The PCB Industry: The Localization Space Still Exists And The Innovation Catalyzes Frequently.

- Mar 21, 2018 -

  The output value of printed Circuit Board (PCB) in the world dropped by 2.02% to US $54.2 billion in 16 years, of which the proportion of the output value of the communication 3C and the vehicle was 9.09.By benefiting from the smart machine innovation cycle opened by iPhone X, the rapid growth of automotive electronics promoted by Tesla, The supply-side backwardness of production caused by rising costs and environmental production restrictions was cleared. During the period from February to October, the PCB BB value in North America was greater than 1 for 9 consecutive months, and the average price of PCB in Japan rose 10.588.In the period from January to January, the average price of Japanese PCB rose 10.588.Therefore, Prismark expects 17 years of global PCB output to grow by more than 2% from a year earlier. In this macro environment, we expect the shift of industrial centers and downstream application innovation to push the local PCB industry back to the upper floor. The concentration of large factories was further enhanced.

  Second, the mainland has wide space to replace single and double panels

According to WECC data, the global output value of the mainland for 16 years is 36.51a, while the global share of multilayer panels exceeds 600.This phenomenon is mainly due to the production capacity of Japan, Korea and Taiwan, considering the maturity of the single and double panel industries. Referring to the development of LCD-LEDs in the past two years, we believe that local PCB enterprises are expected to benefit directly from the transfer of single and double panel industrial centers to the mainland. In order to achieve rapid expansion of production and seize share, more and more PCB industry chain companies choose to resort to the power of capital. There are only 7 PCB related companies listed in China in 17 years. According to the prospectus of Shennan Electric Road 002916, 7 of the top 10 PCB manufacturers listed in China in 16 years have clear plans for large-scale production expansion.

  Third, the increase of industry concentration caused by environmental protection and production restriction

Since January 1st, the Environmental Protection tax Law of the people's Republic of China has come into force. Recently, Kunshan and Zhuhai have issued production restriction notices because of environmental problems, involving many large factories in the PCB industrial chain. This series of changes has fully released the signal of continuous tightening of environmental regulation. Under the influence of previous environmental regulations, on August, 17 years, PCB raw materials, inks, solvents, and so on, have taken place in a wide range, a large amount of centralized price adjustment. We believe, The price increase of raw materials shortage makes small and medium-sized PCB enterprises face challenges in the stability of capital chain and supply chain, at the same time, the tightening of environmental protection supervision will make some small and medium-sized PCB enterprises have disadvantages in production technology and lack of investment in environmental protection facilities. Therefore, the concentration of PCB manufacturers is expected to further increase, and large factories benefit significantly.

Fourth, innovation catalyzes frequently.

Communication is the biggest downstream application of PCB. Sixteen years single and double panel and multilayer board account for 84.5% of communication PCB. The 5G construction is expected to open high frequency and high speed CCL. The communication PCB new round of high growth. PCB is widely used in automobile, 2016 4th. The combined ratio of single and double panels and multilayers in the quarterly PCB is about 73. We expect that in 2020, the electronization of cars will add about $950 million to the global demand for PCB for vehicles. The new PCB will add about $430 million to the domestic demand for the PCB. In addition, Apple's 17-year standard FPC wireless charging device, the iPhone X, will use a full-scale COF screen and further enhance the integration through the SLP, leading to a further increase in the use of the iPhone single FPC. Therefore, FPC industry will welcome new opportunities in domestic mobile phone innovation.

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