PCB Industry Has Entered The Era Of High Cost, Leading Enterprises Have Prominent Advantages

- Sep 22, 2018-

1. The rising price of raw materials breaks the original pattern of the industry

There are many kinds of raw materials for PCB production, mainly copper clad sheet (CCL), semi-cured sheet (PP), copper foil, copper ball, gold salt, ink, dry film and other materials.Generally speaking, about 37% of PCB cost, 13% of semi-solidified sheet, 8% of gold salt, 5% of copper foil and copper ball, about 11% of labor cost, slightly adjusted for different types of raw materials.

The copper clad sheet is a kind of sheet bond material which is mainly made by glass fiber cloth, resin and additive.According to the thickness of copper clad sheet, the glass fiber cloth accounts for 25%~40% of the cost, resin for 25%~30% and copper foil for 30%~50%.Due to the high concentration of copper clad plate industry, strong bargaining power and relatively smooth price transmission to PCB industry, the cost of PCB enterprises is sensitive to the price of upstream main raw materials such as electrolytic copper foil, glass fiber cloth and synthetic resin. The effect of price increase will bring great pressure on the profitability of PCB enterprises.

1.1. The price of copper foil fluctuates at a high level, and the supply-demand relationship will ease in the second half of the year

This round of copper foil enterprises are affected by the rising demand of new energy vehicles for lithium electric copper foil, and they are actively transferring to the production of lithium electric copper foil. As a result, the standard copper foil used in the production of PCB board is reduced, leading to the rapid price increase of copper foil since the beginning of 2016.The standard copper foil and lithium electrical copper foil are different in the production equipment and process, the lithium electrical copper foil process is less, the process is simple, the gross profit is higher than the PCB standard copper foil.With the encouragement policies of China's new energy vehicles, the production of new energy vehicles has expanded, and the demand for copper foil used as negative pole carrier for lithium ion batteries has also increased greatly, and the manufacturers at home and abroad are highly motivated to switch to production.According to the copper clad industry association, in 2015, Taiwan, Japan and South Korea produced 62,000 tons of lithium copper foil, accounting for 30.62% of electrolytic copper foil production.In 2016, China added 16, 700 tons of lithium electric copper foil (including transfer production), which reduced the proportion of standard copper foil in the total annual capacity of electrolytic copper foil in China from 82.3% in 2015 to 79.8% in 2016.

1.2. The industrial cycle adds environmental pressure, and the price of double-wheel drive fiberglass cloth increases

Capital - intensive glass yarn industry, highly concentrated market, manufacturers strong bargaining power.The glass fiber yarn is made by burning silica sand and other raw materials into liquid in the kiln. It is made into extremely fine glass fiber through extremely tiny alloy nozzles, and then hundreds of glass fibers are tangled to form glass fiber yarn.The construction investment of the kiln is huge. As a capital intensive industry, the 30,000-ton kiln needs 400 million RMB, the construction of the kiln needs 18 months, the business cycle is difficult to grasp, and once the kiln is ignited, the production must be uninterrupted for 24 hours, and after five years or so, the production must be stopped for half a year for maintenance, and the exit cost is huge.The glass fiber cloth industry is highly concentrated, with 70% of global production capacity concentrated in 5 enterprises of China megalith, OCV, NEG, chongqing international and taishan fiberglass.In China, China's giant stone, taishan fiberglass, chongqing international, shandong fiberglass, sichuan microglass and changhai shares concentrate 80 percent of the country's production capacity.