After extreme internal circulation, the PCB market is welcoming the new year
PCB, known as Printed Circuit Board, also referred to as a printed wiring board, is an indispensable key interconnect in electronic products and is acclaimed as the "mother of electronic products."
As the foundation of the electronic information industry, the PCB printed circuit board industry has a vast market size. According to the "2023-2028 China Printed Circuit Board (PCB) Industry Development Trend and Forecast Report" released by the China Business Industry Research Institute, the market size of China's PCB industry reached 307.816 billion yuan in 2022, and the market size has increased to 309.663 billion yuan in 2023, with an expected increase to 330.071 billion yuan in 2024.
Looking at the regions, global PCB manufacturing enterprises are mainly distributed in areas such as Mainland China, Taiwan, Japan, South Korea, the United States, Europe, and Southeast Asia, with Mainland China still occupying the world's first important position.
From the perspective of application scenarios, communication and computers are the main application fields of PCBs, accounting for nearly 70% of the global market share.
It is in such a market growth context, with Mainland China's PCB industry having significant advantages, that news of PCB manufacturers going bankrupt and restructuring often comes to light.
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01
Multiple PCB factories face bankruptcy difficulties
Recently, a reorganization investor recruitment announcement from Guangzhou Taihua Multilayer Circuit Co., Ltd. has sparked heated discussions in the industry. Although Guangzhou Taihua's poor management led to consecutive years of losses and has long been suspended for rectification, it is not uncommon for PCB manufacturers to fall into reorganization or even bankruptcy. However, as a veteran PCB enterprise with nearly twenty years of production and operation, and as a wholly-owned subsidiary of the A-share listed company Chaohua Technology, the path of self-rescue through reorganization for Guangzhou Taihua is still lamentable.Coincidentally, at the beginning of this year, another established PCB manufacturer went bankrupt and was liquidated. This company was Kunshan Quanying Electronics Co., Ltd. In January, according to the National Enterprise Bankruptcy Reorganization Case Information Network, Kunshan Quanying Electronics Co., Ltd. had entered the bankruptcy liquidation process. In accordance with relevant regulations, the labor contracts between the company and its employees were terminated on January 31, 2024. The wages and economic compensation owed by the company will be investigated and publicized by the administrator according to law, and will be settled from the bankruptcy estate in accordance with relevant regulations.
In addition to the aforementioned Guangzhou Taihua and Kunshan Quanying Electronics facing difficulties, since 2023, more than 20 PCB-related companies have been insolvent and declared bankruptcy. For example, Shenzhen Xingfa Inspiration Circuit Board Co., Ltd., Kunshan Huasheng Circuit Board R&D Base Co., Ltd., Jiangxi Xinhua Sheng Electronic Circuit Technology Co., Ltd., Meizhou Huasheng Circuit Board Co., Ltd., and Shenzhen Senyutong Precision Circuit Co., Ltd. have all fallen into bankruptcy crises.
The dynamic evolution of the PCB market, like a mirror, reflects the harsh reality of market competition and highlights the urgency of accelerating industry consolidation.
The negative impact of accelerated internal competition is not limited to the shutdown of a batch of enterprises; the product prices of PCB listed companies and the revenue and profits of many manufacturers have also been continuously declining in this process.
02
Accelerated internal competition, with 80% of listed companies affected
The overall prosperity of the PCB industry has significantly declined since the fourth quarter of 2022, failing to continue the high growth momentum of 2021. In fact, after several years of strong expansion, coupled with the current industry chill, the release of new expanded production capacity by enterprises is affected, and domestic PCB production capacity may take a longer time to digest. In addition, stimulated by the market environment and objective factors, manufacturers have over-prepared inventory in advance to prevent supply chain risks, which has prematurely exhausted market demand.
Under fierce competition, some enterprises have adopted malicious competition strategies to seize market share, leading to a significant drop in PCB product prices. For example, in the first quarter of last year, some PCB manufacturers successively reduced prices for automotive PCB products, with a strategy of reducing prices by 10% to 15% to grab orders, a price reduction range that is rare in recent years.
