Development status of FPC industry
Table of Contents
FPC PCB is flexible PCB, referred to as soft board. It is a flexible PCB made of polyimide or polyester film as the base material. Compared with the traditional PCB rigid board, it has the advantages of high production efficiency, high wiring density, light weight, thin thickness, foldable bending, With significant advantages such as three-dimensional wiring, it is more in line with the trend of intelligence, portability, and thinning in the downstream electronics industry.
It can be widely used in aerospace, military, mobile communications, notebook computers, computer peripherals, PDAs, digital cameras and other fields or products and it is the fastest growing category in the PCB industry in recent years.
The main raw materials in the upstream of the FPC industry chain include flexible copper clad laminates (FCCL), cover films, components, shielding films, adhesive tapes, steel sheets, electroplating additives, dry films, etc.
Among them FCCL sheet films are common polyimide Amine film (PI), polyester (PET), polyethylene naphthalate (PEN), liquid crystal display polymer (LCP) and other polymer material plastic films; midstream is FPC manufacturing; downstream is various applications , including display/touch modules, fingerprint recognition modules, camera modules, etc., and the final applications include consumer electronics, communication equipment, automotive electronics, industrial control medical, aerospace and other fields.
In 2021, the global FPC market size is 18.2 billion US dollars, and it is expected to reach 28.7 billion US dollars in 2025, with an average annual compound growth rate of 12.06%. From the perspective of the competitive landscape, the top 3 FPC manufacturers in the world in 2019 are Mektec, Avary Holding and Sumitomo, which together account for 60.5% of the FPC market, with a high market concentration.
In recent years, with the acceleration of the upgrading of downstream terminal products and the increasing concentration of brands, higher requirements have been placed on the mass production capacity and technology research and development capabilities of FPC manufacturers. Relying on the existing technology and scale advantages, the leading FPC manufacturers actively carry out technology research and development and capacity expansion to achieve a new round of expansion of revenue scale.
Funds and customer channels constitute the entry threshold for the FPC industry
With the formation of an oligopolistic competition pattern in the FPC industry, for new FPC companies, the threshold for capital and customer access has been raised. From the perspective of capital access threshold, as a capital-intensive industry, the FPC industry has high requirements on the capital strength of enterprises for initial investment and continuous operation. Currently, a new PCB production line with an annual production capacity of more than one million square meters needs to invest at least several hundred million RMB.
At the same time, in order to maintain the sustainable competitiveness of products, manufacturers must continue to upgrade production equipment and processes, and maintain a high R&D investment to keep up with the pace of industry changes. In addition, FPC manufacturers also need to build factories in areas where downstream customers’ production is concentrated to maintain their fast supply and delivery capabilities.
From the perspective of customer access thresholds, when electronic product manufacturers choose PCB suppliers, they generally need to go through a long period of strict certification and assessment in 1-3 quarters. On the basis of forming a cooperative relationship, the two parties also gradually increase orders and supply. cooperation in a quantitative manner. In addition, once a long-term and stable cooperative relationship is formed, new FPC suppliers will not be easily activated, resulting in high customer acceptance barriers.
Technology evolution opens up competitive advantage
In the context of continuous technological upgrading of downstream consumer electronic products and the development of lighter, thinner and more intelligent products, FPC manufacturers need to continuously make technological improvements and breakthroughs to meet the development of downstream needs. At present, leading manufacturers in the industry are also continuously conducting technology research and development to open up their competitive advantages with other manufacturers.
Take Avary Holding, a leading FPC manufacturer, as an example. Avary Holding was established in April 1999. The company is mainly engaged in the design, R&D, manufacturing and sales of various PCBs. Since its establishment, the company has continuously upgraded its technology to enhance its competitive advantages. The minimum aperture/minimum line width of its PCB products can reach 0.025mm/0.025mm.
The next-generation PCB products SLP required by higher-end processes also have mass production capabilities. In-depth layout has also been carried out in R&D directions such as layers. After long-term development, its technology has gradually reached the leading level in the industry, which has established its dominant position as a leading manufacturer.
According to Prismark’s ranking of global PCB companies in terms of revenue from 2018 to 2022, Avary Holding ranked the world’s largest PCB manufacturer for five consecutive years from 2017 to 2021.
FPC scale effect further strengthens barriers
The gross profit margin of FPC products is low, and manufacturers need to continuously increase their scale to strengthen their industry barriers. Judging from the operations of well-known FPC manufacturers Avary Holding, Flexium Interconnect, Dongshan Precision, Hongxin Electronics, and Yidong Electronics, their gross profit margins in 2021 was 20.39%, 17.80%, 14.67%, 3.68%, and 27.89% respectively, and the overall gross profit margin is relatively low.
FPC manufacturers mainly form scale effects through expansion of production, strengthen industry barriers, in order to achieve the ultimate profit improvement purpose. Avary Holding continues to expand its FPC production capacity and upgrade its technology. In 2021, its fundraising project, Huai’an flexible multi-layer PCB expansion project, has been completed, and the investment plan for the first phase of the FPC project in Kaohsiung, Taiwan is also in progress, the increase in production capacity has continuously consolidated its competitiveness in FPC.
In general, the gross profit margin of FPC products is relatively low, and enterprises mainly realize the growth of revenue volume through economies of scale.
The share of Chinese manufacturers has increased rapidly
After years of development, the FPC industry has become a fully competitive industry in the world. Japan, South Korea, and Taiwan, China, have undertaken the transfer of the FPC industry from European and American countries and have grown rapidly, and currently occupy a dominant position in the FPC industry. Due to the late start of Chinese FPC companies, there is still a certain gap in comprehensive competitiveness compared with international leading companies.
However, in recent years, FPC companies such as Dongshan Precision, Hongxin Electronics, have developed rapidly, and they have continuously shortened the gap with other FPC companies. size and technical strength.
FPC is an important component of PCB, and the transfer trend of FPC industry can also be seen from the total transfer of PCB. Japanese and Korean PCB companies were the first to deploy FPC products, and Apple’s business accounted for a relatively high proportion. After the sales growth of Apple mobile phones slowed down in 2016, Japanese and Korean manufacturers began to be cautious about the capital expenditure of the FPC sector, the speed of product update and iteration slowed down, and the competitiveness gradually declined.
In the global PCB output value distribution in 2018, Japanese companies accounted for 37%, ranking first. In recent years, PCB manufacturers represented by Japanese companies are less willing to expand production and gradually withdraw, while mainland China actively undertakes industrial transfer, and PCB output value and its global share are rapidly increasing.
FPC enterprises strengthen industrial chain cooperation and improve supply chain security
In terms of upstream raw materials, flexible copper clad laminate (FCCL) is the most important substrate for the production of FPC, accounting for 40%, and all processing procedures of FPC are completed on FCCL. The global FCCL production capacity is mainly concentrated in Japan, mainland China, South Korea and Taiwan, China.
In the middle and lower reaches, with the further improvement of China’s FPC industry chain, the steady improvement of technical level and the continuous improvement of production capacity, Chinese FPC enterprises are able to meet the needs of new energy vehicles and emerging consumer electronic products for FPC, and the competitiveness of Chinese FPC enterprises will continue to increase. Market share will also increase accordingly.
Consumer electronics provide an opportunity for the localization of the FPC industry chain, and the time has come for automotive electronics to enter the FPC industry chain. The operating income of China’s leading FPC manufacturers has reached a scale of 100 million. They have expanded their production capacity through fundraising and investment projects and improved the degree of localization of FPC .