PCB yield is predominant in the electronics industry

PCB yield is predominant in the electronics industry

According to research reports released by relevant institutions, the current short-term prosperity of the PCB industry chain is not a fundamental improvement in the prosperity of the industry, and the turning point of the industry has not yet arrived. However, in the long run, electronic products are still in continuous innovation.

As an important carrier of electronic products, the PCB industry chain will still benefit from the growth effect brought about by continuous innovation in the long run. The bank believes that the important innovation directions of the future industry chain mainly include automobiles, servers, and packaging substrates, and it is recommended to focus on long-term growth directions.

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Yield rate of the PCB sector is predominant

In November 2022, according to Shenwan Industry Classification (2021), the monthly rise of the PCB sector in the electronics industry segment was 5.4%, outperforming the average rise and fall of the electronics industry of 3.8%, ranking second in rise and fall.

From the monthly rise and fall of major manufacturers at home and abroad in the PCB industry chain, it can be seen that whether it is upstream PCB raw materials (copper foil, glass fiber cloth, resin), midstream copper clad laminates, or midstream and downstream PCB boards, the entire industry chain is experiencing changes.

After the sluggish performance throughout the year, the stock price rebounded well in November.

yield rate of the PCB sector is predominant

Supply squeezing made raw materials more expensive

From the perspective of the supply side, PCB upstream raw materials have been facing price reduction pressure since the beginning of this year (the annual change of LME copper price is -15%, the price of China’s 35um copper foil has dropped by 23% from the beginning of the year to November 30, and the processing fee has dropped by -50%.

The major manufacturers of glass fiber cloth/resin had poor operations in the first three quarters), especially when the operating pressure in the third quarter of the traditional peak season of the electronics industry did not decrease but rose, the industry chain began to become more pessimistic about future demand expectations, Pessimistic expectations will lead to a reduction in effective production capacity (tail manufacturers are cleared, production capacity is actively compressed by 10% to 40%).

From the perspective of the demand side, although the first three quarters were relatively weak, at the end of October, various terminals entered the rhythm of stocking up at the end of the year. The bank tracked the upstream, midstream and downstream companies and learned that the utilization rate of all links in the industrial chain has improved. The operating rate has generally returned to 80% to 90%, and some large companies are basically close to full production.

Under the circumstances that the supply has been compressed and the demand has improved month-on-month, there is a short-term mismatch between supply and demand, and upstream raw materials have begun to increase in price. 

The bank observed that copper foil prices have rebounded twice from the lowest point of the year at the end of October to the end of November. , the total rebound rate reached 11.85%. From the monthly revenue data of Taiwanese copper foil and glass fiber cloth manufacturers, the bank can see that the year-on-year decline in revenue has also narrowed.

PCB raw materials become more expensive

Long-term direction of innovation is more important

The bank believes that in November, the industrial chain ushered in a month-on-month improvement in the demand side under the condition of compressed supply, which has caused the current hot scene of the industrial chain, which is finally reflected in the prices of upstream raw materials and the utilization rate of midstream and downstream.

However, it is worth noting that the bank believes that the current prosperity of the PCB industry is mainly due to the short-term mismatch between supply and demand. However, it is difficult to ask for prices downstream, which reflects that the demand has not really recovered, and its strength is still difficult to support the price increase of the industrial chain.

Under such circumstances, the bank believes that it is necessary to be alert to the risk of overdrafting demand in 23Q1 by the current stocking behavior, and the price increase of upstream raw materials will intensify the confrontation between supply and demand, triggering negative feedback from downstream to upstream demand, thereby deepening the deterioration of the industrial chain.

The bank believes that the inflection point of the industry has not yet arrived, but in the long run, there are many opportunities for value enhancement brought by innovation in some subdivisions. It is precisely because of the long-term logical support that the stock price will be more significant when the fundamentals of the industry chain improve in the short term. Therefore, the bank recommends paying attention to long-term investment opportunities in the sector.

The important innovation directions of the future industrial chain mainly include automobiles (high current and high voltage require thick copper plates, SiC volumes bring incremental market for lining boards, and domain controllers allow automotive PCBs to be upgraded to HDI PCB), servers (new platform upgrades require higher layers It is recommended to focus on the long-term growth direction.

In the future, the core logic of China’s PCB companies surpassing foreign-funded PCB companies: based on the strong demand of China’s independent brands, taking advantage of cost leadership, reporting a firmer belief, and continuing “R&D investment plus capacity expansion”. At the same time, foreign-funded enterprises are already in a conservative situation, so China’s PCB companies are expected to replace and overtake.

PCB industry


With the continuous development of the global electronic process, the demand for 5G, cloud servers, and automotive electronics will continue in the future. It is expected that the PCB industry, which is the “lifeblood” of electronic products, will grow steadily at a CAGR of 3.1%. Under the current global competition pattern, the PCB output value in China accounts for 50%.

However, from the analysis of enterprise ownership, foreign-funded PCB manufacturers (Taiwan-funded, Japanese-funded) are still in the leading position, and the future opportunities for mainland PCB manufacturers lie in the large replacement space.

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