Under heavy pressure, many manufacturers have issued annual performance loss announcements, and some small and medium-sized enterprises are facing survival pressures.According to incomplete statistics, there are currently more than 30 PCB companies listed on the A-share market, including Peng Ding Holdings, Dongshan Precision, Shennan Circuits, Hu Die Shares, Jingwang Electronics, and others. Looking at the performance in 2023, in the face of insufficient order volumes and a significant decline in product prices, except for five companies including Hu Die Shares, Aisikang, Yidun Electronics, Tianjin Pulin, and Founder Technology, which saw an increase in net profits compared to last year, the net profits of more than 20 other companies have all declined year-on-year.
Most companies have seen their profit margins squeezed, falling into a situation of "increasing revenue but not profits" or a double decrease in revenue. Among them, PCB manufacturers whose main customers are consumer electronics are the first to be affected; while companies whose products are mainly deployed in downstream application markets such as automotive electronics and new energy have been relatively less impacted.
Another point that can be observed from the performance forecasts and annual reports of these companies is the phenomenon of the rich getting richer among domestic PCB manufacturers. The main PCB manufacturers occupy the vast majority of the market share, while the remaining small and medium-sized companies have to accelerate internal competition in the remaining limited space.
03
Market Preliminary Recovery
In fact, since the fourth quarter of 2023, many PCB companies have indicated that the current situation has improved compared to the third quarter.
Against the backdrop of a recovery in consumer demand and a buying frenzy triggered by the release of new machines in the third quarter, the output of the PCB industry has increased, and the inventory turnover rate has improved. However, the overall industry inventory is still at a high level, and with the rise in mobile phone market demand, the de-stocking effect in the fourth quarter has accelerated.
Shiyun Circuits stated in early December 2023, "The current utilization rate of production capacity is between 85% and 90%, slightly higher than in the third quarter"; a person from the securities department of Zhongjing Electronics said that the overall utilization rate of production capacity is better than in the third quarter, and there are signs of recovery internally within the company.
Entering January 2024, looking at the current situation, issues such as price declines (especially a significant drop in the price of HDI-high density interconnect boards), overcapacity, insufficient demand, and future uncertainties are still widespread, but they have entered the final stage.Next, the industry must re-enter a new growth trajectory.
04
PCB is entering a new growth trajectory
The major driving factors for the PCB market in 2024 include:
Firstly, the high-endization of smartphones has simultaneously driven the demand for PCBs. Canalys data shows that in the third quarter of 2023, global smartphone market sales declined year-on-year, but the domestic high-end smartphone market sales grew by 12.3% year-on-year; additionally, according to IDC data, the shipment of foldable smartphones in China in the first half of 2023 was 2.27 million units, a year-on-year increase of 102%. This indicates that the smartphone market is trending towards "high-endization," with the increase in foldable smartphones driving the demand for high-end PCB categories.
Secondly, the rapid development of AI has also brought structural opportunities to the industry. The advancement of AI technology has driven the demand for high-performance computing chips, directly boosting the scale of the PCB industry. With the upgrade of the PCIe protocol, the increase in transmission rates, and the demand for more PCB layers, the market's requirements for PCB materials and manufacturing processes are continuously improving, thereby increasing the value of PCBs. For example, in the AI server market ignited by ChatGPT, the high demand for computing power has led to a strong demand for products such as large-sized, multi-layer, high-density HDI, and high-frequency high-speed PCBs.
Thirdly, robotic products also require a large number of scenarios with flexibility, foldability, and high precision, necessitating the use of many supporting products such as FPC (Flexible Printed Circuit). Recently, NVIDIA has indicated its intention to enter the humanoid robotics industry.
Fourthly, the robust development of new energy vehicles also drives the application of HDI, FPC, and other products in ADAS and smart cockpits. The automotive industry's requirements for PCBs are diverse, with single and double-sided panels, 4-layer boards, and 6-layer boards accounting for 26.93%, 25.70%, and 17.37% respectively, totaling about 73%. HDI, FPC, and IC substrates account for 9.56%, 14.57%, and 2.38% respectively, totaling about 27%. It is evident that multi-layer PCBs remain the main demand in automotive electronics. The demand for automotive PCBs is primarily for 2-6 layer boards, which account for about 2% of the total cost of electronic devices in vehicles.
