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- September 27, 2022
- PCB news
- (0)
- 07 mins
The overall performance of PCB manufacturers in the first half of 2022 improved
Under the combined influence of the continuous decline of upstream raw material prices and the steady recovery of downstream demand, the profitability of the PCB industry has improved significantly. In the first half of 2022, the overall business performance of PCB industry companies is improving, and the performance growth rate is generally 20%-30%.
In 2021, affected by the price increase of upstream raw materials, companies in the PCB industry generally experience a slowdown in performance growth or a decline in performance. However, since the beginning of the year, with the continuous decline in the prices of upstream materials such as copper, resin, and glass fiber, the profit margin level of the PCB industry has been improved, and the industry’s profitability has steadily recovered.
Costs drop, performance picks up
As of August 31, more than 20 listed PCB manufacturing companies have released performance reports for the first half of the year, and the industry’s operations are generally improving.
In the first half of the year, Avary Holding achieved a net profit attributable to its parent of 1.426 billion RMB, a year-on-year increase of 125.24%; Shennan Circuits achieved a net profit of 752 million RMB, a year-on-year increase of 34.1%; Dongshan Precision’s net profit attributable to its parent was 796 million RMB, a year-on-year increase 31.7%.
Suntak Circuit’s net profit attributable to its parent was 313 million RMB, a year-on-year increase of 27.81%; Victory Giant’s net profit attributable to its parent was 454 million RMB, a year-on-year increase of 16.01%; WUS’s net profit attributable to its parent was 534 million RMB, a year-on-year increase An increase of 11.16%.
In the first half of the year, when it comes to the gross profit margin of PCB business, Avary Holding was 19.52%, an increase of 1.27% over the same period of the previous year; Shennan Circuit’s was 27.34%, an increase of 1.45%; DSBJ was 16.51%, an increase of 1.56%; Suntak Circuit was 20.3%, an increase of 8.97%; WUS was 30.8%, an increase of 1.26%.
Affected by rising raw material prices, in 2021, the overall operating performance of Chinese PCB companies will show a downward trend, and some companies will experience negative growth in operating performance. While in the 2022 semi-annual report, PCB companies have stated that the company’s operating performance has improved due to factors such as the decline in raw materials and cost and expense control.
Divided by cost structure, in the cost structure of PCB, direct materials account for more than 60% of the cost of PCB products, and materials include copper clad laminates, prepregs, copper balls, electronic parts and other materials. Among the above materials, CCL is closely related to the quality and performance of PCB. Its production technology and supply level directly affect the quality of PCB, accounting for 30%-70% of the cost of PCB raw materials, and it is the most important raw material of PCB.
The price fluctuation of CCL is mainly affected by the price changes of raw materials such as copper foil, resin and glass fiber cloth. The aforementioned three materials account for about 40%, 25% and 20% of the cost of CCL respectively, and the total impact exceeds 80%. Among them, the components of copper foil price mainly include copper base price and processing fee.
Since 2022, copper prices have continued to fall. At the same time, since the beginning of the year, the prices of resin and glass fiber cloth have also dropped significantly. The fall in raw material prices has reduced the cost of PCBs. It is believed that the increase in the price of upstream raw materials suppresses the profitability level, and the cost transfer helps to restore the profitability. At present, the bottom of the profitability of the PCB industry has been determined.
Demand recovers
From the perspective of demand, in the first half of the year, PCB companies generally achieved an increase in operating income of more than 10%, reflecting that the downstream demand of the industry maintained a certain degree of stable growth.
According to the semi-annual report, from January to June, Avary Holding’ PCB business achieved revenue of 14.19 billion RMB, a year-on-year increase of 18.6%; Shennan Circuit’s PCB business achieved revenue of 4.432 billion RMB, a year-on-year increase of 19.56%; DSBJ achieved 9.049 billion RMB, a year-on-year increase of 9.19%; Suntak Circuit achieved 2.629 billion RMB, a year-on-year increase of 12.61%; WUS achieved 3.531 billion RMB, a year-on-year increase of 3.93%.
