-
- August 30, 2022
- PCB news
- (0)
- 06 mins
New energy vehicles – the biggest growth point in PCB market in 2022
Recently, the prices of some bulk commodities represented by aluminum and copper have continued to weaken, which has greatly reduced the production costs of downstream manufacturers and improved the marginal gross profit margin of companies such as PCB.
According to statistics, in 2021, due to the increase in the prices of raw materials such as bulk commodities, CCL enterprises have raised prices more than five times last year in order to pass on costs. This situation has hurt downstream PCB companies, so that most PCB companies’ net profit fall sharply due to cost rise.
However, the situation has changed significantly this year, especially driven by new energy vehicles, and with the background of falling costs, the demand for automotive PCBs is expected to usher in an explosion.
Raw material price cut, gross profit margin ratio improved
As we all know, last year, affected by factors such as the continuous price increase of bulk commodities and the strong downstream demand, the price of copper clad laminates continued to increase in order to pass on the cost. According to incomplete statistics, the number of price increases before the third quarter was more than five times.
Due to the highly concentrated market share of CCL, it has a strong right to speak in the industry chain. When its price increases, downstream PCB manufacturers usually have to passively accept it, and there is too much room for bargaining. China’s PCB market has long been a red sea. In a fully competitive market, the market share is relatively scattered.
Therefore, when facing the price increase of copper clad laminates, PCB companies cannot smoothly pass the cost on to terminal manufacturers, so that in 2021 Although the revenue of most PCB companies has increased significantly in 2018, their profits and gross profit margins have been eroded, and the industry has generally shown a phenomenon of increasing revenue but not increasing profits.
According to statistics, among the 35 Chinese PCB companies, 33 will achieve revenue growth in 2021, with an average increase of 38%. Only Shanghai Electric Power Co., Ltd. and ST Fangke’s revenue will decline, with an average decline of 5%; but the net profit performance is average, of which the net profit is loss. There are 16 entrepreneurs with a year-on-year decline, accounting for 46%, with an average decline of 38%; the 19 companies whose profits have increased, except for 5 CCL manufacturers and Tianjin Pulin, have an average increase of 26%.
However, this situation has changed this year. Since the third quarter of last year, the price of copper clad laminates has loosened, and it has begun to fall in the fourth quarter. In recent years, the price of copper, the main raw material of upstream copper clad laminates, has been weakening, the price of epoxy resin has fluctuated lower, and the price of electronic glass fiber has dropped.
From the perspective of raw materials, although the LME copper price rose slightly in the first quarter, it began to plummet after that. As of June 17, it fell nearly 6% during the year to $9,140/ton. In terms of epoxy resin, according to data, since February this year, the market price of epoxy resin E-51 in East China has been decreasing continuously, and the price has accelerated since May.
In addition, the gross profit margin of major CCL manufacturers in the first quarter of 2022 generally declined compared with the end of 2021, and the cost pressure of PCB manufacturers eased slightly. According to wind data, as of the first quarter of this year, among the 35 PCB companies, 19 had a month-on-month increase in gross profit margin, and 16 had a slight drop in the month-on-month.
It is not difficult to find that in the first quarter of this year, the gross profit margin of more than half of PCB companies has been improving month-on-month. With the continuous decline of epoxy resin and copper prices in the second quarter, the gross profit margin of PCB companies in the second quarter is expected to be further improvement.
Automotive PCB may become the biggest bright spot
The data shows that under the background of the continuous increase in the penetration rate of new energy vehicles, the continuous upgrading of ADAS and the increasingly rich application of smart cockpits, the consumption of bicycle PCBs is increasing. The value of the PCB of a bicycle has also surged from RMB 400 for traditional fuel vehicles to RMB 2,000-3,000 for smart electric vehicles.
In addition, according to Prismark’s statistics and forecasts, the global automotive PCB market will be US$6.132 billion in 2020, and will grow at a compound growth rate of 9% from 2020 to 2024. By 2024, the global automotive PCB market will reach US$8.736 billion.
Market weakness in consumer electronics and communications
According to industry insiders, at present, the demand in the fields of consumer electronics and communications is very weak. In general, the demand for new energy vehicles and data centers will be relatively much better, especially in China’s new energy vehicle industry. There must be a substantial growth this year. And, on a full-year basis, automotive PCBs may be the only one to grow.
It is understood that due to the weak mobile phone market and the continuous decline in sales, major Chinese brand manufacturers have revised down their annual shipment forecasts, so that the consumer electronics industry’s prosperity has declined. Even for the full year, expectations are more pessimistic.
In terms of 5G base stations, China will build more than 650,000 new base stations in 2021. According to the plan of the Ministry of Industry and Information Technology, it plans to add 600,000 5G base stations this year, a decrease of 50,000 from last year. The slowdown in the progress of 5G construction, coupled with the release of large-scale production capacity, has brought price competition, and PCB manufacturers focusing on communication business have weak revenue growth and pressure on profits.
Considerable sales of new energy vehicles
Looking at the automotive field, with the easing of the epidemic in East China, sales of new energy vehicles have resumed growth. According to the data of the China Automobile Association, in May, the production and sales of new energy vehicles in China were 466,000 and 447,000 respectively, an increase of 49.5% and 49.6% month-on-month, and a year-on-year increase of 1.1 times.
From January to May, the production and sales of new energy vehicles in China were completed respectively 2.071 million and 2.003 million, both increased by 1.1 times year-on-year. The China Automobile Association stated that it is confident that the annual sales volume will exceed 5 million according to the monthly change.
“The electrification, intelligence, and networking of new energy vehicles have increased the use of chips, which directly drives the use of PCBs of bicycles. The PCB market for new energy vehicles will definitely continue to grow. It is predicted that there will be a year-on-year increase of 10% this year.” The aforementioned industry insiders said that car purchase subsidies are now being carried out everywhere, especially for new energy vehicles.
From the perspective of the secondary market, PCB manufacturer with a large proportion of business in the automotive field, such as Shanghai Electric Co., Ltd., have recently performed relatively strong stock prices, rebounding by more than 50% since the bottom of April. Some brokerage researchers said that they are optimistic about the performance of automotive PCB companies, and other high-quality companies will follow suit.
Generally speaking, the growth rate of the automotive PCB market is stable this year. Therefore, under the background of the drive of new energy vehicles and the reduction of superimposed costs , the demand for automotive PCBs is expected to usher in a big explosion.
