How is the performance of the booming PCB industry in mainland China?

Due to a combination of factors, shortages and price increases have become the norm in the semiconductor industry, and the PCB industry, as an essential component, is no exception. The prices of upstream raw materials and the performance of downstream companies have all experienced a steep growth curve. However, in this big market, how much profit will the mainland PCB industry make? Are the relevant mainland companies ready?

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Printed circuit board (PCB), known as the "mother of the electronics industry", is an essential component of electronic products. It is responsible for fixing electronic components and providing current to components. Simply put, it is an insulating board that allows the current of components to communicate. It is an indispensable basic component for all electronic products and is mostly used in telecommunications, computer peripherals, electric vehicles, military, home appliances, mobile phones, medical precision instruments and other fields.　

In the past two years, with the tight production capacity of wafer fabs and packaging plants, the high prosperity of the electronics industry has been transmitted to PCB circuit boards. According to a previous report by China Business News, the upstream raw materials of PCB have continued to rise from the end of 2020 to now, and overbooking, rushing for production capacity, and rushing for raw materials have become the norm. Under the price increase of copper clad laminates, the printed circuit board index has accelerated its rebound since late May, with an increase of about 18%.

The prosperity of PCB can also be seen from the growth data of Taiwan, China, a major province in the PCB industry, and the performance of PCB manufacturers.

Recently, data from the Taiwan Printed Circuit Association (TPCA) showed that the output value of Taiwan's cross-strait PCB manufacturing industry reached NT$696.3 billion (approximately RMB 162 billion) in 2020, a 5.1% increase from NT$662.4 billion in 2019. Taiwan's PCB industry chain has become its third-largest trillion-dollar electronics industry, and has also set a new milestone in the development of PCB in Taiwan.

At the end of July, PCB and IC substrate supplier Xinxing Electronics announced that its second-quarter financial report performed better than expected. At the same time, the company's senior management revealed that both ABF and CSP substrates are in strong demand, and customers buy as many as they can. Among them, ABF substrate production capacity has been booked early by customers, and most of the production capacity before 2025 has been booked.

According to Prismark statistics, the total output value of the global PCB industry is estimated to reach US$65.219 billion in 2020, a year-on-year increase of 6.4%. Prismark predicts that the total revenue of the top 40 PCB manufacturers will increase by 29% year-on-year in the first quarter of 2021, reaching US$17.8 billion.

In addition, thanks to the economic recovery under the gradual control of the epidemic and the strong rebound in consumer demand that was suppressed last year, Prismark also raised its sales forecast for the PCB industry in 2021, with the annual growth rate increasing from 8.6% to 14.0%. According to the agency's forecast, unlike last year's growth from individual sectors (mainly HDI, packaging and other sub-sectors), this year's sales growth is a comprehensive growth in all industries and regions.

It is understood that the mobile phone industry, which currently uses PCBs on a large scale, is experiencing a slowdown in growth. However, as specifications continue to improve, the subsequent 5G commercialization, servers, a large number of small base stations, storage devices, etc. are the next terminal products to join the use of PCBs; in addition, electric vehicles are also another new engine for PCB growth, driving the average selling price of PCBs to continue to rise in recent years.

How strong is the mainland's PCB industry?

What role does the mainland play and what is its status behind the booming PCB industry?

From the overall global situation, according to NT Information statistics, there are approximately 2,800 PCB factories in the world, of which 116 are worth more than US$100 million, mainly distributed in the United States, Japan, South Korea, mainland China and Taiwan.

Among them, the Asia-Pacific region is an important player. According to printed circuit board market research, the Asia-Pacific region accounts for 90% of the market share, with a compound annual growth rate of 4-6% from 2020 to 2024. The top four Asian countries that account for 90% of PCB output value are mainland China, Taiwan, Japan and South Korea.

In the past decade, my country's PCB manufacturing industry has developed rapidly by relying on its advantages in labor, resources, policies, and industrial agglomeration, and has now become the world's largest PCB production base.

