PrintedCircuitBoard (PCB) is also called printed circuit board, printed circuit board and printed circuit board in Chinese.

  The prototype of PCB originated from the telephone exchange system using the concept of "Circuit" in the early 20th century. It was made by cutting metal foil into circuit conductors and adhering them between two pieces of paraffin paper. The true meaning of PCB was born in the 1930s. It was made by electronic printing. It took insulating board as the base material and was cut to a certain size. At least one conductive pattern was attached to it and holes were distributed on it. It was used to replace the chassis of electronic components in the past. It realized the interconnection between electronic components and played the role of relay transmission. It was the support of electronic components and was called "the mother of electronic products".

  According to PrismarkPrismark, a consultancy, global PCB has reached 63.55 billion US dollars in 2018, and the overall growth rate of the industry is 6%.

  In 2018, the output value of PCB in mainland China was 32.6 billion US dollars, accounting for 51.30% of the market share. In recent years, the market share is still steadily increasing, and the compound growth rate in the next five years will reach 3.2%, firmly leading the way.

  PCB downstream applications are extensive. With the continuous growth of downstream consumer electronics, automobiles, communications and other fields, the market will continue to expand.

  PCB is the key connecting piece for assembling electronic parts. The whole assembly of special ink, glass fiber yarn, epoxy resin, glass fiber cloth, copper foil, resin sheet, copper clad plate, printed circuit board and electronic equipment is an upstream and downstream product closely connected in the industrial chain.

  There are many types of PCB products, which can be classified according to substrate material, number of layers of conductive pattern, application field and terminal products. PCB multi-layer board can be classified into common multi-layer board, back board, high-speed multi-layer board, metal substrate, thick copper plate, high-frequency microwave board and HDI.

  With the development and progress of consumer electronics and automotive electronics, PCB is also increasingly developing towards multi-layer number and flexible board. According to Prismark's data, in 2017, the ratio of single/double-sided board, multilayer board, flexible board, HDI board and package board was 14.70%, 39.20%, 20.50%, 14.10% and 11.50% respectively.

PCB industry chain

  The industrial chain of PCB is relatively long. The assembly of special ink, glass fiber yarn, epoxy resin, glass fiber cloth, copper foil, resin sheet, copper clad laminate, printed circuit board and electronic equipment are closely connected upstream and downstream products in the industrial chain.

  PCB ink is one of the key raw materials for PCB production. Its demand is directly affected by the scale and development of PCB industry. Judging from the overall situation, the proportion of PCB ink in PCB output value is about 3% on average. Therefore, with the expansion of PCB output value scale, PCB ink market scale will maintain a certain proportion of the same direction changes.

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

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

  The electronic cloth used for PCB has higher requirements. The main manufacturers are distributed in European and American enterprises, but the production capacity has been shifting to the Asia-Pacific region.

  Different PCB have different requirements for resin. Generally speaking, single/double-sided, multi-layer and HDI boards mainly use phenolic resin and epoxy resin, while the high speed/high frequency boards required by 5G development mainly use polytetrafluoroethylene, and the halogen-free CCL popular in recent years uses environment-friendly non-bromine resin.

  Former suppliers of phenolic resin and epoxy resin are mainly in mainland China and Taiwan, while giant factories in the United States and Japan monopolize the supply of high-end specialty resins such as BT and PPE.

  PCB cost mainly consists of material cost and manual manufacturing cost. Copper foil, glass fiber and resin constitute the main material cost of copper clad laminate, accounting for 39%, 18% and 18% of copper foil cost respectively. Glass fiber cloth is made by calcining silica sand and other raw materials into liquid in a kiln, drawing glass fiber filaments through an alloy nozzle, winding and twisting to form glass fiber yarns, and finally spinning the glass fiber yarns.

  Glass fiber cloth is used as a reinforcing material in copper clad laminate to increase strength and insulation. Epoxy resin is widely used in the manufacture of copper clad laminates, anti-corrosion coatings and plastic packaging materials due to its good mechanical properties, electrical properties and bonding properties. Labor cost is relatively high, accounting for 40% of the total cost.

  On the whole, PCB is greatly affected by copper price, so the price shows a certain periodicity.

  Output value of downstream PCB continues to grow, with China leading the world in growth rate. From the perspective of application field, its downstream application market mainly includes communication equipment, consumer electronics, automotive electronics, national defense and military industries, etc.

  PCB is mainly used in communication boards, consumer electronics boards, computer boards, automotive electronics boards, military/aerospace boards, industrial control boards and medical boards.

Investment Opportunities in Industrial Chain in 5G Era

  Communication base stations and intelligent terminals have created a large number of demands. In the 5G era, in order to meet the goal of high-speed and high-frequency transportation in short distance, certain requirements are put forward for PCB technical difficulty. The PCB materials used in 5G base stations and terminals have higher value. In addition, with the expansion of 5G base stations and the arrival of the wave of switching machines, the demand for their output is also increasing.

  5G Commercial Speed-up Will Expand PCB Market Space. On the one hand, 5G base stations are developing to high frequency bands, and the number of base stations has increased significantly. The low-frequency communication frequency band is crowded, the communication transmission gradually shifts to the high-frequency band, the bandwidth capacity of the high-frequency band is larger, and the coverage area of a single base station will become smaller. Therefore, in order to reach the same coverage area, the number of base stations in 5G era may be 1.5-2 times that of 4G.

  On the other hand, the application of MassiveMIMO has brought significant changes to the base station structure, changing from the antenna feeder system +RRU+BBU in 4G era to the form of AAU+CU+DU, where AAU needs to integrate more components.

  According to calculations, the area of the base station AUUPCB in the 5G era is about 4.5 times that of the RUUPCB in the 4G era. To sum up, the increase in the number of 5G base stations and the PCB panels used by individual base stations will increase the demand for PCB used by base stations.

  In the use of terminals, apart from the increase in the number of mobile phone antennas, the RF front-end of 5G mobile phones is more complex. In order to reduce the space occupied by RF channels and promote the development of PCB towards miniaturization and modularization, HDI and SLP will coexist, and related terminal industry targets are expected to gain more market space.

  In the first half of the year, PCB has proved that 5G pre-business is good. In the fourth quarter, with the promotion of 5G base station construction, PCB market performance is expected to further strengthen with major manufacturers' 5G mobile phones. Relevant industrial chain companies include Shennan Circuit, Shanghai Electric Co., Ltd., Shengyi Technology, Pengding Holdings, xing sen technology, etc.

  According to the statistics of 23 PCB companies, in the first half of 2019, the total operating income of PCB board was 54.937 billion yuan, up 12.48% year on year. Net profit attributable to shareholders of listed companies was 4.727 billion yuan, up 28.88% year on year. At the same time, the profit margin of PCB is high, with the gross profit margin and net interest rate of 22.46% and 8.74% in the first half of 2019. Financial expenses have been properly controlled and basically kept below 1%.

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