Automotive electronics PCB market grows rapidly
PCB is an important support for electronic components. PCB (printed circuit board) is an important electronic component, a support for electronic components, and a carrier for electrical connections of electronic components. The PCBA is made after the empty PCB board is passed through the SMT assembly, and then the entire process of the DIP plug-in. Simply speaking, PCBA is the PCB with the components attached.
Among the downstream applications of PCB, the automotive field is an important application scenario. According to the data of Qianzhan Industry Research Institute, the downstream application scenarios of PCB will be broad in 2020, including almost all electrical circuit products.
Communication electronics is the largest downstream application of PCB, accounting for 35% of the application share, while automotive electronics currently accounts for 16%, which is one of the important downstream applications of PCB.
The application scenarios of automotive PCB are rich
PCBs are used in multiple parts of vehicles. In the whole car, PCBs are currently used in many fields, including control systems, audio-visual systems, GPS modules, etc., with rich application scenarios. We believe that as the degree of automotive electronics continues to increase in the future, the demand for automotive PCB applications will continue to increase, and the development of automotive PCBs is in good shape.
According to the types, the main types of automotive PCBs include 5 categories, namely flexible PCB boards (FPC), rigid PCB boards (RPCB), rigid-flex boards, HDI boards and LED PCBs. Due to the different materials and characteristics, each type of PCB has different application scenarios. HDI, RF boards and flexible boards for automobiles are highly related to automobile intelligence, and the proportion of applications keeps growing.
In addition, high-current PCBs are highly related to new energy vehicles and can maintain a slight growth. HDI, RF boards and flexible boards require a lot of investment.
The value of PCB single vehicle is not high at present, and it is expected to continue to increase with the promotion of the new four modernizations of automotive, that is electrification, networking, intelligence, and sharing in the future. As of July 2019, the value of a single PCB for low-end, mid-range, and high-end cars is US$30-40, US$50-70, and US$100-150, respectively. We expect that with the continuous advancement of the new four modernizations of automobiles in the future, the value of a single PCB is expected to continue to increase.
The market space is vast, and the Asia-Pacific market is growing rapidly
The global automotive PCB market continues to grow. According to the forecast of Verified Market Research, the automotive PCB market will maintain growth from 2021 to 2028, with an interval CAGR of 5.30%. The market size will increase from US$7.81 billion in 2020 to US$12.48 billion in 2028. The Asia Pacific region is the largest market and the fastest growing market. In terms of regions, the automotive PCB market in the Asia-Pacific region ranks first in the world, accounting for 38% of the global market share.
At the same time, according to the forecast of Mordor Intelligence, the market in the Asia-Pacific region will become the market with the highest growth rate in the future. Among them, we believe that the Chinese market will also become a fast-growing market full of opportunities.
The new four modernizations of automotive promote the value of single-vehicle PCB
The proportion of automotive electronics in the cost of a complete vehicle is gradually increasing. The penetration rate of automotive electronics continues to increase, and the trend of electronification is obvious.
It is expected to reach a penetration rate of around 50% in 2030. 1) Under the wave of intelligence, the penetration rate and automation of ADAS continue to increase, and the degree of automotive electronics is comprehensively improved; 2) Under the wave of electrification, the penetration of new energy vehicles is accelerated, and the cost of electronic components for a single vehicle is at least double that of traditional cars. Electronic devices account for about 25% of the cost of traditional high-end cars, and 45%-65% in new energy vehicles; 3) Some automotive electronic components originally used in mid-to-high-end models, such as anti-lock braking systems (ABS), electronic stability control systems (ESC), reversing camera system, etc. are accelerating their penetration into low-end and mid-range models.
The new trend of new energy vehicles has led to a further rapid increase in the proportion of automotive electronics. New energy vehicles account for a higher proportion of automotive electronics. The proportion of automotive electronics in the cost of a complete vehicle varies. Among them, the proportion of compact passenger car costs reaches 15%, that of mid-to-high-end passenger cars accounts for 28%, and that of hybrid passenger vehicles accounts for 47%. %, pure electric passenger vehicles accounted for 65%.
Under the new four modernizations, the proportion of automotive electronics in the whole vehicle continues to increase. In automotive electronics applications, PCB is an important base support, which increases the application requirements of automotive PCBs.
Intelligent driving promotes the demand for ADAS sensor PCB applications
1. ADAS sensors are developing rapidly
Under the intelligentization, the demand for automotive PCBs increases, and automotive sensors require PCBs. Intelligent driving of automobiles has become the core goal of industrial development. Ensuring driving safety and realizing unmanned driving require a variety of sensors for automobiles. Among these are microchips that control engine performance and vehicle safety, and cars increasingly rely on reliable printed circuit boards. All safety features like drowsy driver alert, blind spot detection require PCBs.
The penetration rate of ADAS continues to increase, and the assembly volume is expected to continue to grow in the future. According to data from Automotive Research Institute, from January to November 2020, the number of passenger vehicles equipped with L2 automatic driving functions was 2.60 million, a year-on-year increase of 118.9%; the assembly rate was 16.1%, an increase of 9.3 percentage points from the same period last year. Despite multiple negative impacts, L2 assembly volumes rose against the trend, and the market showed strong demand.
Autonomous driving drives camera and radar requirements, and 1V1R is currently the mainstream application. From January to November 2020, the mainstream solutions for L2 functions include 1V1R (1 camera + 1 forward-facing millimeter-wave radar), 1V3R (1 camera + 1 forward-facing millimeter-wave radar + 2 back-angle radar) with a combined market share of 89.3%, of which the 1V1R solution accounted for the largest share at 60.5%.