Looking back at the development of the PCB industry over the past year, the market has shown price reductions and intense competition, but it has also demonstrated investment expansion and the vigorous development of high-end categories. All these positive signals indicate the rebirth and transformation of the industry.High-end PCBs are pinned with high expectations
Looking at the development process of the PCB industry, developed countries such as Europe, America, and Japan started early, have mature industries, and have obvious competitive advantages. Data shows that before the 21st century, the United States, Japan, and Europe accounted for more than 70% of the global PCB production value. Since 2000, the Asian PCB industry has begun to rise comprehensively, especially China, which, with its all-round advantages in resources, policies, and industry aggregation, has begun to develop the PCB industry with all its strength.
In the process of the global industry center shifting to Asia, China has become the global manufacturing center for PCBs. Data shows that since 2006, China officially surpassed Japan to become the world's largest PCB production base. In 2022, the total output value of China's PCB industry has reached 44.2 billion US dollars, accounting for 54.1% of the global total. In recent years, as more and more companies increase their investment in technology research and development and industry, the cluster advantages of China's PCB industry have become more obvious. Many PCB manufacturers have formed their own competitive advantages and bargaining power in various sub-segments. However, it is worth noting that China still needs to improve its technology and production capacity in the field of high-end PCBs.
With the rapid development of global electronic information technology, applications such as 5G, AI, cloud computing, and big data are accelerating, which puts higher demands on the performance of PCBs, such as high frequency, high speed, high voltage, heat resistance, and low loss. This has led to a strong demand for products such as large-sized, multi-layered, high-order HDI, and high-frequency high-speed PCBs.
For example, just looking at the change in the number of layers of PCBs, AI models need to improve computing power to manage increasing amounts of data. The packaging base of the existing mainstream servers and memory is generally 6-16 layers. Entering the era of large-scale commercial use of artificial intelligence, high-end servers with more than 16 layers will become the mainstream of the market. Even as technical requirements continue to improve, the number of PCB layers will also continue to increase, and products with more than 20 layers will gradually increase the market supply. Among them, the PCBs of servers in the AI training stage will generally reach more than 20 layers. Higher-end PCBs will undoubtedly provide more stable and efficient support for AI operations.
Overall, high-end PCBs have high reliability and stability, high integration and performance, low power consumption and high transmission rate, and long service life and low maintenance costs. At present, many industry chain manufacturers have increased their layout of high-frequency high-speed PCB boards and other high-end PCBs.
For example, Peng Ding Holdings' AI server board has begun mass production; Shengyi Electronics has successfully produced a number of PCBs for AI server products, and some projects have entered the mass production stage; Zhongjing Electronics' FPC products have been used in small batches in the field of humanoid robots; Sihui Fushi can provide new automotive electronics PCBs, including millimeter-wave radars.
Chongda Technology claims to accelerate the expansion of high-end board production capacity, and Ke Xiang shares plans to invest 2 billion to build a new high-end PCB intelligent manufacturing factory. Recently, related projects in many places have also been signed and started, indicating that the market for high-frequency high-speed high-layer high-order PCBs may continue to flourish.
The investment direction of the industry also implies the bright future of multi-layer boards. According to the data released by CINNO Research, from January to June 2023, the investment funds in the Chinese (including Taiwan) circuit board industry mainly flowed to multi-layer boards, with an amount of about 82.6 billion yuan, accounting for 58.3%; the total investment amount of IC substrates is about 25.5 billion yuan, accounting for 18.1%; the total investment amount of copper-clad board is about 17.3 billion yuan, accounting for 12.2%; the total investment amount of FPC is about 9.4 billion yuan, accounting for 6.6%.
Looking at the market value of high-end PCBs, according to the latest report "Global High-end PCB Market Report 2024-2030" by the QY Research research team, it is expected that the global high-end PCB market will reach 115.34 billion US dollars by 2030, and the compound annual growth rate (CAGR) in the next few years will be 6.8%.Looking forward to 2024, high-end PCBs are expected to play a significant role, with advanced products anticipated to continue penetrating fields such as AI servers, new energy vehicles, and 5G. Industry companies are also focusing on these areas to compete.
