What is the prosperity of the PCB industry in 2022?

After entering 2022, how is the prosperity of the PCB industry? Have upstream raw material prices declined?

PCB downstream demand has entered a growth period

5G wireless communication is expected to fully blossom

Recently, Wang Weizhong, the acting governor of Guangdong Province, said that he will respond to the policy and promote the digital transformation of 5,000 industrial enterprises above designated size, so as to realize the wide coverage of the Pearl River Delta with 5G network and full coverage in some areas; The national hub node of the national integrated computing power network.

The data shows that in 2021, the telecommunications business revenue will increase by 8% year-on-year, and the software and information technology service industry revenue will increase by 17.7% year-on-year. The Ministry of Industry and Information Technology pointed out that by the end of 2021, a total of 1.425 million 5G base stations have been built and opened in my country.

Under the trend of policy support and industrial development, the 5G sector will be good for a long time. Minsheng Securities believes that 5G wireless communication is expected to fully blossom in multiple boom industries. The era of the Internet of Everything has arrived, and the market space for communication modules is huge!

Driven by the full recovery of the electronics industry driven by the new generation of information technologies such as 5G, the PCB and upstream copper clad laminate industries are expected to enter a high-growth channel. In terms of PCBs used in communication equipment, the demand for PCBs is mainly based on multi-layer boards. In terms of PCB boards for servers, with the rapid growth, the requirements for high integration and high frequency are also placed on PCBs, thereby driving the value and technology of PCB boards.

New energy vehicle PCB usage continues to grow

The data that the sales of new energy vehicles exceed expectations have been overwhelming, and the rapid growth of the industry is self-evident. The demand for PCBs from new energy vehicles and the continuous growth of the value of bicycles will also bring great benefits to the industry.

(1) Sensors account for 2-5% of the total vehicle PCB usage

First of all, PCB (printed circuit board) is an important raw material for electronic products. With the development trend of intelligent and electrified automobiles, the amount of electronic products is also greatly increased, especially in the field of sensors: the use of cameras and radars is growing exponentially. According to the configuration of the number of sensors in different grades of vehicles, the usage of PCB in sensors will account for 21%-55% of the total vehicle usage.

(2) The three-electric system increases the amount of PCB

The number of PCBs required in the three-electric system (battery, motor, and electronic control) of new energy vehicles is much higher than that of traditional vehicles. A large number of electronic components used in batteries and electronic control are based on PCB as a carrier. Inverters and DC/DC converters in electronic controls use PCBs.

The demand for PCB by the three power systems is the new market space. According to the agency's data forecast, the battery management system needs to add 3 square meters of PCB consumption, and the electronic control and electric drive system needs to add 0.18 square meters of PCB consumption.

(3) Growth in the value of PCB bicycles

The value of the traditional automobile and bicycle PCB is relatively low, about 400 yuan; the value of the bicycle of the new energy vehicle is about 2,000 yuan.

Judging from the above three aspects, the value of automotive PCB will increase significantly. The agency predicts that the global automotive PCB output value will increase from US$6.7 billion to US$8.8 billion in 2021-2024.

The downstream of MiniLED blooms at many points, and the PCB accounts for 50%-60% of the cost of the backlight module.

The Mini-LED market is developing rapidly, and the market size is expected to exceed 2 billion US dollars. According to Arizton's forecast, from 2021 to 2024, the global Mini LED market size is expected to increase from US$150 million to US$2.32 billion, with a compound annual growth rate of 149%. The Mini-LED market is the first to break out in the large-size field. With the gradual decline in cost, Mini-LED will accelerate its penetration into medium-size, and the market size will further increase.

The large-scale commercial use of Mini-LED has significantly benefited PCB manufacturers. The cost of the PCB substrate in the Mini-LED backlight module is the largest, according to our estimate, it is about 40%. The threshold of Mini-LED PCB is mainly reflected in large-scale mass production capacity and yield. A number of domestic manufacturers have developed Mini-LED PCB substrates. We believe that rapid mass production capacity and improved yield are the current competitive criteria for measuring PCB manufacturers. With the improvement of the mass production level of PCB and the improvement of the yield rate, the production cost of Mini-LED PCB substrate has a large room for reduction, and the reduction of PCB cost has a driving effect on the improvement of Mini-LED penetration rate. The two It is expected to form a virtuous circle.

PCB manufacturers increase investment in Mini-LED substrates, and domestic manufacturers usher in opportunities. From a global perspective, there are many manufacturers that have developed Mini-LED PCB substrates, including Taiwanese companies Xinxing, Taiding, Tongtai, South Korea's Yongfeng, mainland companies Pengding Holdings, Zhongjing Electronics, Victory Macro Technology, Oxcon et al. Rapid market response capability, mass production capability and product yield have become the core competitiveness of various manufacturers. The domestic Mini-LED industry chain is relatively mature. From the chip end to the packaging and display end, a complete Mini-LED industry chain is basically realized in China, which brings opportunities for the development of domestic PCB manufacturers.

