Printed circuit board: sub-industry with absolute advantage in the 5G era

According to the Ministry of Industry and Information Technology on October 28th, the Ministry of Industry and Information Technology, according to the "Provisional Conditions for Printed Circuit Board Industry" and the "Interim Measures for the Administration of Printed Circuit Board Industry Specification Announcement", recommended by enterprises, provincial-level industrial and information administration authorities, experts Procedures for review, online publicity, on-site verification, etc., the Ministry of Industry and Information Technology determines the list of enterprises that meet the "Specifications for Printed Circuit Board Industry" (first batch), and is now announcing.

PCB is one of the sub-sectors with absolute advantage in the 5G era

Printed Circuit Board ("PCB"), the Chinese name is printed circuit board, also known as printed circuit board, printed circuit board, printed circuit board.

The prototype of the PCB originated from the telephone switch system that used the concept of "Circuit" in the early 20th century. It was cut into a line conductor with metal foil and glued to the middle of two paraffin papers. The true PCB was born in the 1930s. It is made by electronic printing. It is cut into a certain size with an insulating plate as a base material. At least one conductive pattern is attached to it and a hole is provided to replace the conventional device. The chassis of electronic components, and the interconnection between electronic components, plays the role of relay transmission, is the support of electronic components, and is known as the "mother of electronic products."

PCB is one of the sub-sectors with an absolute advantage in the 5G era. According to the consulting firm PrismarkPrismark, the global PCB has reached 63.55 billion US dollars in 2018, and the overall growth rate of the industry is 6%. In 2018, China's PCB output value was 32.6 billion US dollars, with a market share of 51.30%. In recent years, the market share is still steadily increasing. The compound growth rate in the next five years will reach 3.2%, which will stabilize the leading position. PCB downstream applications are extensive, and the market will continue to expand as the downstream consumer electronics, automotive, communications and other fields continue to grow.

PCB is the key interconnecting part for assembling electronic parts. Special ink, glass fiber yarn, epoxy resin, fiberglass cloth, copper foil, resin sheet, copper clad board, printed circuit board, and electronic equipment are assembled in an industrial chain. Connected upstream and downstream products.

There are many types of PCB products, which can be used in various classification methods according to substrate materials, conductive pattern layers, application fields and end products. The PCB multi-layer board can be divided into ordinary multi-layer boards, back boards, high-speed multi-layer boards, metal substrates, thick copper plates, high-frequency microwave boards and HDI.

With the development and advancement of consumer electronics and automotive electronics, PCBs are increasingly moving toward multi-layer and soft board. According to Prismark data, in 2017 single/double panels, multi-layer boards, flexible boards, HDI boards and package substrates accounted for 14.70%, 39.20%, 20.50%, 14.10%, and 11.50%, respectively.

PCB industry chain

PCB industry chain is relatively long, special ink, glass fiber yarn, epoxy resin, fiberglass cloth, copper foil, resin sheet, copper clad board, printed circuit board, electronic equipment assembly is a closely linked upstream and downstream of the industrial chain. product.

PCB ink is one of the key raw materials for PCB production, and its demand situation is directly affected by the scale of the PCB industry and its development. From the overall situation, the proportion of PCB inks in PCB production is about 3%. Therefore, as the scale of PCB production increases, the market size of PCB ink will maintain a certain proportion of the same direction.

The special ink industry has professional attributes such as high professionalism and high technical threshold, and the industry has a high degree of concentration. For a long time, foreign manufacturers represented by the Japan Sun Ink Group have formed a controlling position in China's special ink industry by virtue of capital, technology and management advantages.

After years of exploration, China's special ink industry has basically mastered the key formulas of various special ink products, and has made major breakthroughs and innovations in some areas, so that the quality of domestic special inks has gradually approached and reached the same level of foreign-funded enterprises. In the future, as PCB production capacity shifts to China, domestic special ink companies are expected to accelerate import substitution by relying on local rapid response advantages and cost advantages.

The electronic cloth used for PCBs has higher requirements, and the major manufacturers are distributed in European and American companies, but the production capacity has been shifting to Asia-Pacific. Different PCBs have different resin requirements. Generally speaking, phenolic resin and epoxy resin are mainly used for single/double-panel, multi-layer board and HDI, and high-speed/high-frequency board for 5G development mainly uses PTFE. The halogen-free CCL popular in recent years uses environmentally friendly non-bromine-based resins. The suppliers of pre-phenolic resins and epoxy resins are mainly in mainland China and Taiwan, and the huge factories in the United States and Japan monopolize the supply of high-end specialty resins such as BT and PPE.