PCB, known as Printed Circuit Board, also referred to as a printed wiring board, is an indispensable key interconnect in electronic products and is acclaimed as the "mother of electronic products."
As the foundation of the electronic information industry, the PCB printed circuit board industry has a vast market size. According to the "2023-2028 China Printed Circuit Board (PCB) Industry Development Trend and Forecast Report" released by the China Business Industry Research Institute, the market size of China's PCB industry reached 307.816 billion yuan in 2022, and the market size has increased to 309.663 billion yuan in 2023, with an expected increase to 330.071 billion yuan in 2024.
Looking at the regions, global PCB manufacturing enterprises are mainly distributed in areas such as Mainland China, Taiwan, Japan, South Korea, the United States, Europe, and Southeast Asia, with Mainland China still occupying the world's first important position.
From the perspective of application scenarios, communication and computers are the main application fields of PCBs, accounting for nearly 70% of the global market share.
It is in such a market growth context, with Mainland China's PCB industry having significant advantages, that news of PCB manufacturers going bankrupt and restructuring often comes to light.
Advertisement
01
Multiple PCB factories face bankruptcy difficulties
Recently, a reorganization investor recruitment announcement from Guangzhou Taihua Multilayer Circuit Co., Ltd. has sparked heated discussions in the industry. Although Guangzhou Taihua's poor management led to consecutive years of losses and has long been suspended for rectification, it is not uncommon for PCB manufacturers to fall into reorganization or even bankruptcy. However, as a veteran PCB enterprise with nearly twenty years of production and operation, and as a wholly-owned subsidiary of the A-share listed company Chaohua Technology, the path of self-rescue through reorganization for Guangzhou Taihua is still lamentable.Coincidentally, at the beginning of this year, another established PCB manufacturer went bankrupt and was liquidated. This company was Kunshan Quanying Electronics Co., Ltd. In January, according to the National Enterprise Bankruptcy Reorganization Case Information Network, Kunshan Quanying Electronics Co., Ltd. had entered the bankruptcy liquidation process. In accordance with relevant regulations, the labor contracts between the company and its employees were terminated on January 31, 2024. The wages and economic compensation owed by the company will be investigated and publicized by the administrator according to law, and will be settled from the bankruptcy estate in accordance with relevant regulations.
In addition to the aforementioned Guangzhou Taihua and Kunshan Quanying Electronics facing difficulties, since 2023, more than 20 PCB-related companies have been insolvent and declared bankruptcy. For example, Shenzhen Xingfa Inspiration Circuit Board Co., Ltd., Kunshan Huasheng Circuit Board R&D Base Co., Ltd., Jiangxi Xinhua Sheng Electronic Circuit Technology Co., Ltd., Meizhou Huasheng Circuit Board Co., Ltd., and Shenzhen Senyutong Precision Circuit Co., Ltd. have all fallen into bankruptcy crises.
The dynamic evolution of the PCB market, like a mirror, reflects the harsh reality of market competition and highlights the urgency of accelerating industry consolidation.
The negative impact of accelerated internal competition is not limited to the shutdown of a batch of enterprises; the product prices of PCB listed companies and the revenue and profits of many manufacturers have also been continuously declining in this process.
02
Accelerated internal competition, with 80% of listed companies affected
The overall prosperity of the PCB industry has significantly declined since the fourth quarter of 2022, failing to continue the high growth momentum of 2021. In fact, after several years of strong expansion, coupled with the current industry chill, the release of new expanded production capacity by enterprises is affected, and domestic PCB production capacity may take a longer time to digest. In addition, stimulated by the market environment and objective factors, manufacturers have over-prepared inventory in advance to prevent supply chain risks, which has prematurely exhausted market demand.
Under fierce competition, some enterprises have adopted malicious competition strategies to seize market share, leading to a significant drop in PCB product prices. For example, in the first quarter of last year, some PCB manufacturers successively reduced prices for automotive PCB products, with a strategy of reducing prices by 10% to 15% to grab orders, a price reduction range that is rare in recent years.
