PCB Cost Pressures Ease，demand Diversification

High cost pressures "alarm" temporarily remove superposition of downstream demand, Hong Kong and a-share printed circuit board (PCB) plate has welcomed the rally.

Recently, Hong Kong relies industrial (01639), built deep deposition layer board (01888), and A share of the most popular electronic (603228. SH), shennan circuits (002916 SZ), dongshan precision (002384 SZ), peng ding holdings (002938 SZ) and so on PCB industry listed company's share price continued to rise. Which the ansett industrial shares have gained more than 60% since October.

According to kilter finance APP observation, PCB plate strong mainly has two driving factors: on the one hand, cars, server, Mini LED board, XR demand for PCB board, is expected to continue to moderate; On the other hand the upstream main raw material prices ease restrictions on profit growth.

PCB diversification demand, smart cars can focus on the PCB

Server PCB, for example, as the cloud computing market expansion and upgrade server platform, PCB demand showed a trend of rapid growth. IDC data show that global to calculate the size of the market to $291.5 billion in 2020, is expected to reach $349.7 billion in 2021.Cloud computing development of data flow, the server needs. Not only that, as the server platform from Purely (PCle3.0) steering Whitley (PCle4.0), further enhance the demand for high-speed multi-layer PCB board. Recently used in server and data center of the high-end PCB demand, especially ABF loading board out of stock situation is more serious.Mini LED with boards, improve Mini LED backlit display in the PC, tablet, television and other electronic equipment of permeability. While Mini LED back the scheme of PCB as a mainstream HDI due to the narrow spacing lightweight mainstream back first. Because Mini LED display panel unit area lights, the higher the density, the display effect is better, as represented by apple in the mainstream of high-end laptops and tablets back technology solutions.

According to the survey data of guotai junan securities, Mini - LEDPCB substrate single chip price is about $20, 2025, the Mini - LED by PCB market size or close to 20 billion yuan, considering the future price decline, the Mini - LEDPCB substrate market will remain close to $ten billion.Of course, if the market hot spots, the investors are most concerned about is applied in the field of PCB in the car. According to kilter APP understanding of finance and economics, since this year, lack of core for the car production and marketing conditions have a negative impact. Statistics show that 1 - October, car production and marketing finished 20.587 million and 20.97 million, respectively, year-on-year growth of 5.4% and 6.4% respectively. Than September 1 - continue to increase dropped 2.1 and 2.3%.Good news is that motor iron core status will be gradually eased in the future. In the short term, in October this year, car production and marketing finished 2.33 million and 2.333 million, respectively, from 12.296 and 12.8% respectively; Among them, the new energy automobile production and sales, respectively, in October 397000 and 383000, quarter-on-quarter growth of 12.5% and 7.3% respectively, to a certain extent that iron core condition get better. In addition, power battery installed on October 15.4 GWh, year-on-year growth of 162.8%, a sharp also means car market demand for PCB is expected to a new level.

As we all know, the PCB in the car before the application of the main concerns two trends, one is the electric car, and the second is intelligent car. In the past, electrification is the dominant force in auto demand for PCB. Looking forward to the future, as the car companies investment growth of smart car, intelligent car demand for PCB also worth focusing on.Just for the intelligent driving, with ever increasing permeability of ADAS, smart car use to increase the number of sensors, make bike PCB cost increase.Currently, the mainstream of ADAS scheme sensor for "the combination of camera + radar", both cameras or radar, PCB are the basic components. Cameras and radar using amount decided the proportion in the PCB in the vehicle cost. Tesla Model3 as an example, according to relevant data shows, Model3 carrying the number of sensors for 21, millimeter wave radar and the number of super god wave radar was 1 and 12, respectively. According to zc estimate of bari, tesla Model3 PCB ADAS sensor value in 536-1364 yuan between, accounted for 21.4% to 54.6% of the total value of the vehicle PCB

