A Brief Analysis of the Future Trend from the PCB/Copper Clad Market in 2021

2021 will be a roller-coaster year for the PCB and copper clad markets. In 2020, all countries except the Chinese mainland experienced a sharp decline in the economy due to the impact of COVID-19. Governments in order to save the economy, in 2021 took a variety of powerful economic stimulus policies, under the policy to promote national economy all has the different degrees of recovery, notably the world's two largest economies of China and the United States (regardless of cause) the performance of the most bright eye, GDP growth of 8.1% and 5.7% respectively, Europe toward positive growth 5.2%, Japan has also climbed out of the trough and southeast Asian economies have turned positive.

The year of 2021 will go down in history

Under the influence of such a macro economy, the electronics industry will fully recover in 2021, which also drives the explosive growth of PCB demand. Prismark expects global PCB production to grow 22.6 per cent -- a double-digit increase rarely seen in years -- to more than $80bn. The main PCB producing areas in Asia are not only Mainland China (more than 40 billion US dollars), Taiwan (up 17.5% with an output value of 817.8 billion NT dollars), but even Japan (19.2% with an output value of 14.06 billion US dollars), which has been declining for several years. In such PCB market strong demand, copper-clad board is also hard to find, a time "where are the copper-clad board" in the supply chain boiling. The hard demand of economic recovery and supply chain obstruction, plus inflation, plus the instantaneous shortage of production capacity, plus inventory depletion and other reasons, the supply chain as a whole is difficult to bear, all materials of copper clad plate have risen sharply, the general increase of more than 50%. Some materials, for example, have nearly doubled in value since their lows in 2020. Due to the rapid and dramatic rise in cost and the instantaneous shortage of supply, the price increase of copper-clad plate became the only choice. Back then, people didn't ask what went up, they asked what didn't go up. Therefore, "shortage", "increase" almost noisy for a whole year. For most of the year, there was a rush to buy, stock up and adjust prices, but in the fourth quarter of 2021, the market began to adjust.

2021 is sure to go down in history for the entire PCB/ copper-clad industry, with many experiences that will be talked about for years to come. Although the final full-year operating statistics are not yet available, a 20 per cent increase in mainland China's copper clad industry output is not a problem. Although the overall production expansion incremental effect in 2021 has not been fully shown, but because the operating rate in previous years is about 75%, and it is believed that the vast majority of enterprises have full or close to full production in 2021, therefore, production and sales will have a large increase. With the increase in volume, the output value will increase by more than 25%, and even 35% is very possible. How many years may it take to repeat such a feat? The last time there was such a surge was about 22 years ago, in 2000. Since many people joining the industry did not experience the last surge, 2021 will be more interesting. It's all gone, and before our hearts have calmed down, we will have to face a more complex, volatile and uncertain 2022.

Competitive and uncertain 2022

The rapid growth of PCB and copper-clad industry in Mainland China in 2021 depends on two factors: one is incremental investment (including factors of full utilization of capacity); Second, supply chain price increase.

Let's look at the incremental effect. In the five years before 2021, a total of 15 PCBS in Mainland China went public and raised 15.216 billion yuan. Adding the subsequent bond issuance and private placement, 24.627 billion yuan was raised. The total investment of 39.843 billion yuan plus self-supporting funds should exceed 100 billion yuan. The above investment has increased PCB production by 30 ~40 million square meters. During the same period, copper-clad panels are also increasing production through various channels, including ipo financing, which will increase annual production capacity by 25 million square meters (including metal base copper-clad panels) in 2021. The price increase factor is more influential than the increment. Under the influence of all raw and auxiliary materials skyrocketing or even off supply, copper-clad plates are forced to implement price rises, and some companies and varieties have reached about 50% of the total annual rises (should be the highest level after 2000). But when the tide recedes, we need to calm down and face the reality, which is:

1. A concentrated explosive growth in 2022, PCB formed a net increment of nearly 50 million square meters, and the scale will continue to grow in the next few years; Copper clad plate in 2022 will be compared with 2021 monthly net increase of 5.5 to 6 million square meters of production capacity, enterprises in order to make the new capacity can be full or as full as possible is bound to grab orders. If the market is still can continue to boom before the third quarter of 2021, that's no problem, but there is no corresponding growth if the total market demand, there may be local, some varieties of excess, a certain period of time, the market capacity digestion phase, and this period is not for everyone to see most is can reduce the price list.

2. There are Chinese-funded private PCB enterprises with monthly consumption of copper clad plates of more than one million square meters. In the past, enterprises with consumption of more than one million square meters were concentrated in Taiwan-funded giant enterprises. But by 2021, we can be glad to see Chinese capital, private capital also appeared such enterprises, this is symbolic. This kind of super-large enterprises will certainly form a new competitive pattern. The competition of their orders will not only be reflected in the competition between domestic enterprises, but will soon be the pattern of external competition -- the volume and cost will appear a new situation.

3. When PCB/ copper clad board is in a rush on high-speed, high-frequency, automotive, Mini LED and other "high-tech" substrates, enterprises must find the correct market positioning, I call it the "market adaptation period", that is to say, it is necessary to build a new management system in technology, quality control, cost and other elements. For example, high-speed materials do server, in product classification and technical positioning to determine their own Purley, Whitley, Eagle Stream and the future of which product level? We cannot simply and blindly call it "high speed". For example, in terms of automotive electronics, according to huawei classification, the main products of our companies are oriented towards intelligent cockpit? New energy management? Autopilot? What are the application areas of the Internet of vehicles? I think there are at least 5 types of copper-clad plates involved here. In today's "material determines product era", we can not generally say "car plate", but should be subdivided into which plate of the car? For example, in terms of Mini LED, 50μm to 200μm are Mini LED, many of our enterprises know what they are doing? If not clear and do not understand the technical characteristics, there is no way to provide customers with appropriate materials, serious and even major quality claims accidents. In 2021, a company faces a sky-high claim in MiniLED, as well as a major quality accident of a famous automobile brand camera plate explosion. According to the judgment of the industry, these quality accidents are all the wrong materials -- but many people think that "car board" is the same, and "Mini LED" is the same, and the material selection is not accurate, which eventually LED to a major quality dispute. Expect to see a sharp rise in quality controversy in 2022.

In 2022, the overall world economy is still on a path of recovery, and it is predicted that the economies of mainland China, the United States, Europe and Asian countries will all grow. But 2022 is fraught with uncertainty. In addition to the repeated shocks of the epidemic; International supply chain impact; The Federal Reserve cut interest rates; High inflation in the US; In addition to the common problems such as the price rise of international commodities, our industry is also faced with: PCB/ copper clad board market from tight supply to flat supply or even node oversupply; Supply chains remain volatile; Although the supply of some raw materials has stabilized, there are still some materials such as copper foil in tight supply and high prices. In the transition between supply and demand, the selling price of copper clad plates tends to decline. The whole industry is facing such a contradictory environment in 2022, so it is full of challenges. Of course, in the face of all kinds of opportunities and difficulties, I believe that companies will be very positive in the face of some products and certain periods of the market, not excluding the emergence of extreme competition, the growth rate of the industry will slow down, but the overall outlook is still optimistic. After the market gradually digested this round of capacity expansion, industry prospects are still very optimistic.