PCB cost is mainly due to material cost and manual manufacturing cost. Copper foil, glass fiber and resin constitute the main material cost of copper clad laminates, accounting for 39%, 18% and 18% of the cost of copper foil respectively. The fiberglass cloth is calcined into a liquid state by using a raw material such as silica sand in a kiln, and then drawn into a glass fiber yarn through an alloy nozzle, and then twisted into a glass fiber yarn, and finally made of glass fiber yarn.

The fiberglass cloth acts as a reinforcing material in the copper clad laminate to increase the strength and insulation. The epoxy resin is widely used in the manufacture of copper clad laminates, anticorrosive coatings and molding materials due to its good mechanical properties, electrical properties and bonding properties. The cost of manufacturing is relatively high, about 40% of the total cost. Overall, PCBs are more affected by copper prices, so prices are cyclical.

The output value of downstream PCBs continues to grow, and China's growth rate is leading the world. From the application field, its downstream application market mainly includes communication equipment, consumer electronics, automotive electronics, and defense military. PCB is mainly used in communication boards, consumer electronics boards, computer boards, automotive electronics boards, military/aerospace boards, industrial control boards, and medical boards.

Industry chain investment opportunities in the 5G era

Communication base stations and smart terminals have created a lot of demand. In the 5G era, in order to meet the goal of high-speed high-frequency transportation in short distance, certain requirements are imposed on the technical difficulty of PCB. The value of PCB materials used by 5G base stations and terminals is higher. In addition, with the expansion of 5G base stations, the wave of replacement is coming. As a result, its production demand is also growing.

5G commercial speed increase will expand the PCB market space. On the one hand, 5G base stations are developing to high frequency bands, and the number of base stations is significantly increased. The low-frequency communication band is crowded, the communication transmission gradually shifts to the high-frequency band, the bandwidth of the high-frequency band is larger, and the coverage of a single base station will become smaller. Therefore, to achieve the same coverage, the number of base stations in the 5G era may be 4G of 1.5. -2 times.

On the other hand, the application of Massive MIMO brings significant changes to the structure of the base station, from the antenna feeder system + RRU + BBU in the 4G era to the form of AAU + CU + DU, in which AAU needs to integrate more components. According to estimates, the area of the AUUPCB of the base station in the 5G era is about 4.5 times the area of the RUUPCB in the 4G era. In summary, the number of 5G base stations and the increase in PCB panels used by a single base station will increase the demand for PCBs used by base stations.

In terms of terminal usage, in addition to the increase in the number of mobile phone antennas, the RF front-end of 5G mobile phones is more complicated. In order to reduce the space occupied by RF channels and promote the miniaturization and modularization of PCBs, HDI and SLP will coexist, and related terminal industries The target is expected to gain more market space. In the first half of the year, PCB has confirmed the 5G pre-commercial business with perfect performance. In the fourth quarter, with the promotion of 5G base station construction, and the 5G mobile phone shipments from major manufacturers, the PCB market performance is expected to further strengthen. Industry chain related companies: Shennan Circuit, Hudian , Shengyi Technology, Pengding Holdings, Xingsen Technology.

Statistics of 23 PCB companies. In the first half of 2019, the total revenue of the PCB segment was 54.937 billion yuan, a year-on-year increase of 12.48%. The net profit attributable to shareholders of listed companies was 4.727 billion yuan, a year-on-year increase of 28.88%. At the same time, the profit margin of the PCB sector is high. The gross profit margin and net profit margin in the first half of 2019 were 22.46% and 8.74%. Financial expenses are properly controlled and are kept below 1%.

At present, the top 20 PCB manufacturers in the world are mainly overseas-based enterprises. The huge development space of the PCB market in mainland China has attracted a large number of international companies to enter. Most of the world-renowned PCB manufacturers have established production bases in China and are actively expanding. The manufacturing quality of PCB not only directly affects the reliability of electronic products, but also affects the integrity of signal transmission between chips and chips. The development level of the industry can reflect the development speed and technical level of electronic information industry in a country or region to a certain extent. .