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Market Analysis 2018 PCB Industry Chain Analysis

Aug 14, 2018

PCB industry chain upstream

The middle and lower reaches of the PCB industry are clearly defined. The upstream industry mainly includes raw material suppliers such as copper clad laminates and copper foil. In general, the raw material cost of the PCB industry accounts for more than 50% of the total operating cost, which is the most influential part of the gross profit margin of PCB companies. Taking Shennan Circuit as an example, in 2017, its direct material costs reached 2.349 billion yuan, accounting for 55.60% of operating costs, far higher than direct labor, manufacturing costs and outsourcing costs.

In the past two years, the effect of raw material price hikes has been highlighted, which has had a certain impact on PCB companies. Taking copper foil as an example, copper foil has entered the price increase cycle since the second half of 2016. The highest price has reached 110 yuan/KG. In 2017, the price has been adjusted back, but it is still at a relatively high level. However, with the capacity adjustment of copper foil capacity, the smooth price transmission mechanism will enable the leading copper clad laminates and PCB manufacturers with bargaining advantages to transfer the pressure of rising raw material costs, thus gaining a large room for performance flexibility.

PCB industry chain downstream

The PCB industry covers almost all electrical circuit products downstream, with the most core and most value-added applications including communications equipment, computers, consumer electronics and automotive electronics. With the development of human society to electrification and automation, the application range of PCB is becoming wider and wider.

In 2016, in China's market, communications, automotive electronics and consumer electronics are the three areas with the highest PCB demand. Among them, the largest demand for PCB applications is in the communications field, accounting for 35%; followed by automotive electronics, with a proportion of 16%; consumer electronics ranked third, accounting for about 15%; and other sectors are below 10.