Looking forward to the future development trend of PCB industry in China

- Aug 01, 2018-

01


From the perspective of industrial development, high-end products such as packaging substrate and middle and high-end products such as HDI board will become an important direction.

In terms of product types, the global PCB industry is moving towards high precision, high density and high reliability, constantly reducing volume, reducing cost, improving performance, light weight and thin type, increasing productivity and reducing pollution, so as to adapt to the development of the downstream electronic equipment industry.

The investment in technology research and development will be further increased, and the high-speed, high-frequency and high-heat applications of multilayer panels will continue to expand, with more sophisticated HDI panels and more advanced wafer level packaging technologies.


Compared with Japan, Korea and other mature regions in PCB industry, China has the advantages of low labor cost, huge market potential, concentration of downstream industries, land, hydropower, resources and policies, etc., so the PCB industry has realized the transfer from developed countries to China.

Because of the IC industry is not developed, China in high-end PCB products, such as packaging substrates on the r&d and manufacturing technology of lags far behind has formed a mature industry chain of Japan, South Korea and other regions, is still at the exploration stage technology, only yi fei electric (Beijing) co., LTD., ase (Shanghai) co., LTD., zhuhai doumen yi electronics co., LTD. One of the few manufacturers in small batch production.

Accepting the industrial transfer will help Chinese enterprises to learn advanced technology, enhance their sense of crisis, constantly improve their competitiveness and bring about prosperity.


02 


One of the biggest crises facing China's PCB industry is from competitors.

With the disappearance of China's demographic dividend and the maturing of the PCB industry, the cost of labor, water, electricity and the environment will continue to increase. Southeast Asian countries have attracted a large number of foreign investment through their cost advantages, especially India, which has a large demand for PCB.

Lower-end PCB products with low cost and low investment, such as single and double panel, are gradually transferred to these countries for the second time.

It is not only the general trend to move from low-end overcapacity to high-tech products, but also the call for environmental protection.

Come into force on January 1, 2018 of the law of the People's Republic of China on environmental protection tax law by tax mechanism reversed transmission, transformation and upgrading of enterprises, high pollution and high energy consumption, in turn, promote economic restructuring and change of the pattern of economic development, to establish "enterprise much more taxes, less row tax", the mechanism of environmental tax will be all as local revenue, the central don't participate in, so as to encourage local government regulation, thus accelerating high fouling the exit of the enterprise, improve the production efficiency is high, less pollution emission of enterprises economic benefits.

The government's environmental policy has restricted the investment of low-end PCB products below 4 floors, which has provided more capital investment and wider market space for high-end products such as HDI.

According to Prismark, the compound annual growth rate of China's packaging substrate output will reach 5.5% from 2016 to 2020 (the global average is only 0.1%).


03


In the strategic choice of enterprises, some PCB enterprises begin to extend the industrial chain and provide innovative services.


Upstream companies in the PCB industry are sensitive to changes in various external factors and can almost completely transfer price pressure to the middle of the industrial chain.

When the upstream raw materials are in short supply and the price rises, small and medium-sized PCB enterprises are faced with challenges in the capital chain and the stability of the supply chain, and the operation risk and competition pressure are increased.


Due to the high industrial concentration of upstream enterprises, some large enterprises try to expand into the downstream electronic assembly industry of PCB manufacturing business, realizing the integration of production and marketing, developing into multiple industries, reducing costs and increasing revenue.

The industry of electronic assembly is EMS industry. Specifically, it refers to welding passive devices, active devices, connectors and other electronic components on PCB board by means of plug-in, surface mount and micro-assembly according to the design scheme, realizing electrical interconnection, and forming modules, complete machines or systems through functional and reliability tests.

Through the professional services provided by EMS service providers, a large number of downstream small batch electronic products enterprises with insufficient economic scale are designed in a personalized manner to help the brand manufacturers achieve mass production with higher efficiency and meet the needs timely.

According to IPC research, the global revenue of EMS service industry reached $446.3 billion in 2016, an increase of 3.77% over the previous year.

Prolonging the product chain will help enterprises reduce the pressure of price increase, so as to have more room to solve the impact of various economic and policy changes on enterprises.


In addition, due to the diversification of consumer electronics products and the short life cycle, some enterprises have begun to enter the one-stop service field of small quantity and high customization, making small and medium-sized batch PCB manufacturing optimization to help customers reduce design costs and increase their competitiveness.

Shennan circuit, hsingsen fast, jessai technology, zhuhai founder, zhuhai yuansheng electronics and other enterprises have been actively planning one-stop express services.


04


In terms of enterprise size and industry concentration, China's PCB enterprises will further expand, phase out some backward small and medium-sized enterprises and concentrate most of their production capacity on leading enterprises.

According to the comparison of Prismark data, the PCB industry concentration in mainland China lags far behind that in Europe, the United States, Korea, Japan and Taiwan, and the concentration of domestic PCB industry and the market share of large factories have great room for improvement.


05


In terms of industrial layout, China's PCB industry will continue to follow the development steps and policies of the government.


The government has developed the pearl river delta development zone in 1994, the Yangtze river delta development zone in 2000, the bohai rim development zone in 2005, and the western triangle development zone in 2010, which was promoted by the central government.

After confirming whether the market demand can support the establishment of factories, the flow and management of talents, the overall operation environment, waste water discharge and other licensing factors, a number of enterprises move inland to enjoy the preferential policies and prices of various factors.

Inland at present, because of low wages are the lack of personnel quality, and the consequent offset management difficulties, lower labor cost savings, and the main customer relationship, namely the local small and medium-sized electronics factory set most of south China and east China, and no inner demand, coupled with the demand for water of a large number of PCB industry, the proportion of PCB enterprises to move inland is not high, most of the mergers and acquisitions to achieve layout.

However, inland areas have always been the focus of national development. Considering the saturation of coastal markets and the imbalance between the development of eastern and western regions, inland transfer will still be the development direction of PCB industry in the next few years.


With the improvement of PCB industry concentration, leading enterprises with technology and capital advantages and environmental protection standards will gain more market space and greater development.

Small and medium-sized PCB enterprises with shrinking profit margins should also recognize the overall situation and actively seek the transformation path in the era of high cost.