New car manufacturers and some car companies have adopted 2 rear angle radars. It is expected that the application of cameras and millimeter wave/lidar will increase in the future.
Arbe expects that the proportion of autonomous driving above L3 level will increase in the future, driving the increase in the number of sensors. It is estimated that by 2025, the proportion of L3 autonomous driving will reach about 10%, and that of L4-L5 will only be 1%. Each level of autonomous driving has different sensor requirements.
It is estimated that L5 will require a total of 32 sensors, including 10 ultrasonic sensors. 6 short-range radar sensors, 2 long-range radar sensors, 1 lidar sensor, etc. The continuous development of autonomous driving will drive the increase in the number of sensors, which will further increase the demand for automotive PCBs.
2. 77GHz has become a development trend, and PCB volume and price are rising
Millimeter wave radar is based on PCB. The composition of millimeter wave radar includes control circuit, DSP, algorithm, PCB, etc. The PCB is the basic support, which has an important impact on the performance of the millimeter-wave radar. As of October 2019, PCB accounted for about 10% of the cost structure of millimeter-wave radar in China. 77GHz millimeter-wave radar has become mainstream and has significant advantages over 24GHz.
At present, countries allocate different frequency bands for millimeter-wave radar, mainly focusing on 24GHz and 77GHz, and a few countries (such as Japan) use the 60GHz frequency band. Compared with the 24GHz millimeter-wave radar, the 77GHz radar has obvious advantages in terms of size, velocity resolution, and signal-to-noise ratio. In December 2018, the monthly shipments of 77GHz millimeter-wave radars surpassed those of 24GHz millimeter-wave radars. We expect that the application of 77GHz millimeter wave radar will gradually increase in the future.
77GHz millimeter-wave radar has higher requirements for PCB, which will increase the value of PCB. In millimeter-wave radar, the PCB has a certain influence on its performance, so the performance requirements for the PCB increase accordingly. Including the electrical characteristics of materials, the reliability of materials needs to be strictly considered to improve antenna gain and scanning angle or range, to meet radar detection and positioning accuracy, and to ensure stability in different working environments such as different temperatures or humidity.
Manufacturers actively expand production to cope with future demand
Automotive PCB-related companies are actively expanding production, and the industry’s production capacity has increased to cope with the expansion of demand. Many automotive PCB-related companies are currently planning to raise funds and expand production, such as Olympic Circuit Technology, Kinwong Electronic, etc. The overall industry production capacity is expected to continue to increase rapidly to cope with the continuous improvement of downstream demand.
1. The industry concentration is low, and a hundred schools of thought contend
CMK, which has the largest share, occupies 8.2% of the market share. At present , the share of Chinese manufacturers is still small, and there is considerable room for improvement.
2. The threshold for automotive electronics is high, and there are many industry certification standards
The threshold for the automotive PCB industry is high. The automotive electronics industry needs to pass multiple vehicle-level industry certifications. Vehicle-level manufacturing is difficult and requires high technical requirements. Different from the manufacturing process requirements of consumer electronics, automobiles have higher requirements for the safety factor and reliability, and it is necessary to ensure that road traffic is foolproof.
Automotive electronic components have different requirements for the external working environment, such as temperature, humidity, mildew, dust, water and harmful gas erosion, etc., depending on the installation location, but generally greater than the consumer grade.
The working environment needs to be able to adapt to the temperature of the body from -40 degrees to 85 degrees or even higher, and the operating life needs to be increased to more than 15 years. Strict requirements set higher standards for the technical level of manufacturers in the automotive electronics industry chain.
3. Downstream customer resources are important
The automotive electronics industry is very important for the development of downstream end customer resources. Most of the downstream end customers of automotive electronics are Tier1 auto manufacturers or OEMs. The orders and performance of automotive electronics manufacturers are directly affected by the needs of downstream customers, so it is very important to develop downstream customer resources.
At present, from a global perspective, downstream customers are strong, and the recognition of leading end customers may greatly improve the performance of manufacturers.
Expand the development of high-end automotive PCB products to improve profitability. Chinese automotive PCB manufacturers are actively developing high-end PCB products such as ADAS main control boards, HDI, high-density multi-layer PCB boards, etc. After successful development, the added value of PCB manufacturers’ products will increase, and profitability is also expected to rise.
In terms of profitability, manufacturers perform differently, but in 2021 they will all be affected by rising raw material prices. Comparing the gross profit margin of various manufacturers, there is a differentiation situation. The gross profit margins of Wus Printed Circuit, Kinwong Electronics, Olympic Circuit Technology and Sihui Fuji Electronics showed an overall upward trend from 2017 to 2020, mainly due to the improvement of product structure and the increase in sales of high-end products.
However, Ellington Electronics will show a sharp decline in 2020, mainly due to the decline in production volume in 2020, the decline in capacity utilization, and the increase in unit fixed costs. In 2021, all manufacturers will be affected by the increase in the cost of upstream raw materials, resulting in varying degrees of decline in gross profit margins, and the overall downward trend in 2022Q1 will continue. We believe that as the price of upstream raw materials gradually stabilizes and declines, the gross profit margin of PCB manufacturers may show a trend of stabilization and recovery.
Actively expand Tier1/car enterprise customers and open up downstream terminal applications. The downstream of the automotive electronics industry chain is Tier1 manufacturers/car companies, and the expansion of end customers will provide strong sales support for products. Chinese automotive PCB manufacturers are vigorously developing downstream customers.
For example, Wus Printed Circuit has obtained the recognition of Bosch, the world’s leading tier1 manufacturer, and China Continental. Kinwong Electronics has cooperated with tier1 manufacturers Denso, Bosch, Aptiv, and OEMs such as Valeo, Toyota and others have cooperative relations.