apple's high-end AirPods Pro products changed from a hard-and-soft combination board to a SiP plus soft board solution, causing the hard-and-soft combination board to gradually lose its place in the TWS products with the highest market share.

At the same time, an industry insider revealed: "Apple may abandon the hard-and-soft combination board and switch to SiP solution for its mobile phone battery module in the new iPhone in 2021."

Now, as Apple's technology route continues to upgrade and gradually abandons the use of hard-and-soft boards, the domestic PCB market is driven by applications in lens modules, TWS headphones, wearable devices, automotive electronics and other fields, and is continuously deepening the penetration rate of hard-and-soft boards.

Indeed, as a bellwether of the smartphone industry, Apple is relatively ahead in technological innovation. Benefiting from the demand for multi-lens modules in mobile phones, hard-and-flex boards have become one of the technologies with the strongest growth momentum in 2019. With the gradual expansion of subdivided application areas, it has also attracted the layout of some small manufacturers in Taiwan and mainland China.

Looking at domestic PCB manufacturers, Hongxin Electronics began to increase its investment in the field of rigid-flex boards last year. Its first phase project has been successfully put into production. After the project is fully completed, it is expected that the annual output of rigid-flex boards will reach 440,000 square meters, and the annual output value will reach 2 billion yuan.

At the same time, Bomin Electronics is also expanding its production on a large scale. Its production projects include HDI and rigid-flex boards. After the project is completed and expanded, it is expected to produce 120,000 square meters of rigid-flex boards annually.