【英文】麦格理报告：中国PCB行业：在5G时代日益占据主导地位China PCB sector Growing dominance in the 5G era（72P）

英文研究报告 2019年09月03日 08:03 管理员

We initiate coverage of China PCB sector with a positive stance We believe structural changes on both the supply (consolidation) and demand sides (5G) will make China’s PCB sector trade as a non-commodity-like sector. For specific China PCB company names, the new technology 5G cycle presents more growth and less cyclical features in the coming 2-3 years. Supply: Tightening environmental policy prompts industry reform China’s government has been pushing for a tighter policy for “environmental protection” since late 2017. This has indirectly pushed many small PCB “shops” out of business, forming a supply-side reform wave. PCB small “shops” are facing a dilemma between 1) being fined while continuing with existing operations, and 2) adding policy-approved systems. Yet both actions will take ~30% off their profit, forcing them to close down. We sees the tightening policy continuing in the coming years, leading to more consolidation and thus benefitting leading PCB players. Demand: 5G to drive PCB upcycle for the next decade The PCB sector has been strongly impacted by product cycles, from PCs to feature phones, to smartphones, and now 5G.

Countries around the world have been competing for this multi-billion business sector. With 5G commercialization having already started in 1H19 in the US/Korea, and 5G infrastructure being deployed in China, there is no doubt the 5G uptrend has started in 2019. 5G product upgrades will move from the telecom sector initially to the IDC sector and then to the consumer electronics sector, lifting PCB demand in terms of both volume and ASP growth in material and manufacturing process. We expect the PCB content value per station for 5G macro station will be ~3 times of 4G station in the initial stage and ~1.8 times in the mature stage. Upstream: 5G requires high speed, high frequency material 5G network’s essential upgrade characteristics are high speed, low power and low latency. And these upgrades will need PCB to help fulfil the “high speed and high frequency” features. To achieve these two features, PCB makers need to have a more precise manufacturing process, and more importantly, upstream laminate/CCL makers need to provide an upgraded material. As the trade war uncertainty continues, we expect the growing preference for domestic supply chain could be extended to PCB and laminate/CCL segment, thus benefitting China’s high speed, high frequency laminate makers.