Under heavy pressure, many manufacturers have issued annual performance loss announcements, and some small and medium-sized enterprises are facing survival pressures.According to incomplete statistics, there are currently more than 30 PCB companies listed on the A-share market, including Peng Ding Holdings, Dongshan Precision, Shennan Circuits, Hu Die Shares, Jingwang Electronics, and others. Looking at the performance in 2023, in the face of insufficient order volumes and a significant decline in product prices, except for five companies including Hu Die Shares, Aisikang, Yidun Electronics, Tianjin Pulin, and Founder Technology, which saw an increase in net profits compared to last year, the net profits of more than 20 other companies have all declined year-on-year.
Most companies have seen their profit margins squeezed, falling into a situation of "increasing revenue but not profits" or a double decrease in revenue. Among them, PCB manufacturers whose main customers are consumer electronics are the first to be affected; while companies whose products are mainly deployed in downstream application markets such as automotive electronics and new energy have been relatively less impacted.
Another point that can be observed from the performance forecasts and annual reports of these companies is the phenomenon of the rich getting richer among domestic PCB manufacturers. The main PCB manufacturers occupy the vast majority of the market share, while the remaining small and medium-sized companies have to accelerate internal competition in the remaining limited space.
03
Market Preliminary Recovery
In fact, since the fourth quarter of 2023, many PCB companies have indicated that the current situation has improved compared to the third quarter.
Against the backdrop of a recovery in consumer demand and a buying frenzy triggered by the release of new machines in the third quarter, the output of the PCB industry has increased, and the inventory turnover rate has improved. However, the overall industry inventory is still at a high level, and with the rise in mobile phone market demand, the de-stocking effect in the fourth quarter has accelerated.
Shiyun Circuits stated in early December 2023, "The current utilization rate of production capacity is between 85% and 90%, slightly higher than in the third quarter"; a person from the securities department of Zhongjing Electronics said that the overall utilization rate of production capacity is better than in the third quarter, and there are signs of recovery internally within the company.
Entering January 2024, looking at the current situation, issues such as price declines (especially a significant drop in the price of HDI-high density interconnect boards), overcapacity, insufficient demand, and future uncertainties are still widespread, but they have entered the final stage.Next, the industry must re-enter a new growth trajectory.
04
PCB is entering a new growth trajectory
The major driving factors for the PCB market in 2024 include:
Firstly, the high-endization of smartphones has simultaneously driven the demand for PCBs. Canalys data shows that in the third quarter of 2023, global smartphone market sales declined year-on-year, but the domestic high-end smartphone market sales grew by 12.3% year-on-year; additionally, according to IDC data, the shipment of foldable smartphones in China in the first half of 2023 was 2.27 million units, a year-on-year increase of 102%. This indicates that the smartphone market is trending towards "high-endization," with the increase in foldable smartphones driving the demand for high-end PCB categories.
Secondly, the rapid development of AI has also brought structural opportunities to the industry. The advancement of AI technology has driven the demand for high-performance computing chips, directly boosting the scale of the PCB industry. With the upgrade of the PCIe protocol, the increase in transmission rates, and the demand for more PCB layers, the market's requirements for PCB materials and manufacturing processes are continuously improving, thereby increasing the value of PCBs. For example, in the AI server market ignited by ChatGPT, the high demand for computing power has led to a strong demand for products such as large-sized, multi-layer, high-density HDI, and high-frequency high-speed PCBs.
Thirdly, robotic products also require a large number of scenarios with flexibility, foldability, and high precision, necessitating the use of many supporting products such as FPC (Flexible Printed Circuit). Recently, NVIDIA has indicated its intention to enter the humanoid robotics industry.
Fourthly, the robust development of new energy vehicles also drives the application of HDI, FPC, and other products in ADAS and smart cockpits. The automotive industry's requirements for PCBs are diverse, with single and double-sided panels, 4-layer boards, and 6-layer boards accounting for 26.93%, 25.70%, and 17.37% respectively, totaling about 73%. HDI, FPC, and IC substrates account for 9.56%, 14.57%, and 2.38% respectively, totaling about 27%. It is evident that multi-layer PCBs remain the main demand in automotive electronics. The demand for automotive PCBs is primarily for 2-6 layer boards, which account for about 2% of the total cost of electronic devices in vehicles.
