Tuesday, January 15, 2019
Taiwan PCB makers enjoyed strong growth in 2018 in shipments of their flexible boards, rigid-flex boards and substrate-like PCBs to new application sectors of datacenter servers and network communication equipment, and expect such shipments to grow further in 2019 as the 5G era is set to come. But they are all conservative about overall business prospects for 2019 due partly to political and economic uncertainties arising from the US-China trade war.
In 2018, Taiwan makers of flexible PCBs (FPCB) did not see growth momentum as strong as that in 2017, but such boards will be increasingly needed to support production of ever-slimmer consumer electronic devices. Shipments of FPCBs for the iPhone X series almost double those for previous models, which has benefited Taiwan suppliers including Zhen Ding Technology (ZDT), Flexium Interconnect, and Career Technology.
Increased presence in FPCB space
In recent years, Taiwan's FPCB makers have significantly expanded their presence in the consumer electronics market due partly to their Japan counterparts quitting production of such boards. At the moment, ZDT is the world's largest PCB maker with annual revenues reaching US$3.58 billion in 2017, compared to US$3.23 billion for Japan's Mektec, according to Prismark statistics. Flexium has enjoyed a significant boost in its share of the market for communication management modules, while Career has kept expanding shipments of its LPC (liquid crystal polymer) boards.
After one year of efforts in production improvement, Taiwan makers have remarkably improved their yield rates for substrate-like PCBs (SLP) since the start of 2018, turning their SLP production lines into profitable operation. ZDT again leads in this product segment, followed by Unimicron, Compeq Manufacturing, and Kinsus Interconnect Technology.
Nevertheless, the SLP market still posts relatively limited growth. In addition to iPhones, Apple Watch and Samsung's S series smartphones, only part of high-end smartphones from China vendors have incorporated SLP, with the market failing to reach economies of scale. Some makers have reportedly mulled temporarily halting their SLP production lines.
In contrast, rigid-flex boards boast great application potentials, with the largest application now in camera and power supply modules. Apple's AirPods and auto-use radars have also incorporated rigid-flex board technology. Currently, Unimicron, Compeq and Unitech PCB have performed well in this segment and are expected to sustain technological leaderships by leveraging their first-mover advantages.
Niche application segments
Besides handsets and other consumer electronics devices as major application outlets for PCBs, datacenter servers and network communication products were emerging as new niche PCB application segments in 2018. This has prompted Taiwan suppliers including Tripod Technology, Hannstar Board, and Gold Circuit Electronics, which were devoted to supplying notebook PCBs, to shift part of capacities for producing niche boards in 2018, which helped boost their revenues remarkably. Even their upstream copper clad substrate suppliers such as ITEQ and Taiwan Union Technology have also benefited significantly. For all of them, continued revenue expansions from the new niche application markets can be well expected in 2019.
Automotive electronics is another space with great sales potentials for PCBs, especially in applications to electrical vehicles, ADAS (advanced driver assistance systems), radar products. But since these new applications have yet to be extended to midrange or even lower-level vehicles, makers are encountering difficulty expanding sales of automotive PCBs.
Taiwan PCB makers are turning conservative about their overall business prospects for 2019 due to some undesirable factors. Despite a 90-day truce in the US-China tariff war, the arrest of Huawei's chief financial officer Meng Wanzhou in early December 2018 may undermine the progress of 5G infrastructure constructions in China and other parts of the world if the event eventually worsens into US banning exports of key components to the China's leading telecom equipment supplier. This would cast clouds over PCB makers' shipment prospects in the year.
Undesirable factors may dim prospects
Stagnant growth in smartphone sales and unclear visibility as to when massive demand for PCBs will erupt from 5G and automotive electronics applications are also factors behind makers' lack of optimism about growth prospects for 2019. At least, high growth rates in 2017 and 2018 are not expected in 2019.
Accordingly, most PCB makers are not keen to expand capacities in 2019, and Unimicron, Compeq and Tripod have all said that they will not implement any large-scale capacity expansion plan in the year.
On another front, China's leading PCB makers such as Shennan Circuits and Wus Printed Circuits are catching up with Taiwan peers in terms of technology development and capacity scales, and they may even outperform Taiwan makers in the near future as they are ready to mass ship PCBs or substrates for 5G infrastructure applications, according to ZDT chairman Charles Shen.
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