1、 The concentration of copper clad panel industry is high
In the past five years, the compound annual growth rates of output and sales in the copper-clad panel industry have been 4.9% and 5.6%, respectively, indicating stable growth. From the perspective of regional distribution, the trend of transfer to Chinese Mainland is obvious. From a worldwide perspective, the copper clad laminate industry has gradually shifted from the period dominated by the United States before the 1980s to the period dominated by Japan in the following 20 years or so, and since this century, the leading enterprises have gradually shifted from developed countries in Europe and the United States to Asia, and has formed a pattern of Europe, the United States and Japan leading ultra high-end products, and Chinese Mainland and Taiwan leading high, middle and low-end products. While the global output value maintains a single digit compound growth rate, the output value of Chinese Mainland maintains a double-digit annual compound growth rate. The capacity transfer trend is significant. Since 2016, the sales of copper clad laminate in Chinese Mainland has accounted for more than 70%, and the output value in 2017 has accounted for nearly 2/3. From the perspective of competitive landscape, the concentration of the copper-clad board industry is high, with a global CR3 of 38%. The global production capacity distribution of the three main upstream materials, glass fiber cloth, electrolytic copper foil, and epoxy resin, with CR3 exceeding 50%, nearly 40%, and over 30% respectively, all have the characteristics of highly concentrated production, large investment, and long return cycles. Compared to downstream PCB demand, the industry is highly dispersed, with CR10 in mainland China less than 15%. The competitive landscape of the industrial chain determines the strong cost transfer ability of the copper-clad panel industry.
2、 5G and other factors are driving downstream high-end incremental demand
Driven by new generation information technologies such as big data, the Internet of Things, artificial intelligence, and 5G, communication equipment and automotive electronics have become the main driving forces for downstream demand growth. According to Prismark's forecast, communication base stations and automotive electronics will become new driving forces for the development of the PCB industry from 2017 to 2021, with their CAGR reaching 6.9% and 5.6% respectively. The demand for millimeter wave high-frequency substrates is driven by the 5G commercial and automotive anti-collision radar. Millimeter wave communication is gradually penetrating from military applications to commercial civilian applications, and vehicle mounted collision avoidance radar and 5G mobile communication will become important scenarios. 1. The demand for copper clad panels and high-frequency substrates for 5G base station equipment is increasing. High frequency communication materials are the key foundational materials for the implementation of base station antenna functions. Due to the high and wide range of communication frequencies, PCB substrates are still mainly made of high-frequency copper clad plates. At the same time, the number of 5G base station antennas has significantly increased, which will further increase the usage of high-frequency copper-clad panels. 2. The continuous intelligent upgrading of automobiles and the increase in electronicization have driven the demand for copper-clad panels. Automotive PCBs have gradually transitioned from simple double-sided boards, 4-6 layer boards, and multi-layer boards to HDI with higher integration and smaller area. In addition, automotive HDI has more stringent considerations for safety performance, requiring high integration while also possessing characteristics such as heat resistance, low loss, and long lifespan. The implementation of high-frequency copper clad panels requires stricter selection of upstream materials and process requirements, which is also the main reason why ultra high-end copper clad panel products are almost monopolized by Japanese and American manufacturers. Domestic manufacturers with relevant layouts are expected to benefit from the development of the industry.
3、 Investment advice and investment targets
With the approaching commercialization of 5G and the further penetration of technologies such as bottom layer cloud computing and artificial intelligence, scenarios such as 5G mobile communication base stations, 5G smartphones, ADAS advanced driving assistance systems, autonomous driving, wearable devices, and massive Internet of Things connections will all require higher performance and more quantity requirements for PCBs and even copper-clad panels. With domestic copper clad panel manufacturers making breakthroughs in the development of high-frequency substrate products, and main equipment manufacturers including Huawei and ZTE accelerating localization, it is expected that top manufacturers will have better development prospects based on their advantages in funding, technology, and scale. It is recommended to pay attention to A-share copper-clad board listed companies Shengyi Technology (15.080, 0.14, 0.94%) and Huazheng New Materials (29.960, 0.71, 2.43%), both of which have launched related products and are actively expanding production.
Risk statement The commercial progress of 5G may not be as expected, the industry landscape is uncertain, and environmental policies may lead to production restrictions.
(Source of article: Sina.com)
