PCB News - Risks faced by PCB manufacturers in the second half of the year

Circuit board industry PCB
The development speed of the PCB industry may slow down or decline, which will adversely affect the operation of PCB companies
Risks from fluctuations in the macro economy and downstream markets

Printed circuit boards are the key electronic interconnections of electronic information products and the substrates loaded on various electronic components. The downstream is the electronic information manufacturing industry. The final products are widely used in various fields of production and life, and are more affected by fluctuations in a single industry or field. It is small, but has a greater correlation with the overall social and economic prosperity, and is significantly affected by macroeconomic cyclical fluctuations. In recent years, my country has gradually become the main production and consumption base of global printed circuit boards, and my country's printed circuit board industry has become increasingly affected by the changes in the global macroeconomic environment. The company’s printed circuit board products are diversified and have a wide range of downstream applications, which to some extent disperse the influence of fluctuations in individual downstream areas. However, if the overall macroeconomic decline causes the overall downstream demand to shrink, the development speed of the PCB industry may slow down or Decline, thereby adversely affecting the operation of PCB companies.

Raw material price fluctuation risk

Since the second half of 2020, the prices of major upstream raw materials have ushered in a new round of price increases. Due to the impact of the new crown pneumonia epidemic, foreign copper mines have been suspended and under-operated, coupled with the impact of the global loose monetary policy, the price of bulk metal copper has risen rapidly. The raw materials required for the production of printed circuit boards account for a relatively high proportion of the cost. The main raw materials include copper clad laminates, copper foils, prepregs, copper balls, etc. The prices of copper clad laminates, copper foils, and copper balls are mainly affected by copper price fluctuations. Due to the large proportion of raw materials in the finished product, if the supply and price of raw materials fluctuate significantly, it will be

It will have a negative impact on the overall gross profit margin and profitability of PCB companies.

Increased market competition risk

According to Prismark statistics, as of 2019, there are about 2,800 PCB companies in the world, and there are more than 2,000 PCB manufacturing companies in mainland China. In 2019, they accounted for 53.70% of the global output value. The market concentration of the industry is low. The market is full of competition. If PCB companies cannot make timely technological and business model innovations in accordance with industry development trends, changes in customer needs, and technological progress to enhance the company’s competitive strength, and timely launch of competitive high-tech and high-value-added products, the company’s operations may be caused by market competition. The risk of declining performance or being overtaken by competitors.

New crown pneumonia epidemic risk

The global epidemic prevention and control will remain severe in 2021, and the risk of a decline in the global macro economy and the electronics industry still exists. PCB companies need to strengthen full communication with customers, formulate emergency plans in advance, and jointly deal with the possible adverse effects of the epidemic.

Exchange rate fluctuation risk

If PCB companies have export products, they may face the risk of exchange rate fluctuations. In recent years, the exchange rate of the RMB against the US dollar has fluctuated due to the influence of macro factors such as Sino-US trade frictions, and the international situation such as the global new crown pneumonia epidemic. If the renminbi exchange rate fluctuates in the future, the impact of exchange gains and losses on the profitability of PCB companies may increase.