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PCB industry annual report inventory: upstream doubles downstream pressure automotive electronics, servers are expected to bring structural opportunities

electronics industry market

In the context of global economic recovery, the electronics industry market is picking up, the outbreak of automotive electronics and other industries and the continuous emergence of new application scenarios have boosted the demand for PCBs. Benefiting from this, listed companies in the PCB industry chain such as Shengyi Technology (600183.SH), Nord (600110.SH), and Chaohua Technology (002288.SZ) have reported good results in 2021. Some analysts pointed out that structural opportunities have emerged, and the demand for PCB plates is strong. Looking forward to 2022, the industry will maintain its growth momentum.

Upstream profit doubled

As the “mother of electronic products“, PCB (printed circuit board) continues to penetrate into industrial control, medical, consumer electronics, automotive electronics and other fields.

According to Prismark data cited in the 2021 annual report of Shennan Circuits (002916.SZ), in the medium and long term, the industry will maintain a steady growth trend. The expected compound annual growth rate of global PCB output value from 2021 to 2026 is 4.8%. In mainland China, with a relatively high base in 2021, the compound growth rate will still reach 4.6%, and the growth will remain stable.

Listed companies in the upper reaches of the PCB industry chain performed well last year. Various annual reports show that the upstream copper clad laminate supplier Shengyi Technology achieved a net profit of 2.830 billion yuan, a year-on-year increase of 68.38%; copper foil suppliers Nord and Jiayuan Technology (688388.SH) achieved net profits of 404 million yuan and 5.50 100 million yuan, an increase of 7409.93% and 195.02% year-on-year respectively; Chaohua Technology (002288.SZ) net profit increased by 118 million yuan to 130 million yuan, a year-on-year increase of 449.63%-505.53%.

The increase in product sales and prices, and the effective transfer of costs to the downstream are the keys to supporting the growth of the above-mentioned companies.

Since last year, commodity prices have continued to fluctuate, copper prices have risen sharply, and costs have increased accordingly. Copper clad laminates are welcoming the tide of price increases. CCL manufacturers including Shengyi Technology have raised product prices. At the same time, the market has shifted more production focus to gross profit. The higher lithium battery copper foil has squeezed the output of copper clad laminate copper foil to a certain extent, resulting in a shortage of supply in the market and even out of stock. The sales volume of Shengyi Technology, which specializes in copper clad laminates and printed circuit boards, has grown. The production of 8,000 tons of high-precision electronic copper foil project (phase II) per year to release production capacity has become one of the main reasons for the changes in Chaohua Technology’s performance.

How to control costs when copper prices continue to rise? The relevant person in charge of Jiayuan Technology said that we have dynamically adjusted the inventory of copper wires, adjusted accordingly when the price rose and fell, and controlled the inventory. The rise of copper prices will have a certain impact on the company’s profits, but the overall impact is not very big. According to him, the company’s products are basically at full production and full sales.

Due to the tight market supply of copper foil products, the processing fee has also increased. According to the reporter’s understanding, the pricing model of copper foil products of many companies is “copper price + processing fee”. The increase in processing fee or copper price will lead to a corresponding increase in copper foil products, thereby improving the overall profitability of the product. An insider of Nord Co., Ltd. told the Financial Associated Press that the increase in processing fees is the main factor for the profitability of the company’s copper foil products. The increase in raw materials can be partially transmitted to downstream customers, and we have also hedged.

Under the positive trend of the market, the industry “gets together” to increase capital and expand production. The latest announcement of Shengyi Technology shows that it will increase its capital of 500 million yuan to Jiangxi Shengyi Technology Co., Ltd., a wholly-owned subsidiary, and start the construction of the second phase of the project. In 2021, the subsidiary will produce 13.1079 million square meters of various types of copper clad laminates and sell 13.0735 million square meters of various types of copper clad laminates. Ten thousand square meters. Jiayuan Technology is also promoting the project of high-performance copper foil with an annual output of 15,000 tons in Ningde City, Fujian Province, the new technological transformation project of high-performance copper foil with an annual output of 16,000 tons in Jiayuan Science and Technology Park in Meizhou, Guangdong, and the high-performance copper foil project with an annual output of 30,000 tons in Liaocheng, Shandong. Fundraising projects such as the precision ultra-thin electronic copper foil project and the annual output of 20,000 tons of electrolytic copper foil project of Jiangxi Jiayuan Technology Co., Ltd. in Ganzhou City, Jiangxi Province.

