PCB Technical - The rise of the local PCB industry chain

From the perspective of industrial rise, the first industrial transfer was from the United States, Europe, Japan, South Korea, and Taiwan. In the past 10 years, it was mainly to China. The industries are mainly concentrated in the Pearl River Delta and the Yangtze River Delta. From the perspective of the PCB industry structure, it can be divided into four parts: board factories, materials (raw materials and auxiliary materials), equipment manufacturing, and services (environmental protection, software, information systems, etc.).

In the past ten years, materials, especially copper clad laminates, have achieved rapid growth. The output of copper clad laminates has achieved a steady increase, reaching 234 million square meters in 2017, and the global proportion of rigid copper clad laminates has risen from 60% to 70%. However, when we look at the supply of materials, imports are still greater than exports, which shows that local supporting capabilities need to be improved. At the same time, looking at the product structure, you will find that high-end materials are more dependent on imports, which will also be a huge business opportunity for material manufacturers in the industry in the future.

In terms of investment in PCB equipment, from 7.7 billion yuan in 2008 to 24 billion yuan in 2017, equipment investment accounted for a ratio of 1:8 in revenue that year. Both the scale and technical capabilities of local equipment manufacturers have been greatly improved.

The global share of China's PCB industry has changed dramatically, from less than 10% in 2000 to 30% in 2008 and more than 50% in 2018. China has become the world's largest PCB exporter and has achieved a surplus in imports and exports since 2014.

The capital market has increasingly become a booster for the development of the industry. In 1997, Ultrasonic Electronics became the first listed company in the industry; in 1998, Shengyi Technology was successfully listed. In six or seven years, these two companies have carried the banner of capital in the industry. The past ten years have been a decade of capital market power. More and more companies have achieved IPOs, especially in 2017, which has become a major year for capital in our industry. This year, a total of 11 companies successfully IPO. Huazheng New Materials and Jingwang Electronics were the first companies to go public in 2017. The successful listing of Shennan Circuit at the end of the year marked the successful landing of the largest local PCB manufacturing company in the capital market. In 18 years, Pengding successfully went public and became the first company in the industry with a market value of more than 60 billion yuan. This is something that our industry is very proud of. It is especially important to emphasize that PCB has become a separate sector in the capital market, and more and more analysts are beginning to pay attention to the development of the entire PCB industry. I would like to thank Dr. Jiang Xugao, who was the first analyst to invest in industry research, and Zhongyuan Dr. Jiexiong and others, they have made active contributions to industry research and industry development.

In particular, for entrepreneurs who are going to the capital market, they need to pay more attention to the long-term growth and healthier development of the company, instead of paying too much attention to short-term benefits and ignoring the long-term value of the company. This is also the impact that a company may have after it goes public, and it needs to be paid attention to and grasped well.

For the entire PCB industry, the accumulated financing is close to 60 billion yuan, 90% of which were completed in the last ten years, and 17 financings exceeded 1 billion yuan. And financing methods have become diversified, including initial fundraising IPOs, additional issuance, convertible bonds and other methods. Direct financing through multiple channels has greatly assisted the industry.