[Concern] RISKS Faced By PCB Manufacturers in The Second Half Of The Year

Risks arising from macroeconomic and downstream market fluctuations

The printed circuit board is the key to the electronic products electronic interconnection and loading of the electronic parts of substrate, it's downstream to electronic information manufacturing industry, the end product is widely used in various fields of production and living, affected by fluctuations in the field of a single industry or smaller, but the larger correlation with the whole social-economic sentiment and affected by the macroeconomic cyclical fluctuations significantly. In recent years, China has gradually become the main production and consumption base of the printed circuit boards in the world. The diversified printed circuit board products and the wide range of downstream application fields of the company have dispersed the influence of fluctuations in some downstream fields to a certain extent. However, if the overall macroeconomic downturn results in the overall contraction of downstream demand, the development speed of the PCB industry may slow down or decline, thus adversely affecting the operation of PCB enterprises.

Raw material price volatility risk

Since the second half of 2020, the upstream main raw material prices ushered in a new round of the rising cycles. Due to the impact of COVID-19, foreign copper mines have stopped work and underused, coupled with the impact of loose monetary policies around the world, the price of the bulk metal copper has risen rapidly. The raw materials required for the production of printed circuit boards account for a high proportion of the cost, the main raw materials include copper-clad plate, copper foil, semi-cured sheet, copper ball, etc., among which the price of the copper-clad plate, copper foil, the copper ball is mainly affected by copper price fluctuations. Due to the large proportion of raw materials in finished products, if there is a large fluctuation of raw material supply and price, it will have a negative impact on the overall gross margin and profitability of PCB enterprises.

Market competition increases risks

According to Primark statistics, as of 2019, there are about 2,800 PCB enterprises in the world, and more than 2,000 PCB manufacturing enterprises in Mainland China, accounting for 53.70% market share of the global total output value in 2019. The market concentration of the industry is low, and THE market competition of PCB manufacturers is full. If PCB enterprises fail to carry out technology and business model innovation in a timely manner according to the industry development trend, customer demand changes, and technological progress to improve their competitive strength and timely launch competitive high-tech and high value-added products, the company will have the risk of declining business performance or being surpassed by competitors due to market competition.

COVID-19 risk

In 2021, the global epidemic prevention and control will remain severe, and the risk of a decline in the global macroeconomy and electronics industry still exists. PCB companies need to strengthen full communication with customers, formulate emergency plans in advance, and jointly deal with the possible adverse impact of the epidemic.

Risk of exchange rate fluctuation

PCB enterprises with export products may face the risk of exchange rate fluctuations. In recent years, the RMB exchange rate against the US dollar has fluctuated due to macro factors such as china-us trade frictions and international situations such as the COVID-19 pandemic. If the fluctuation of the RMB exchange rate increases in the future, the impact of exchange gains and losses on the profitability of PCB enterprises may increase.