Since the late 1990s, the output value of PCB in mainland China has grown rapidly, and it has continuously introduced advanced foreign technology and equipment, becoming the fastest growing region in the world in terms of PCB output value. According to Prismark data, in the past 10 years, the output value of PCB in mainland China has increased from US$15.037 billion in 2008 to US$29.732 billion in 2017, with a compound annual growth rate of 7.87% (the global CAGR is 2.21%), which is significantly higher than the global growth rate.

In 2006, mainland China surpassed Japan for the first time and became the world's largest PCB production base. By 2017, the output value of printed circuit boards in mainland China had exceeded half of the world's total. From 2015 to 2019, the average annual compound growth rate of PCB output in mainland China reached 5.61%, which was significantly higher than the global average growth rate. It is expected that the output value will reach US$37.052 billion in 2021. In 2021, with the development of 5G, cloud computing, Internet of Things and other industries in my country, my country's printed circuit board industry is moving towards a higher level.

Hayao Nakahara, president of NTInformation, an authority on global PCB industry research, released the NTI-100 2020 Global Top 100 PCB Ranking and Industry Trends (NTI-100: Annual turnover exceeds 100 million US dollars). According to his survey report, in 2020, a total of 128 manufacturers with revenue exceeding 100 million US dollars entered the list, an increase of 6 from 122 in 2019, and the output value increased from 62.342 billion US dollars to 68.789 billion US dollars, a growth rate of 10.3%. Compared with last year, the number of companies on the list in each region is 55 in mainland China, 25 in Taiwan, China, 21 in Japan, 14 in South Korea, 4 in the United States, 5 in Europe, and 3 in Southeast Asia.

The following is the number of PCB companies with a global output value of more than US$100 million in 2020 compiled by NTI (commonly referred to as the top 100 companies)

In the future, with the accelerated penetration of emerging technologies such as 5G communications, cloud computing, big data, artificial intelligence, Industry 4.0, and the Internet of Things in China, the PCB industry, as the basic force that connects the entire electronic information manufacturing industry chain, will enter a new cycle of technology and products. According to NTInformation (NTI), my country's PCB output value will exceed US$40 billion by 2022 and will reach US$43.8 billion by 2024, and there is still much room for improvement in the market size.

The following is the situation of some PCB manufacturers in mainland China:

Dongshan Precision

Dongshan Precision was founded in 1980 and listed on the Shenzhen Stock Exchange in April 2010. After listing, the company successively acquired Mflex and Multek and successfully entered the field of soft and hard boards, becoming the top three in the world in FPC business and the top five in the world in overall PCB business. The company's business is mainly divided into four parts: printed circuit boards (62.23%), TP and LCM modules (16.22%), LEDs and their modules (10.32%), and communication equipment components (10.94%) (2019 annual report data).

Shenzhen South Circuit

Shenzhen South Circuit Co., Ltd. (hereinafter referred to as "Shennan Circuit") was established in 1984 and is headquartered in Shenzhen, Guangdong Province, China. The company entered the field of packaging substrates in 2009. At present, the company has 3 packaging substrate factories, including two packaging substrate factories in Shenzhen with a production capacity of about 300,000 square meters/year, and one packaging substrate factory in Wuxi, with an estimated production capacity of 600,000 square meters/year after reaching full capacity. Shenzhen South Circuit has always focused on the field of electronic interconnection and is committed to "building a world-class integrator of electronic circuit technology and solutions". It has three businesses: printed circuit boards, electronic assembly, and packaging substrates, forming a unique "3-In-One" business layout in the industry. 

Jingwang Electronics

 Founded in 1993, Jingwang is a national high-tech enterprise specializing in the research and development, production and sales of printed circuit boards and high-end electronic materials. The company's product types cover FR4 printed circuit boards, aluminum-based circuit boards, flexible circuit boards, HDI boards, rigid-flexible boards, high-end electronic materials, etc.

Victory Giant Technology

Founded in 2006, Shenghong Technology specializes in the research and development, production and sales of high-precision, HDI PCB printed circuit boards. Its products are widely used in computers, aerospace, automotive electronics, communications, consumer electronics, industrial control, medical equipment and other fields. It has established long-term and stable cooperative relationships with more than 160 top companies in the world.