—— The PCB industry has rebounded, and the domestic PCB industry has huge potential

   The structure of PCB products is complex, and the product categories continue to evolve according to terminal needs: terminal electronic products are changing to the needs of light, thin, short, and multi-functional, prompting the rapid improvement of the product performance and integration of electronic components. Generally speaking, from single and double panels, multi-layer boards, HDI boards (low-level → high-level), arbitrary layer interconnection boards, to SLP-type carrier boards, packaging substrates, the integration level is getting higher and higher, and the design and processing are more complicated. .

  Multilayer boards, FPC, and HDI boards are the main force in the market, and high-end PCB products have ample room for growth. According to Prismark statistics, in 2017, the combined proportion of multilayer boards, FPC and HDI boards accounted for 74% and dominated the PCB market. It is expected that the compound growth of FPC, HDI and multilayer boards will reach 3%, 2.8% and 2.4% by 2021. The cycle of various PCB products is mainly related to terminal demand.

Driven by rising raw material prices and changes in downstream demand in 2017, the global PCB market showed unexpected growth. The annual output value increased by as much as 8.6%, which exceeded the growth rate of the entire electronic system product and far exceeded the GDP growth rate. The demand for driving the downstream PCB market in 2017 mainly comes from:

  (1) The unit price of high-end smart machine innovation and upgrade has increased, stimulating the increase in the output value of the entire PCB market. The appearance design of Apple iPhoneX has changed a lot. The motherboard adopts a more advanced MSAP stacking solution, and the value of a single machine has nearly tripled, reaching more than US$20. Innovative appearance and functional parts such as full screen and 3Dsensing have directly increased the demand for rigid-flex boards and flexible FPC boards, and the value of FPC boards has increased to more than US$40. Other non-Apple smartphones quickly followed Apple's innovation in the launch of new products, and vigorously promoted the application of new concepts such as full screen, 3D sensing, and wireless charging. Although the overall growth rate of smartphone shipments is still declining, the value of stand-alone components has increased rapidly, driving the production value of mobile phone boards to increase beyond expectations.

  (2) The virtual currency mining boom has driven the demand for mining machine motherboards and chip carrier boards to soar. In 2017, the price of virtual currencies led by Bitcoin and Ethereum skyrocketed. The price of Bitcoin has doubled by 14 times in 2017. The supply of upstream mining equipment is in short supply, and the price of mining machines has also risen along with the investment boom. The cost of the mining machine is mainly composed of the motherboard and the chip. The circuit boards for the motherboard are mainly 4, 6, and 8 layer multi-layer boards. The price of ordinary multi-layer boards is 600-800 yuan per square meter. The price of multi-layer boards for Bitcoin motherboards has increased to 1200-1500 yuan per square meter, this type of board is mostly supplied by domestic medium and low-end board manufacturers. Package carrier boards for mining machine chips are mainly provided by Japanese and Taiwanese carrier board manufacturers. Although the market generally expects the virtual currency market to be unsustainable, it has a significant short-term impact on PCB performance. The monthly demand exceeds 560,000 square meters. It is estimated that the mining machine board market for 2017 is about 1.24 billion U.S. dollars.

  (3) The service/storage market in the computer field began to improve, driving the further expansion of the output value of the entire computer system. As the cloud, data center, and artificial intelligence currently require huge storage space and powerful computing capabilities, with the gradual penetration of the Internet of Things in the future, the scale of the service/storage market will grow rapidly. Computer PCBs are mainly based on the 6-16 layer multilayer board for graphics cards and memory chip packaging substrates.

  In the short term, the impact of Apple's mobile phone on PCB production value and technology will continue into 2018. SLP-type carrier boards have become the trend of high-end mobile phone motherboards. The loading rate of FPC flexible boards on new mobile phones in 2018 will continue to increase, but Due to the rapid expansion of production capacity, the rigid-flex board, which is sought after by the market, mainly consumed the original inventory in the first half of 2018. The demand for graphics boards and IC packaging substrates for storage and servers continues to increase. In the medium and long term, in the stage of steady economic growth, the third large-scale development of the PCB industry will be driven by the further penetration of automotive electronics, and the resonance era in various fields such as communications, consumer electronics, and computers promoted by 5G and AI technologies. .