Looking back at the development of the PCB industry over the past year, the market has shown price reductions and intense competition, but it has also demonstrated investment expansion and the vigorous development of high-end categories. All these positive signals indicate the rebirth and transformation of the industry.High-end PCBs are pinned with high expectations
Looking at the development process of the PCB industry, developed countries such as Europe, America, and Japan started early, have mature industries, and have obvious competitive advantages. Data shows that before the 21st century, the United States, Japan, and Europe accounted for more than 70% of the global PCB production value. Since 2000, the Asian PCB industry has begun to rise comprehensively, especially China, which, with its all-round advantages in resources, policies, and industry aggregation, has begun to develop the PCB industry with all its strength.
In the process of the global industry center shifting to Asia, China has become the global manufacturing center for PCBs. Data shows that since 2006, China officially surpassed Japan to become the world's largest PCB production base. In 2022, the total output value of China's PCB industry has reached 44.2 billion US dollars, accounting for 54.1% of the global total. In recent years, as more and more companies increase their investment in technology research and development and industry, the cluster advantages of China's PCB industry have become more obvious. Many PCB manufacturers have formed their own competitive advantages and bargaining power in various sub-segments. However, it is worth noting that China still needs to improve its technology and production capacity in the field of high-end PCBs.
With the rapid development of global electronic information technology, applications such as 5G, AI, cloud computing, and big data are accelerating, which puts higher demands on the performance of PCBs, such as high frequency, high speed, high voltage, heat resistance, and low loss. This has led to a strong demand for products such as large-sized, multi-layered, high-order HDI, and high-frequency high-speed PCBs.
For example, just looking at the change in the number of layers of PCBs, AI models need to improve computing power to manage increasing amounts of data. The packaging base of the existing mainstream servers and memory is generally 6-16 layers. Entering the era of large-scale commercial use of artificial intelligence, high-end servers with more than 16 layers will become the mainstream of the market. Even as technical requirements continue to improve, the number of PCB layers will also continue to increase, and products with more than 20 layers will gradually increase the market supply. Among them, the PCBs of servers in the AI training stage will generally reach more than 20 layers. Higher-end PCBs will undoubtedly provide more stable and efficient support for AI operations.
Overall, high-end PCBs have high reliability and stability, high integration and performance, low power consumption and high transmission rate, and long service life and low maintenance costs. At present, many industry chain manufacturers have increased their layout of high-frequency high-speed PCB boards and other high-end PCBs.
For example, Peng Ding Holdings' AI server board has begun mass production; Shengyi Electronics has successfully produced a number of PCBs for AI server products, and some projects have entered the mass production stage; Zhongjing Electronics' FPC products have been used in small batches in the field of humanoid robots; Sihui Fushi can provide new automotive electronics PCBs, including millimeter-wave radars.
Chongda Technology claims to accelerate the expansion of high-end board production capacity, and Ke Xiang shares plans to invest 2 billion to build a new high-end PCB intelligent manufacturing factory. Recently, related projects in many places have also been signed and started, indicating that the market for high-frequency high-speed high-layer high-order PCBs may continue to flourish.
The investment direction of the industry also implies the bright future of multi-layer boards. According to the data released by CINNO Research, from January to June 2023, the investment funds in the Chinese (including Taiwan) circuit board industry mainly flowed to multi-layer boards, with an amount of about 82.6 billion yuan, accounting for 58.3%; the total investment amount of IC substrates is about 25.5 billion yuan, accounting for 18.1%; the total investment amount of copper-clad board is about 17.3 billion yuan, accounting for 12.2%; the total investment amount of FPC is about 9.4 billion yuan, accounting for 6.6%.
Looking at the market value of high-end PCBs, according to the latest report "Global High-end PCB Market Report 2024-2030" by the QY Research research team, it is expected that the global high-end PCB market will reach 115.34 billion US dollars by 2030, and the compound annual growth rate (CAGR) in the next few years will be 6.8%.Looking forward to 2024, high-end PCBs are expected to play a significant role, with advanced products anticipated to continue penetrating fields such as AI servers, new energy vehicles, and 5G. Industry companies are also focusing on these areas to compete.