The upstream of the printed circuit board (PCB) manufacturing industry is mainly raw material manufacturers such as copper foil, wood pulp, glass fiber yarn, and resin; the midstream is mainly PCB manufacturers, of which copper clad laminates are the core raw materials for PCB manufacturing; , semiconductor, computer and other fields.

Upstream and midstream: The cost of PCB raw materials has fallen, and CCL manufacturers are bottoming out

The main raw materials of PCB and CCL include copper foil, epoxy resin and glass fiber cloth. In addition to labor and manufacturing costs, PCB raw materials mainly include copper clad laminates, copper foil, phosphor copper balls, solder mask inks, etc. Copper-clad laminates account for the highest proportion of PCB raw material costs, reaching 30%. The main raw material of copper foil is copper. Since 2023, the LME copper spot price has fluctuated and declined.

The prosperity of PCB upstream and midstream A-share targets is low. The price of copper fluctuated and went down, and the prices of epoxy resin and electronic-grade glass fiber cloth were relatively low in history. Affected by the continuous decline in prices, the recovery of revenue and net profit performance of the main targets of copper foil, glass fiber cloth and epoxy resin in the full year of 2022 and the first quarter of 2023 is lower than expected. The CCL as a whole is still in the bottoming period, and the revenue and profits of major A-share listed companies continue to decline. The CCL segment needs to wait for the downstream demand to pick up and the emergence of new demand growth points to drive the segment to achieve an orderly recovery.

Downstream PCB manufacturers: tracking of production and sales, inventory and expansion

The production and sales of major domestic PCB manufacturers are relatively stable, waiting for the inflection point of demand after the inventory is cleared. In 2022, the production and sales of major domestic PCB manufacturers will be relatively matched. In terms of sales volume, the sales volume of most major domestic manufacturers remains stable, and the sales growth rate of Xingsen Technology in 2022 will reach 7.27%. In terms of output, Dongshan Precision grew rapidly, with a growth rate of 4.99%. From the perspective of product area and product output value, the output of Jingwang Electronics reached 9.2697 million square meters, and the output of Pengding Holdings reached 27.1 billion yuan. Stimulated by the overall prosperity of the PCB industry and objective factors, manufacturers had previously put pressure on inventory to prevent supply chain risks. We believe that the gradual digestion of inventory will help the PCB industry recover.

Downstream prosperity trend: multiple fields stimulate demand for PCB sub-sectors, pay attention to changes in market space and competition pattern

The main downstream applications of PCB include communications, consumer electronics, automotive electronics, computers, industrial control medical and military aerospace. According to Prismark statistics, the largest downstream application of the global PCB industry in 2021 will be computers, accounting for 34%; followed by the communications industry, accounting for 32%; the consumer electronics industry will rank third, accounting for 15%.

Consumer Electronics: Optimistic about the global electronics entering the innovation cycle, boosting the demand for FPC soft boards. The recovery of the consumer electronics demand side and the innovation of various subdivided products will bring a broader market space for PCB. Consumer electronics includes subdivided product areas such as mobile phones, computers, smart homes, and wearable devices. With the rapid development of the global consumer electronics industry, new consumer hotspots emerging from new series of products such as smartphones, tablets, wearable devices, AR, and VR will lead a round of iterations of consumer electronics products, thereby driving the demand for PCBs.

Automotive electronics: new energy vehicles and automotive electronics increase PCB demand

The new development trend of electrification, intelligence, networking and sharing of smart cars will drive the growth of the overall industrial chain. At present, the penetration rate of new energy vehicles in my country is high, and the automotive electronics market is large. The development of electrification of smart vehicles will empower the development of the three core systems of new energy vehicle batteries, motors, and electronic control. Benefiting from the drive of the "four modernizations" of automobiles, the value of single-car PCBs has increased to about 1,200-3,000 yuan. Taking the median price range of 2100 yuan/car, we predict that China's new energy vehicle PCB market space will rise from 1.196 billion yuan in 2019 to 13.494 billion yuan in 2025, with a CAGR of 49.76%.

Newsletter: The increase of AI servers is large, pay attention to the progress of domestic manufacturers to verify card slots

The increase in the demand for AI servers will bring room for development in the PCB market, and the high demand for computing power will put forward higher quality requirements for PCBs. PCBs are mainly used for motherboards, power backplanes, hard disk backplanes, network cards, riser cards, etc. inside servers. As the server’s requirements for computing and transmission rates continue to increase, PCBs will usher in new upgrades and innovations, and drive PCB Incremental demand in the market. According to Prismark's prediction, the global PCB output value will reach US$101.6 billion in 2026, with a compound growth rate of about 4.8% from 2021 to 2026; the PCB output value in mainland China is expected to continue to maintain its position as the region with the highest PCB output value in the world in 2026, reaching US$54.6 billion. The compound growth rate in 2021-2026 is about 4.6%.