PCB News - Will PCB price increase in the end?

Will PCB price increase in the end?

PCB manufacturers collectively raise prices by 20%-30%: the industry accelerates the reshuffle of small companies facing a wave of bankruptcy

As the current consumer electronics product with the largest shipments of smartphones, the price increase of components affects the entire industry chain. The most typical is memory chips and capacitors. The price increase trend of the two has been uninterrupted. Taiwanese companies are calling for the most dramatic price increases. Whether it is memory chips or capacitors, there has been news recently that they have increased their prices. The trend will ease, and Taiwanese companies will immediately clarify that price increases will continue!

For example, on July 17, the director of Yageo China said that the price of MLCC would fall by 10%. Unexpectedly, on the 18th, Yageo immediately issued a clarification announcement saying that it refuted the rumors of MLCC price loosening, indicating that the supply and demand of MLCC could not be balanced, and there was no sign of falling prices. The industry outlook remains optimistic. Not only did Yageo refute this news, in addition, some agents and traders also encouraged them to refute! When price increases become a means of making huge profits, the resistance triggered by unfavorable news in the market can be imagined!

It is reported that the industry said that the price increase started from agents last year, and it only increased to EMS factories this year. Generally speaking, most of the supply of passive component factories is divided by EMS factories, Chinese mobile phone brand factories, and manufacturers such as Apple. 80% is occupied by agents, and the spot part is only 20%. The gap in the ratio is huge. This is the main reason why the price increase effect of MLCC factories has only exploded this year. The shortage of EMS supply and sweeping goods in the spot market caused the spot price to soar. Increase, pushing up the proportion of passive factory’s agent revenue.

In addition to MLCC, there has recently been news that major PCB manufacturers have begun to increase prices collectively, and the price increase will reach 20-30%. Judging from the current time node, the electronics industry in the second half of the year is undoubtedly better than that in the first half of the year. The off-season is better. Many companies have begun to prepare production capacity for shipments in the second half of the year. Prices start to increase at this time, which will undoubtedly have a very bad impact on the industry. Thanks to this good news, PCB-related concept machines have almost collectively increased their daily limits, such as Ultrasonic Electronics and Bomin Electronics. Then, what are the reasons behind the price increase of PCB manufacturers?

PCB manufacturers collectively raise prices by 20%-30%: small businesses are facing a wave of bankruptcy

On July 18, according to media reports, major domestic PCB manufacturers have increased their costs due to environmental protection issues and the rise of copper and other raw materials (copper clad laminates, copper foil sheets), so there has been a collective price increase. Since July, including PCB manufacturers such as Omwei Electronics and Kingboard Group have issued price increases notices; as for Taiwanese manufacturers, according to industry sources, there are still a lot of idle production capacity, and it is not easy to follow the price increase at this stage.

First of all, with regard to the increase in the price of raw materials, the copper price has received the most attention. The rise in the price of copper has significantly increased the costs of copper foil substrate manufacturers and PCB manufacturers. According to industry statistics, the cost of PCB raw materials accounted for 33%, of which the raw material cost of thick copper copper foil substrates accounted for 18%-20%. In addition, copper foil accounted for 30% of the overall cost of thick copper copper foil substrates.

In addition, in recent years, the domestic market’s awareness of environmental protection has risen. From the emission limit in Kunshan, Jiangsu at the end of 2017, to the emission limit in Zhuhai and Shanghai, and to strict inspections in Shenzhen, due to the sewage discharge problem of the PCB industry, PCB factories at this stage, regardless of Taiwanese investment China, mainland capital, and even foreign capital are unpopular industries in the mainland. For this reason, the PCB industry has to face the pressure of rising costs and the continuous reduction of production capacity, and eventually the pressure to leave.

Therefore, after the PCB industry is under pressure to increase the cost of raw materials, and external environmental issues have caused the problem of limited production capacity, PCB companies in the palace have begun to notify customers of price increases since July. As for the Taiwanese factories, due to unsatisfactory demand, there are still a lot of restrictions on production capacity. In addition, the price increase of copper foil substrate factories in the second quarter of this year is not obvious. For this reason, the industry believes that it is too difficult to follow the price increase at this stage. high.

Regarding the price increase news, according to the mobile phone news online, the reason for the basic price increase is mainly due to the above two, on the one hand, the increase in raw materials, and on the other hand, the environmental protection department's strict emission limit. However, according to the author's knowledge from Shennan Circuit, the other party said that there is no price increase or decrease at present!

