The once-in-a-decade generation upgrade, 5G brings the demand and added value of PCB/ copper clad plate to double.
Chinese IMT - 2020 5 g (5 g) TuiJinZu put forward "five key technologies", the wireless access network device ecological industry chain, great changes have taken place in which 1) 5 g radio frequency will introduce Massive MIMO (large antenna array) technology, and the number of 5 g base stations is 4 g, we measure the two-thirds of the mobile communication base station antenna output will be transferred to the PCB industry chain, so we estimate is only for 5 g base station antenna high-frequency PCB/copper clad value will be more than 10 times of 4 g.
2) 5G network will carry greater bandwidth flow, more investment in routers, switches, IDC and other equipment, and the demand for high-speed PCB/ copper clad plates will also increase substantially.
In addition to the increase in demand and consumption, high-performance equipment will adopt higher value-added high frequency (antenna) high-speed (IDC/ base station) plate materials, bringing the added value and consumption of PCB/ copper clad plate industry chain to double.
5G communication equipment will be the core driving force of the PCB industry in the next three years.
The PCB industry has entered the mature stage, and the traditional application market has been saturated.
Prismark believes that cars and communications equipment will be hooked up to consumer electronics, becoming the new engine for industry growth in the next five years.
Whether it is automotive electronics (human life) or communication equipment (single equipment is of great value and involves a lot), manufacturers will directly verify the upstream materials of the equipment.
The market of intelligent driving and new energy vehicles has grown rapidly in recent years, but the certification threshold of the automobile board market is higher. In particular, ADAS, energy management and other high-value-added core components are hard for mainland Chinese manufacturers to break through in a short time.
Relatively speaking, China's downstream equipment manufacturers in the communications field have realized the transformation from follower to leader in the 5G era. Shennan circuit, Shanghai electric power co., etc., have occupied the main share of the PCB procurement market of 4G equipment manufacturers.
5G is expected to achieve the localized replacement of high frequency/high speed plate materials at higher upstream end.
We believe that PCB will be the core driving force for industry growth in the next three years.
5G brings the opportunity of localization of high-end materials, from cycle to growth.
Copper clad plate is the main material of PCB manufacture.
Copper-clad products are divided into traditional products and high-end products.
The traditional products are mainly epoxy resin glass fiber fabric products (fr-4 and modified fr-4) and simple composite materials (cem-1 and cem-3). These products have the largest output, but the added value is low.
Mainland China has already accounted for 65% of the world's copper clad products, and the further increase of domestic manufacturers' market share is a major trend.
At the same time, the high value-added special materials coated copper plate is still Rogers, taikang, panasonic and other foreign enterprises monopoly.
Special material copper cladding plate generally refers to the copper cladding plate made with special resin filler in proportion to a certain formula. The main filling materials include PTFE (millimeter wave radar and extremely high frequency communication), hydrocarbon (base station radio frequency below 6GHz), PPE/CE (high speed multilayer plate), etc.
Special material copper clad plate has high added value and the unit price is several times that of traditional fr-4 products, so it is not affected by periodic fluctuation of raw materials.
As the demand for 5G and automotive electronics increases in the future, high-end manufacturers can share the growth dividends of emerging downstream areas.
In the 5G era, domestic companies with the production capacity of high-end products are expected to gradually break through the foreign monopoly, dilute the original cycle attribute, and usher in the double improvement of performance and valuation.
5G equipment PCB cake sharing will be decided by "process + material".
Upstream high-end materials are important, but the process and design have a great impact on the final performance of PCB products. "process + materials" will share the added value of 5G industry.
5G high frequency/high speed plates need to be impedance controlled during the design process, which needs to be realized through advanced technology.
The performance requirements of PCB of 5G equipment are very high. Generally, there are higher requirements on the number of layers, area (large area, small thickness to diameter ratio), drilling accuracy (small hole diameter, board member alignment), wires (line width, line distance) and so on.
At present, the PCB processing technology of shennan circuit and Shanghai electric power co., ltd. has been leading in the world, among which the number of processing layers can reach up to 100, and the minimum aperture is as low as 0.1mm.
The exclusive formula comes from the advanced layout, and the "close door" method has a unique skill: the core threshold of high frequency/high speed copper cladding plate comes from the formula, certification and process. It takes time investment and a lot of sunk costs to master the unique formula.
Rogers (NYSE: ROG) is the undisputed king of copper-clad materials, with its fist products accounting for the majority of base station rf materials and the most comprehensive resin formulation system.
Rogers sets up his own technical barriers through two strategies: 1. Research in basic fields is ahead of schedule, even if there is no market demand.
2. Sophisticated enterprises in precise m&a segmentation keep enriching their own formula system.
At present, among domestic enterprises, shengyi technology is the earliest manufacturer to lay out special copper clad plates. In 2005, the company started the r&d of hydrocarbon resin product S7436. In 2014, it cooperated with zte of Japan to introduce PTFE formula and launch product GF series.
At present, the company has a r&d capability comparable to foreign investment, and its high-end products have entered the procurement sequence of shennan circuit. We believe that the company will take the lead in breaking the monopoly of foreign manufacturers in the 5G era.
Investment advice: the PCB/ copper-clad industry chain is one of the main lines of our 5G investment.
For domestic enterprises in China, the market share will be gradually increased in the traditional field, benefiting from the periodic business cycle.
At the same time, with the update and replacement of 5G communication equipment and the localization of materials, the industry will realize the logical transformation from cycle to growth.
We propose to grasp the core assets related to the industrial chain -- shengyi technology (high frequency copper cladding board), Shanghai electric power co., LTD and shennan electric circuit (communication PCB).
5G has started a cross-era feast. With the global 5G standard launched, we expect the construction of 5G network in China to begin in 2019. The investment opportunity of PCB/ copper-clad industry chain is worthy of being laid out in advance.