1.1 The global PCB market continues to maintain a high boom in 2018

  Data for the first quarter of 2018 in various overseas regions shows that the prosperity of the PCB industry has only increased. The BB value of printed circuit boards in North America has exceeded 1 since February 2017, and has stood above 1.1 in 7 months from August last year to April this year, a record high in 5 years. Japan’s PCB monthly output value has continued to maintain positive growth since the fourth quarter of 2017. Since the beginning of the year, the output value of packaged substrates has grown at a leading rate. In February, it increased by 20.67% year-on-year. The growth rate of hard boards remained relatively stable at about 2%. Due to destocking of soft boards, The output value fell 4% year-on-year. In addition, we have calculated the monthly revenue of the top ten PCB manufacturers in Taiwan. The high growth trend of total revenue has continued from the second half of 2017 to January 2018. The revenue growth of Zhending, Xinxing, and Tripod ranked the top in 18Q1. , Respectively, 29.77%, 12.96%, 12.08%.

  Domestic PCB manufacturers' revenue in the first quarter of 2018 increased by an average of 20.57% year-on-year. Although orders are full, domestic PCB export trade is greatly affected by exchange rate fluctuations, and exchange losses directly depress profitability, leading to lower-than-expected performance of most companies in 2018Q1. In the long run, the exchange rate issue is a macroscopic effect, and does not represent the business ability of the company. Since April, the RMB has depreciated against the US dollar, and the profit data of export-oriented domestic PCB companies has improved significantly.

　　1.2 China's industrial growth rate is leading the world, and domestic enterprises have accelerated their rise

  China's PCB production value accounts for more than 50% of the world's total, and its growth rate is the world's leading. PCB products began to be used in commerce in 1948, and began to be widely used in the 1950s. The traditional PCB industry is a labor-intensive industry with a lower technology intensity than the semiconductor industry. Since the beginning of the 21st century, it has preceded the semiconductor industry from the United States, Japan, Gradually transferred to Taiwan and Mainland China. As early as 2008, China's output value accounted for 31.11%, but the output value contribution in the initial stage of the transfer mainly came from foreign capital's production capacity in China. At that time, the number of domestic enterprises accounted for less than 5%. With the continuous improvement of the domestic PCB industry chain and the demand for the huge domestic consumer electronics market, local PCB companies have been able to develop rapidly, changing the situation that PCB demand depends on imports all the year round. In 2014, the trade surplus was achieved for the first time, and more and more Local enterprises move towards overseas markets and gradually realize the real "domestic substitution". Looking at the global PCB output value data, China's output value has set new highs year after year, and the compound growth rate in the past 8 years has led the world, reaching 9.63%, while the compound growth rate of Japan, Europe and the United States and other places are all negative during the same period. According to Prismark's latest statistics, China's PCB output value accounted for 50.53% in 2017.

1.2.1 "Industry transfer" is continuously upgraded, and domestic capital advances to the world's first echelon

  On the path of "industrial transfer", China's electronic circuit industry has gradually upgraded from "production area transfer" to "property transfer". After years of accumulation, the domestic PCB industry has gradually matured. However, compared to Japan, South Korea, Taiwan and other regions, PCB products in mainland China are mainly low-end products such as single and double panels, and multi-layer boards with less than 8 layers. According to the latest statistics of domestic PCB companies, the proportion of foreign-funded manufacturers in China is 58%. Although the number of domestic-funded manufacturers has increased, their scale is relatively small. From the revenue of domestic PCB companies in 2017 According to the data, domestic enterprises with a scale of more than 1 billion account for less than 30%. Japan is currently dominated by large-scale manufacturers such as Qisheng and Sumitomo Electric, dominating the global mid-to-high-end FPC market. South Korean PCB companies mainly rely on the local market, with a wide range of products ranging from low-end to high-end, and have competitive advantages in rigid-flex board and package carrier boards. The scale of Taiwan-funded enterprises is generally 2-3 times or more than that of large domestic PCB manufacturers. Among them, low-end production capacity has been transferred to the mainland. High-end products such as high-end HDI, IC substrates, and similar substrates are mainly produced in Taiwan. The product market is mainly in the fields of computers, consumer electronics, and smart phones. Judging from the changes in the data of the world’s top 100 companies, the number and output value of local companies in mainland China have continued to rise. In 2016, the number of selected companies was 41, far surpassing other countries (24 in Taiwan, 19 in Japan, 14 in South Korea, and 4 in the United States. Home, 4 in Europe). According to Prismark's latest statistics, in 2017, two domestic enterprises have entered the top 20 in the world (Dongshan Precision 12, Shennan Circuit 19), filling the vacancy of domestic enterprises in the first echelon of the PCB industry for many years. This year Dongshan Precision acquired Multek , Will leap into the top five PCB manufacturers in the world. Compared with Taiwanese and Japanese capital, China’s selected local companies account for a relatively low proportion of the top 100 in output value, and there is still a lot of room for growth in individual output. Next, China will gradually upgrade from "production area transfer" to "property transfer" ( The transfer of the investor's place), realizing the true "industry eastward shift".

