Continuous growth of automobile PCB demand and capacity expansion drive future performance growth

With the continuous improvement of automobile intelligence, networking and electrification, the demand for PCB has increased significantly. As an important support of electronic components, PCB is the carrier of electrical connection of electronic components. PCB downstream application scenarios are rich, including communication electronics, automotive electronics, consumer electronics and other modules.

At present, with the rapid development of new energy vehicles, the demand for automotive PCB has increased significantly. However, the concentration of the automotive PCB industry is low, with overseas manufacturers occupying the top three shares, while Chinese manufacturers still have a small share, so there is considerable room for improvement.

Rapid growth of automobile PCB market space

PCB printed circuit board is an important electronic component and the support of electronic components. Its downstream applications cover communication, automobile, etc. With the rapid development of new energy vehicles, automobile electronic PCB track is expected to release broad development space.

Automobile PCB is mainly used in control system, audio and video system, GPS module, etc. With the rapid development of new energy vehicles, the cost of automobile electronics in the whole vehicle is increasing, and the demand for PCB is growing continuously. At present, the proportion of automotive electronics of new energy vehicles has reached 65%, significantly higher than that of fuel vehicles. The continuous improvement of automotive electronic applications will drive the demand growth of its basic component PCB.

Experts predict that with the development of the "new four modernizations" of automobiles in the future, the demand for PCB will increase significantly. Specifically, in terms of automotive intelligence, the penetration rate of ADAS (Advanced Driving Assistance System) is gradually increasing, and most of the sensor schemes are 1V1R. However, it is expected that the promotion of automatic driving above L3 level will drive a significant increase in the number of sensors in the future, thereby driving the growth of the number of PCBs used for sensors.

Intelligent cabin

At present, there is a trend of multi screen and large size for automotive cockpit instruments and screens. Zuosi Automobile Research predicts that the average number of screens will increase from 1.62 in 2019 to 2.66 in 2025, and develop to more than 14 inches; The assembly quantity of liquid crystal instruments in the first three quarters of 2021 will increase by 44.5% year on year. In the future, 10 inch to 12 inch liquid crystal instruments will also become the mainstream of application. The automobile display screen contains PCB, and the growth of its application quantity will drive the demand for PCB to increase.

Networking

It is predicted that in 2022, the penetration rate of the global networked car ownership will reach 24%, and networking will gradually become the standard configuration of cars. The penetration rate of T-Box (intelligent vehicle terminal) is expected to rise rapidly from 50% in 2020 to 85% in 2025. T-Box is also based on PCB development. It is expected that the scale of PCB related to the Internet of Vehicles will reach 922 million yuan in 2025.

In addition, new energy vehicles are developing rapidly. In the new energy electronic control system, PCB is mainly used in VCU (vehicle communication device), MCU (micro control unit) and BMS (battery nanny). The new energy vehicle electronic control system expands the new space of vehicle PCB.

It is estimated that the global scale of automotive PCB will reach 12.48 billion US dollars by 2028, with a compound growth rate of 5.30% from 2020 to 2028. At present, the market size of automotive PCB in the Asia Pacific region ranks first in the world, accounting for 38% of the global market share. In the future, the market in the Asia Pacific region will become the market with the highest growth rate.

Automobile PCB industry has been highly concerned by institutions

The continuous growth of the automotive PCB market has also received high attention from the institutions. According to the recent research report of Tianfeng Securities, from the demand side, with the promotion of intelligence, networking and electrification, the demand for PCBs has increased significantly, and the stability of upstream prices will also drive the development of the industry.

With the rapid increase of demand for automotive electric intelligent PCB, the future market space is broad, and PCB enterprises with high "vehicle content" will benefit the most. At present, the growth of automotive PCB mainly comes from new energy vehicle customers, while traditional automobile manufacturers will face the transformation to new energy vehicles. PCB manufacturers of existing traditional automobile customers have huge growth potential.

According to the data of the China Passenger Vehicle Market Information Joint Conference, the sales volume of new energy passenger vehicles in China in 2021 will increase significantly compared with that in 2020. The year-on-year growth rate of each month from January to December will exceed 120%. The annual cumulative sales volume will exceed 2.99 million vehicles, an increase of 169% compared with that in 2020. The new energy vehicles will enter a period of large-scale growth.

This rapid growth trend will continue in 2022. In the first five months, 1.712 million new energy vehicles will be sold in China, with a year-on-year growth of 145.6%. Experts believe that new energy vehicles are an established trend in the automotive industry and are expected to maintain a relatively high growth rate in the future. As new energy vehicles become the main application models in the world, more electronic devices are needed for automotive electronic control systems, which will drive the increase of PCB sales.

In addition, the auto PCB industry is also an industry with high barriers to entry and low industry concentration. At present, domestic manufacturers are making efforts to catch up. From the perspective of threshold, vehicle specification automotive electronics have strict requirements. The main certification standards include AEC-Q100, IPC-6011, etc. It also has relevant industry standards for PCB products. The technical level of products forms a "moat" and the threshold for entry is high.

On the supply side, with the fall in the prices of bulk commodities such as copper, it is also expected to increase the performance of relevant manufacturers. It is understood that the upstream copper clad plate of PCB accounts for about 30% of the overall cost, and the price of copper and epoxy resin greatly affects the cost of PCB. At present, LME copper price and epoxy resin price in March have stabilized or fallen back, which is expected to ease the pressure on PCB manufacturers. According to the research report of securities companies, it usually takes 2-3 months for the commodity price changes to transmit to the downstream, and the impact of the third quarter performance may be expected to emerge.