In addition, some people in the industry said to the author: "I have to confirm whether the price increase is true or not. I did not see a direct document. Environmental protection pressure does exist. The price of raw materials is currently at a low annual level, but it is estimated that it will rise next. More about the current environmental protection. Under the pressure of raw materials, the industry is upgrading and transforming and eliminating outdated production capacity.” Some organizations believe that with the upgrading of 5G communication equipment and the localization of materials, the industry will realize a logical transformation from cycle to growth. But for small and medium-sized manufacturers, it will undoubtedly cause a great impact, especially some small non-compliant manufacturers, without huge funds to upgrade, will face the risk of bankruptcy!

According to a long-term follow-up observation of Mobile News Online, as early as 2016, copper prices began to rise in March, and the leading increase was mainly the domestic second-largest copper foil substrate manufacturer Kingboard Chemical (now renamed Kingboard Group). As of the end of 2016, both the lithium battery copper foil and the standard copper foil have been in a state of pricelessness. By 2017, the price increase of copper foil/copper clad laminates still has not been alleviated! Attributable to the price increase of copper foil/copper clad laminate, the price of PCB board manufacturers is also rising! Previously, Mobile News Online had repeatedly reported that PCB manufacturers Kingboard Laminates and Kingboard Chemicals continued to increase their prices, prompting revenue and stock prices to rise all the way!

In 2016, some of the copper foil industry has long been unable to withstand the long-term low-cost shutdown of factories and the lithium batteries required for some copper foil steering electric vehicles, and the supply of copper foil for printed circuit boards (PCB) and copper foil substrates (CCL) continues to be in short supply. According to data from the China Chemical and Physical Power Industry Association, the price of raw materials for lithium batteries, including copper foil, electrolytic solvents, and diamond salt, has risen significantly, and the price of some products has even increased by 50%. The copper clad laminate is also affected by the lithium battery and automobile market, leading to out of stock and price increases!

On August 21, 2017, Kingboard Laminates, the world's largest supplier of copper clad laminates, issued another price increase notice, and immediately increased the prices of its PCB materials (copper clad laminates) and PP (prepregs) by 10 yuan per sheet and 10%. . This is the third time the company has issued a price increase notice since July. The first two were on July 7th and 26th. The price increases were both RMB 10 per piece and 10%.

At that time, Kingboard Chemical also stated that in the second half of the year, the electronic product market has entered the traditional peak season, and the demand for copper clad laminates has increased significantly, and the shortage of supply has become more obvious. Therefore, the group has once again raised product prices. The Group is increasing the sales of high value-added copper clad laminates, and the new production capacity will be gradually released, and the operating efficiency is expected to continue to improve. The number of orders in the printed circuit board department has increased considerably, and the production capacity of high-end circuit boards is in short supply.

On the evening of November 21, 2017, according to an announcement issued by Shengyi Technology, the company will publicly issue convertible corporate bonds with a total face value of 1.8 billion yuan with a term of 6 years. Mainly used in the industrialization project of high thermal conductivity and high-density printed circuit board copper clad laminate (Phase II), the annual output of 17 million square meters of copper clad laminate and 22 million meters of commercial bonding sheet construction projects, of which the former will invest 10.12 100 million yuan, 700 million yuan from the fund-raising will be used, and the latter will invest 1.0 billion yuan and 900 million yuan from the fund-raising will be used! In addition, 298 million yuan will be invested in the establishment of a new R&D office building. According to statistics, the total investment in the three major projects will reach 2.310 billion yuan!

From the perspective of environmental protection, as early as December 2017, a number of industrial enterprises in Kunshan, Jiangsu received a notice: On December 24, 2017, the Office of the Leading Group for the Special Action for Two Reductions, Six Regulations and Three Improvements in Kunshan City issued Document No. 186, Kunshan 263 Office (2017), decided to suspend production of three watershed industrial enterprises in Wusong River, Zhaotun (Shipu) and other three sections from December 25, 2017 to January 10, 2018. When the time expires, it will be decided whether to postpone depending on the water quality. . 270 industrial enterprises will be fully shut down.

Among them, these 270 companies include 3 resistor companies, 1 semiconductor company, and hundreds of PCB circuit board companies. A number of companies have confirmed that they have received notices of discontinuation of production. Zhou Guohua, deputy director of the Kunshan High-tech Zone's Work Safety Supervision and Management and Environmental Protection Bureau, confirmed the authenticity of the notice, but said that the factory did not completely stop production, but only required processes that produce wastewater to reduce emissions.

In addition, according to relevant sources, the PCB industry has been shuffling the cards in the past two years. Undoubtedly, under the supervision of relevant policies, the speed of shuffling will accelerate! It also emphasized: “The PCB industry reshuffle first started from the fluctuation of raw material prices, followed by the acceleration of the capital market, and the environmental protection department gave it a heavy blow. Multiple factors have accelerated the reshuffle of the industry and eliminated unqualified small companies, making the industry concentrated in the past two years. The improvement is very fast!"

PCB industry capital prevails to go public and integrate the two-pronged approach: the future or the integration of packaging substrate business