　　1.2.2 Taking advantage of the development of the electronics industry, stepping into the fast track of tens of billions of sprints

  China is the world’s largest manufacturing base and consumer market for electronic information products. With the continuous advancement of "Made in China 2025", emerging markets such as mobile Internet, Internet of Things, big data, cloud computing, artificial intelligence, and driverless cars have emerged A group of world-renowned local companies have been created to provide more development opportunities for the supporting electronics manufacturing industry. Under the guidance of the country's supply-side structural reform and innovation-driven development strategy, the electronic information manufacturing industry has accelerated its structural adjustment, and the industry's prosperity has continued to boost. PCB, as one of the three pillar industries in the electronics industry, is closely related to the overall development of the electronic information industry. Domestic PCB companies have fully benefited from the policy dividends. While constantly improving their product lines, they have timely docked with the capital market, and through industrial optimization and upgrading, they have moved closer to the world's first-class manufacturers.

  Domestic-funded PCB companies have grown rapidly, and have been promoted to a scale of tens of billions. As mentioned earlier, domestic-funded PCB companies have begun to take shape, and their development path is similar to that of Taiwan-funded companies in terms of industrial structure. Taiwan-funded PCB companies have effectively grasped the historical opportunities in the PC and smart phone era. After ten years of golden growth, excellent companies with a scale of 10 billion yuan such as Zhending, Xinxing, Tripod, Hannstar Board, etc. have gradually emerged. However, due to the local market Due to limitations and weak growth in the PC and smart phone sectors, Taiwan-funded PCB companies have gradually entered a plateau period. This also provides opportunities for domestic-funded companies to catch up. In contrast, domestic-funded PCB companies have more growth momentum.

  1) PCB is an asset-heavy industry that requires a large amount of capital investment to gain a competitive advantage in scale. The automation and intelligence of production equipment directly determines the level of production costs, and the cost of equipment transformation in old factories is higher than that of investing in new factories. Domestic-funded enterprises enjoy national policy dividends, low financing costs, short investment cycles, and can quickly respond to market demand.

  2) The domestic industrial chain is complete, and the diversified market demand drives the development of the PCB industry. The development of China's PCB industry has accelerated the localization of local equipment and materials. At present, more than 80% of the newly-built capacity localized equipment has emerged. Among the raw materials, companies such as Shengyi Technology, which rank high in the global market, have also emerged. Industrial clusters continue to expand to the central region along the original Pearl River and Yangtze River Delta, with Jiangxi, Hubei, and Anhui as the new investment focus. From the demand side, the domestic terminal market is more diversified, with independent brands covering communications, smart phones, computers, automobiles, home appliances, industrial medical, aviation and military, etc., providing strong support for the development of local PCB companies.

  3) Domestic-funded PCB companies are developing into a high-speed growth period with a scale of tens of billions, with huge potential in the future. Analogous to the development history of a Taiwan-funded PCB company with a scale of tens of billions, domestic-funded PCB manufacturers are still at the starting point of a scale of tens of billions (RMB 1 to 3 billion), and it took about 8-10 years for Taiwan-funded companies to develop to a scale of tens of billions. Time, but the average compound growth rate during this period was as high as 26.12%.