It is worth noting that Model3 use value of PCB probably does not have the highest of smart car. New forces "to" building cars popular models of wei to ES8 and xiao peng P7, for example, wei to the number of sensors ES8 reached 25, carrying the number of millimeter wave radar and super god wave radar reached 5 and 12, respectively. Xiao peng P7 sensor number 31, millimeter wave radar and the number of super god wave radar and wei ES8 is the same.Visible, along with the smart car permeability increase, the corresponding PCB demand is expected to become an important driving factor PCB market scale expansion. According to the forecast Prismark, from 2020 to 2025, the global PCB market average annual compound growth rate of 5.8%, will reach $86.3 billion by 2025. Among them, the new energy smart car sales growth, will bring $2 billion to $3.2 billion for the global automotive PCB increment of space. Prismark is expected, the global auto PCB production can be up to $8.7 billion in 2024, from 2020 to 2024, average annual compound growth rate of 9%.According to China's auto industry association statistics, China in 2020 to 2025 will realize low speed driving and parking scenario autopilot, from 2025 to 2030, can achieve more complex scenarios of autopilot, road vehicles by 2040 will have a 3/4 is intelligent vehicle driving. The PCB market will also have greater value growth.

PCB cost pressures, the enterprise profitability at repair

Based on the above data can be foreseen, PCB industry has a good growth for a long time, but in the first three quarters of this year, PCB share price performance of listed companies are not so good. The main reason is that PCB upstream raw material prices, restricting the company profit ability promotion.It is reported, The core of the PCB material for copper clad copper clad conductive, insulation, support, and other functions, is vital for the performance of PCB products, accounted for 30% of the total cost of the PCB directly accounts for about 60% of the total cost of the PCB material, copper clad materials including: copper foil, epoxy resin, glass fiber cloth, etc., three major raw materials are about 42% of the cost of sheet production, 26 % and 19%, among them, copper foil, directly and indirectly account for 22% of the total cost of the PCBSince 2020, zero copper three appeared different degree of raw material is increasing. Among them, the price of copper foil is mainly affected by the copper, in June 2021 the LME copper average is 9632 dollars/tons, up 67% year-on-year. Epoxy resin price in August 2020 to April 2021 is up 120%; Glass fiber cloth early July 2021 electronic quotation of 8.7-8.8 yuan/m, up 175% year-on-year, due to rising raw material prices, since the second half of 2020 the upstream raw materials coated panel prices continue to rally, but PCB enterprise cost on relative lag, cause its poor growth.However, according to the western securities research report In November 2021 the fed FOMC meeting opens the taper, reduce assets per month, macro liquidity contraction expected undermine, western securities that copper prices in the short term after the crowded warehouse or a fall, as of November 12, 2021, the cancellation of the warehouse receipt has fallen to 50000 tons, cancelled warrants rate fell to 50%.

The long term, as Peru and Chile with the ease, copper production is expected to rebound, Australia DISER released the resources and energy quarterly report predicts that in 2021 the name of the LME copper price for an average of $9122 / ton, from $6169 / ton rose 47.9% in 2020, Is expected in 2022 and 2023 respectively 8846 and 8650 dollars/tons, copper prices stabilize the downward shocks are expected to drive the copper foil cost.Epoxy resin price, due to the downstream wind affected by subsidies, massive high has passed, but due to the boom of wind power, electronic demand remains high, epoxy resin, and the price is still expected to continue. But with epoxy chloropropane by moderating and bisphenol A price shock slump, epoxy resin production cost or slow.Western securities is expected, glass fiber cloth order downstream demand, supply and demand is still tight, electronic yarn price stability. But each enterprise expansion will strongly driven by high profits, according to the company's disclosure, from 2021 to 2022, the macro and new electronic science and technology, China stone, taishan fiberglass yarn production capacity of about 22 to 250000 tons. The long term, glass fiber yarn prices are expected to drive the electronic cloth gradually return to a reasonable level.In kilter APP financial point of view, PCB production enterprise high cost pressures ease, focus attention to industry growth. As the downstream demand growth is expected to bring more orders PCB enterprises on downstream maintain stronger ability of premium moving downstream cost pressures so as to promote the profit point to accelerate the arrival.