Increased demand for automotive PCBs
Driven by the three major trends of autonomous driving, digitalization, and electrification, In recent years, the value of a single vehicle automotive electronic components continue to increase, and the proportion of the cost in the whole vehicle continues to increase. Among them, the demand for automotive electronic products such as in-vehicle computing platforms, ADAS sensors (cameras, millimeter-wave radars, lidars, etc.), smart cockpits, electric power systems, and battery management systems continues to grow rapidly.
According to Prismark’s forecast, the output value of the global automotive electronics industry will be US$240 billion in 2021, and it is expected to reach US$337 billion in 2026, with a compound annual growth rate of 7% from 2021 to 2026.
As the basic support in automotive electronic applications, the demand for automotive PCBA applications has increased accordingly. According to IFC statistics, the traditional automotive PCB is mainly used in the ECU, according to the model distinction, the traditional fuel cars in the economy, mid-range models and high-end models of single-vehicle PCB usage of about 0.3 square meters, 0.8 square meters and 2 square meters, respectively.
In contrast, the PCB usage and unit value of new energy vehicles have increased significantly. Taking Tesla Model 3 as an example, the estimated value of PCB for one car is expected to reach 1490-1640 RMB, which is a significant increase in the value of a car compared to the traditional car of 500-600 RMB.
In terms of splits, Model 3’s three-electrical system mainly uses 6 sets of PCB boards (4-8 layers of through-hole boards, some with thick copper design), the total consumption reaches 0.71 square meters, and the corresponding value reaches 640-690 RMB. It accounts for 43% of the total vehicle value. Among them, from the perspective of PCB board specifications, the Model 3 battery pack adds about 0.66 square meters of PCB board consumption, which is an increase of nearly 70% compared to the traditional vehicle use of 1 square meter of PCB board.
It is estimated that the PCB value of the battery pack part will reach 600-650 RMB. In addition, the domain control system of Model 3 also uses 6 sets of PCB boards (including 3 main control boards using HDI technology), with a total usage of 0.28 square meters and a corresponding value of 550-600 RMB, accounting for 550-600 RMB in the value of the whole vehicle.
It is estimated that by 2030, the cost of automotive electronics will account for nearly 50%, driving the continued growth of PCB demand.
PCB demand increase on communication equipment
At the same time, the rapid development of communication equipment and derivative facilities represented by 5G is another important support for the demand side in the first half of the year.
In recent years, benefiting from the commercial use of 5G, base stations for wireless communication infrastructure have been built on a large scale. According to data from the Ministry of Industry and Information Technology, in 2021, the total number of China Mobile communication base stations will reach 9.96 million, with a net increase of 650,000 throughout the year.
As of the end of June, the total number of China Mobile communication base stations reached 10.35 million, a net increase of 387,000 from the beginning of the year. Among them, the total number of 5G base stations reached 1.854 million, accounting for 17.9% of the total number of mobile base stations, an increase of 3.6 percentage points compared with the end of the previous year, of which 429,000 5G base stations were newly built from January to June.
It was pointed out that with the cultivation and expansion of the 5G application ecology, the driving force of the value growth of the enterprise communication market board will gradually migrate from the 5G wireless side to the network equipment side. The strong demand for PCB products has put forward higher requirements for its technical level and quality.
The demand for PCBs for communication equipment such as switches, routers, and optical transmission networks used in 5G networks will increase accordingly, and the output value and added value of communication PCBs will be doubled. At the same time, with the rapid development of global cloud computing, the demand for servers, data centers and other cloud infrastructure is also expanding and the corresponding PCB usage has also increased.
Consumer electronics sales pick up
In addition, global consumer electronics shipments have not performed well since the beginning of the year due to the downward pressure on the economy and the high base. According to the research report, in 2020, consumer electronics will account for about 15% of the total PCB demand. In the first half of 2022, the downturn in global consumer electronics sales has affected the demand for PCB products to a certain extent.
However, since July, consumer electronics shipments have also begun to pick up. In June 2022, the mobile phone shipments in the Chinese market were about 28.017 million units, a year-on-year increase of 9.2%, ending the previous five consecutive months of negative sales growth.
On August 16, the market research firm IDC issued a survey report on China’s tablet market in the second quarter of 2022, which mentioned that in the second quarter of 2022, the shipment of China’s tablet market was about 7.29 million units, a year-on-year increase of 1.9%. The growth marked the first “reversal” in the global tablet market after three consecutive quarters of declines in shipments.