Midstream and downstream gross profit is under pressure

In contrast, the performance of the middle and lower reaches of the PCB industry chain is under more pressure.

According to the annual report, Shennan Circuit’s revenue in 2021 was 13.943 billion yuan, a year-on-year increase of 20.19%; its net profit was 1.480 billion yuan, a year-on-year increase of 3.53%, a slight increase. Hudian (002463.SZ), whose core business is the corporate communication market board and automotive board, will have a revenue of 7.419 billion yuan in 2021, a year-on-year decrease of 0.55%; a net profit of 1.064 billion yuan, a year-on-year decrease of 20.80%.

At the same time, the reporter noticed that the PCB gross profit margin of mid-stream and downstream enterprises has decreased compared with the data of the same period.


There have been changes in performance. Both Shennan Circuits and Shanghai Electric Co., Ltd. stated in their annual reports that the impact of the epidemic on the supply side still exists, the circulation of the industrial chain and supply chain is not smooth, the price of raw materials has risen sharply and the supply of chips is tight, which has created a certain impact on the company. cost pressure. Hudian Co., Ltd. also pointed out that due to factors such as the appreciation of the RMB, the slowdown in 5G construction, fluctuations in PCB market demand and intensified competition, the company’s overall operations are facing multiple pressures and challenges.

Regarding the reasons for the decline in gross profit margin, Shennan Circuit pointed out the impact of “the slowdown in demand in the communications market in 2021” in response to the agency’s research.

An industry insider told the Financial Associated Press reporter, “In the context of the epidemic, digitalization is developing rapidly, and remote office, data storage, 5G communication, etc. all require the output and reception of information. The output end is mainly the layout of communication base stations, but the layout is basically the same now. Therefore, a PCB company based on the main communication boardss of communication base stations is equivalent to saying that its performance growth will fall into a stagnation.”

Electronics industry market structural opportunities remain

Relatively speaking, although there is also pressure from the cost side, Sihui Fushi (300852.SZ), whose products are mainly used in downstream fields such as industrial control and automotive electronics (total revenue accounts for about 80%), has seen an increase in performance. , its revenue in 2021 will be 1.050 billion yuan, a year-on-year increase of 61.44%; its net profit will be 184 million yuan, a year-on-year increase of 52.94%.

The relevant person in charge of Sihui Fushi said that the application of the company’s products in the downstream market is mainly in industrial control (revenue accounted for about 60%). Involving some transmission, automatic and other products that will be used in industrial control, such as motors, joints in robots, etc., the amount is large.

In the face of the lack of “cores” in the industry, the aforementioned industry insiders said that from the production side, the new production lines of chip manufacturers have been put into operation, and the production capacity has begun to be gradually released. From the application point of view, countries with severe epidemics in foreign countries are under-operated, and the amount of chips will be reduced, and some of them may flow into China. When the problem of lack of cores is not solved, companies will try to reduce the amount of chips used in the design of new products.

Analysts in the industry also pointed out that the marginal change in PCB demand deserves attention, and automotive electronics and servers bring structural opportunities. Some respondents also said that the application side has only just begun, and the prospects are still very broad.

“The electrification and intelligence of automobiles are the trend, and more and more ADAS (Intelligent Driving Assistance System) configurations, including some intelligent assisted car-following, anti-offset, anti-skid, etc., are driving the rapid growth of PCB usage. There are also new The three-electric system (battery, motor and electronic control) of energy vehicles also requires PCB control, and compared with ordinary gasoline vehicles, its PCB consumption may double.

In addition, under the background of “East Digital and Western Computing”, the improvement of computing power and data interaction requirements in the fields of AI, cloud computing, big data, 8K “Ultra HD” video, and 5G industry applications, as well as the expansion of related application scenarios, drive server, The expansion and upgrade of network equipment such as switches will give rise to greater imagination space for the PCB industry (especially high-frequency and high-speed PCB products).