Copper-clad laminates and copper foils are "rising", and the surge in demand has driven the PCB industry chain upward.

The demand for downstream consumer electronics, 5G base stations, servers, automobiles, etc. has increased significantly, driving the PCB industry chain into a boom cycle. A few days ago, a reporter from Cailian News learned through research that because PCB supply exceeds demand, but the upstream production capacity of the industry chain is limited, the prices of copper-clad laminates, copper foil and other materials continue to rise. Chaohua Technology (002288.SZ) revealed that the current overall price of the company's copper-clad laminates has increased by 30% from the previous bottom. Last year, the company's copper foil processing fees also increased by about 30-40%. Relevant analysis points out that the demand for various products will usher in a concentrated explosion in 2021, and the performance of the PCB industry chain is also expected to usher in a big year of growth this year.

The PCB industry chain is booming

Although it mainly supplies low-end PCB boards to some small home appliance processing companies in Foshan and Zhongshan, the recent boom in the industry also makes Mr. Zhang feel that business is getting better. The owner of a small factory, who has been engaged in the PCB industry for more than 20 years, has been stuck in the quagmire of the epidemic and has not yet escaped.

"We haven't raised the price yet, because most of the orders have been signed before, and the prices have been set. But the raw materials are rising, and the upstream supply is already very tight. Even if we are willing to accept higher costs, it is hard to say whether we can get the goods," Mr. Zhang revealed. "In recent times, everyone has been paying attention to the price increase of home appliances. In fact, it is indeed (because of) the original price increase. Materials are rising, such as copper and plastic, including PCB - whether it is large or small appliances, this board is indispensable, so the price increase of home appliances is also a last resort. "

Taiwan PCB leader Jianding recently revealed that the lead time for PCB orders is usually two weeks to one month, but now orders for the second quarter can be seen in January, and the visibility is very good. Mainland manufacturer Shennan Circuit (002916.SZ) did not disclose specific product price information to reporters because it was in the "annual report silent period", but the company recently publicly stated on an interactive platform that "the company's raw materials include copper-clad laminates, prepregs, copper foil, gold salt, dry film and ink, involving many categories. At present, the price of some of the company's raw materials is facing rising prices." At the same time, Shennan Circuit also revealed that its capacity utilization rate has improved to a certain extent compared with the previous period.

Copper clad laminate is an essential material for making PCB. Reporters from Cailian News recently learned through a number of copper-clad laminate manufacturers that their prices have increased significantly compared with last year, and downstream demand is strong, with orders already scheduled for the second half of the year. Chaohua Technology revealed in a recent survey that the company's capacity utilization rate remains at a high level, some product orders have been scheduled to the first half of this year, and the overall price of copper-clad laminates has also increased by more than 30% from the previous bottom.

Copper foil is not far behind. Chaohua Technology revealed that due to the long equipment ordering cycle, copper foil production is limited. Under this circumstance, many manufacturers have turned to lithium battery copper foil driven by the rapid development of the new energy industry, resulting in a large supply gap for electronic copper foil. Last year, the company's copper foil processing fee increased by about 30%-40%.

Taiwanese manufacturer Tenghui recently told the media that recently, the main raw materials for copper foil substrates, such as copper foil, glass cloth, resin, etc., have increased by as high as 30 to 100%. It is reported that Tenghui has successively adjusted prices in batches and is expected to complete the price adjustment in the near future.

Performance growth may exceed expectations

Significant growth in downstream demand such as consumer electronics, 5G base stations, and automotive electronics is a key factor driving the PCB industry chain into a price increase cycle. Chaohua Technology pointed out that since the second half of last year, with the outbreak of downstream markets such as 5G, new energy vehicles, and energy storage, the entire PCB industry chain has experienced an increase in both volume and price. At present, the demand in the downstream market is still very hot, and the entire industry is still at a high level of prosperity.

The motivation for the price increase of copper clad laminates comes from two aspects: supply and demand. On the one hand, downstream demand is growing rapidly; on the other hand, effective supply - especially for high-end products, with very little new production capacity in the past few years, does not match the growth rate of demand.

It is worth noting that after the layout and accumulation of efforts in the past few years, especially in the context of the COVID-19 epidemic last year that suppressed some downstream demand, the PCB market may usher in a concentrated outbreak this year, which will also become the biggest driving force for the entire industry chain to maintain the current boom.

China Merchants Securities research report pointed out that since the gradual recovery of economic activities in the second half of last year, demand in various major downstream areas of PCB multilayer boards has entered a period of rapid recovery, and the upward trend in the outlook continues until now. In 2021, as the visibility of automotive board demand remains high, consumer electronics demand is also supported by the growth of terminal sales. NB/tablet innovation drives demand growth, and the recovery of 5G construction and chip platform upgrade switching will also promote the recovery of the data communication high-multilayer board market. Against the backdrop of economic recovery, the multilayer board market is expected to usher in a year of growth in 2021.

According to a research report by Soochow Securities, 5.2 million macro base stations are expected to be planned and constructed in China from 2020 to 2025. Combined with the small base station market, the domestic PCB market size driven by 5G construction is expected to reach 55 billion yuan from 2020 to 2025.

This will also drive demand for copper foil and copper-clad laminates for PCBs, especially high-performance copper foil. Since it is still monopolized by foreign manufacturers, domestic substitution will usher in a broad space for substitution in the next few years.

According to previously disclosed public information, Shennan Circuit automotive PCB has entered the customer base of Bosch Group, ZF Friedrichshafen, BYD, Great Wall Motor and other customers. Driven by PCB layer upgrades for communication products, Shennan Circuit, as one of the few local manufacturers that can produce multi-layer PCBs, will also benefit. Shengyi Electronics (688183.SH), which has just landed in the capital market, plans to expand production capacity with Changshu Shengyi as the main body. The new project plans to expand the production of 11.4 million square meters of high-performance copper plates and 36 million meters of adhesive sheets. The products are positioned as high-end products in the HDI field. Chaohua Technology also revealed to reporters that the company is currently continuing to develop high-end products. RTF copper foil used for 5G communications has achieved mass production, and VLP copper foil has been produced on a small scale. In addition, the first phase of the copper foil industry base, built in cooperation with the Yulin government, has an annual output of 50,000 tons of electronic copper foil and 10 million high-end core boards. Construction also officially started at the end of February.