Analysis of PCB and Raw Materials and Industry-Related Company

Printed circuit board (PCB) is a substrate used for assembling electronic parts, with a global output value of US$45 billion per year, second only to the semiconductor industry in the electronics industry, while China’s growth rate is much higher than the industry average. Nowadays, electronic products are changing rapidly, and price wars have changed the structure of the supply chain. China has both cost and market advantages. Due to the impact of cost and downstream industry transfer, the PCB industry is gradually shifting to China, which is the most growing PCB market in the world.

Low-end PCBs (below 4 layers) have relatively low entry barriers, sufficient competition, and low concentration. Under the pressure of downstream price reductions, product prices are often squeezed by downstream manufacturers. However, high-end PCB (HDI, etc.) technology, equipment, craftsmanship and other requirements are very high, the barriers to entry are high, and the production expansion cycle is long, which is in a state of short supply in China.

The production capacity of Chinese PCB manufacturers is expanding rapidly, the output value is increasing, and the products are developing to the high-end. There is still a lot of room for growth for Chinese PCB manufacturers.

The CCL (copper clad laminate) and the downstream machine products are separated by the PCB board. The price transfer is not so direct, the concentration is relatively high, and the bargaining power is higher than that of the PCB. However, the single product use leads to a strong dependence on the PCB. Low-end products and special demand for PCB boards have led to low costs, and there is room for small-scale manufacturers for specific market segments, and industry integration is more difficult.

Large CCL manufacturers implement the strategy of leading scale and have larger production expansion moves. The strong will maintain the pattern of constant strength. The release of production capacity is concentrated in 2007-2008, but the first half of 2008 is a traditional low season, and price wars are unavoidable. Concentration is a trend in the long run, but the pain of short-term profit loss is inevitable.

The increase in raw material prices has made upstream manufacturers lucrative, and the Chinese government has strengthened environmental protection, which has accelerated the integration of downstream industries, raised barriers to entry, and forced companies with weak competitiveness to exit the industry.

The development of PCB has caused glass fiber manufacturers to increase the production of high-end electronic yarns. The electronic yarn industry is developing in the direction of tulle, and there is a trend of in-house kiln factories. The production scale of electronic cloth depends on the size of the kiln, the investment is larger, and the concentration is higher.

The ability to track and guarantee technological innovation capabilities, emerging industry needs, and high-end major customer needs is the key for PCB manufacturers to obtain high profits.