XR equipment shipments are about to explode, related PCB market scale is growing rapidly

XR equipment is the hardware entrance of Metaverse. During the long construction period of Metaverse, XR will benefit first, and PCB is also one of the important raw materials of XR equipment, accounting for about 10% of the cost. According to the agency's forecast, XR equipment shipments will increase from 250,000 units in 2020 to 21 million units in 2025.

And XR equipment shipments are about to explode, and the related PCB market scale is growing rapidly. In the Meta Oculus Quest 2, the cost of both soft and hard boards is around $30, according to IHS. In the future, with the increase of integration and the upgrade of FPC technology, the value of products will be higher. If the shipment of XR equipment in 2021 is calculated at 8 million, and the value of a single device soft board is calculated at US$30, the market size of XR boards will reach about US$240 million. Shipments of fake XR equipment will reach about 100 million units in 2025. Regardless of changes in the price of hard and soft boards, the market size of hard and soft boards for XR equipment will still reach $3 billion.

According to related reports, the number of FPCs used in a single VR/AR glasses exceeds 10, and the number of FPCs used in headsets will be even more. At present, both domestic Pengding Holdings and Dongshan Precision are actively deploying XR boards and supplying them to major players such as F customers. In the future, they are expected to benefit from the rising trend of XR board volume and price.

In terms of technology card positions, institutions continue to be optimistic about HDI, SLP and IC substrates and other sectors, and it is recommended to pay attention to domestic enterprises with production capacity, technology and product layout.

Upstream raw material prices fall

In 2021, due to the impact of multiple factors such as the epidemic, the entire semiconductor industry chain will set off a wave of price hikes in the case of strong demand. The copper clad laminate with a strong voice is no exception. From the beginning of last year to the third quarter, prices continued to rise. However, the price of copper clad laminates began to fall after reaching a high level at the end of the third quarter of 2021, and the price reduction cycle has already begun.

On the one hand, the price of raw material epoxy resin has dropped sharply, and the price of copper foil has also tended to be stable; on the other hand, under the influence of the industry cycle, the price of copper clad laminate has fallen naturally.

Specifically, in terms of epoxy resin, according to data from Zhuochuang Information, the price of epoxy resin has been falling since the second peak in mid-September 2021, reaching a low of 21,000 yuan / ton in December. There has been a rebound, but the overall price fluctuations are not large.

In this regard, Baichuan Yingfu analyst Wang Xiaotong said that epoxy resin has declined a lot since October. The price of epoxy resin rose sharply in early January. The cost-side support was strengthened and the demand for downstream pre-holiday replenishment increased. Multiple positive supports, but recently epoxy resin Prices are flat.

Taking the epoxy resin E-12 (liquid) in East China market as an example, as of January 19, the price of this product was 24,300 yuan / ton, which was more than 10,000 yuan per ton lower than the previous high in September.

Regarding the price expectations for the first quarter, Wang Xiaotong said: "The logistics will be out of service before the Spring Festival, and the price of epoxy resin is expected to decline in a narrow range. After the holiday, the price fluctuates and fluctuates. It mainly depends on the specific impact of the new plant being put into production after the holiday."

In terms of LME copper, the price trend is similar to that of epoxy resin. After the second peak in mid-October, it fell back and consolidated. The price drop was not large, but it did not rise again. As of now, LME copper has maintained a sideways and oscillating trend.

In addition, due to the strong demand for new energy vehicles, lithium battery copper foil manufacturers have increased capital and expanded production, which has relieved a lot of pressure on the supply of PCB copper foil that was squeezed by lithium battery copper foil materials in the early stage. And because the overall price of copper foil has exceeded the historically high position, the price increase has been resisted by the demand side. With the fall in copper prices, the overall price increase of copper foil is limited

From the demand side, areas with high demand such as mobile phones, PCs, and home appliances experienced a slowdown in the growth rate in the second half of the year. That is to say, starting from Q3 in 2021, the weakening of demand has already appeared.

According to Canalys data, global smartphone shipments in Q3 2021 fell by 6% in the third quarter and only increased by 1% in the fourth quarter; Gartner reported that global PC shipments in the third quarter of 2021 increased by only 1% year-on-year, and in the fourth quarter Worldwide PC shipments fell 5% year over year, the first decline in the PC market after six consecutive quarters of growth.

In addition, the price of electronic yarn and electronic cloth has also dropped significantly after entering 2022. According to reports and analysis, it may be due to the influence of changes in the purchasing rhythm of downstream factors such as inventory control near the end of the year. In addition, China's Jushi electronic yarn and electronic thick cloth production capacity continues to expand, and its share steadily increases; Honghe Technology has advantages in high-end electronic cloth technology (the first echelon in the world), and gradually realizes self-supply of high-end electronic yarn.

The decline in raw material prices and the weak demand side have brought space for the price reduction of copper clad laminates. With the gradual easing of raw material cost pressures, the demand for automobiles, servers, and IC substrates will drive the performance of PCB manufacturers to increase steadily.