PCB industry to rise at the global economic boom in 2021
Despite COVID-19’s interruption, benefited from the business opportunities out of 5G applications and work/study from home, the global PCB industry was boosted in 2020 by the stay-at-home economy bolstered with products such as laptops, communication devices, game consoles, tablets, and others. As a result, a growth of 9.4% to a scale of US$69.7 billion was expected from the 2020 global PCB output. Although no sign of relief is observed in the pandemic, based on the economic recovery in Europe and the US and the rise in the demand for 5G terminal application, a growth of 6.2% is expected in the global PCB output, according to the Industry, Science and Technology International Strategy Center (ISTI), Industrial Technology Research Institute (ITRI). However, it is noteworthy that factors including global chip shortages, material price inflation, delivery and transportation delays due to global liner congestion, and deterioration of the pandemic in India and Asian countries have reduced the global manufacturing momentum and caused an impact on the consumer electronics market to bring unpredictable changes to the global PCB industry. Facing such an unfortunate scenario, the top four Asian PCB layers: China, Taiwan, Japan, and South Korea, accounting for nearly 90% of the global PCB output, have started future industrial deployment in response to these situations.

Output value exceeds NT$1 trillion to push IC substrate leadership
With a 2020 domestic and export output reaching NT$1.0386 trillion, the PCB industry has become one of Taiwan’s three electronics industries with a trillion-dollar output value. In terms of product proportion in both domestic and export sales, FPC accounted for 27.5%, multilayer board 27.7%, HDI 19.9%, and IC substrate 13.2%. Due to the diversified distribution of product types, Taiwan’s PCB industry has more chances to deal with the globally changing PCB market. With a market share of nearly 31%, Taiwan’s IC substrates are ranked top of the world. While the IC substrate is also a commonly invested category in recent years, suggesting that Taiwanese PCB manufacturers are also strong in advanced technology in addition to the complete product lineup. However, overseas competitions are keen. For example, Chinese PCB manufacturers are expanding HID and multilayer board capacity with abundant capital, while Japanese and Korean manufacturers rival the IC substrate market. Despite ranking at the top in the world with an overall industrial scale of 33.9%, advanced technology, smart manufacturing, and upgrading, restructuring domestic and overseas deployment, and self-determination in technology and materials are the important issues for Taiwan’s PCB industry to maintain global leadership. Although the pandemic outbroke in Taiwan in 2021Q2, the production momentum remained unaffected due to the gradual amelioration of the pandemic and meticulous prevention of manufacturers. As a result, the purchasing managers’ index (PMI) of 2021H1 maintained over 60 in the higher register. It is believed that the future development of Taiwan’s PCB industry will be promising following the thriving demand for 5G and terminal application products.

Capacity expansion and technology improvement of Chinese PCB manufacturers through policy and market strengths
As the top four Asian PCB layers are still maintaining steady growth, the Chinese PCB industry is tailing after Taiwan with a market share of 28.4%. Despite the unfavorable factors, including COVID-19 and lockdowns in early 2020, the slowdown of the pandemic and the continuing growth of 5G communication and computers have allowed the Chinese PCB industry to enjoy the easy thing after all difficulties in 2020. In addition, the policy support of 5G telecommunications also provided Chinese PCB manufacturers a direction for expansion. As a result, leading the Chinese PCB manufacturers, including Shennan Circuits, Shenzhen Kinwong Electronic, Shenzhen Fastprint Circuit Tech, and Shengyi Technology, are increasing capital expenditure to expand capacity, notably for PCB manufacturers in Guangdong and Guangxi provinces. In terms of product proportion, HDI and PCB at 72.3% are the highest, then FPC at 24.4%. While leading Chinese PCB manufacturers maintained an R&D investment up to 4-6% in 2020H1, showing that they are bridging the technical gap in advanced processes with competitors in addition to capacity expansion. Although the pandemic broke out in certain areas in 2021H1, no large-scale outbreak was reported due to the Chinese government’s strict control. In 2021H1, China’s manufacturing industries maintain steady growth as witnessed by a PMI of 50-52.

Rebound from a fall: Japanese manufacturers on the road to transformation
Ranked as the world’s third-largest with a market share of 16.9%, the Japanese PCB industry keeps declining every year. Due to the high production cost in mainland Japan, Japanese PCB manufacturers continue to expand overseas capacity, mostly in Southeast Asian countries, to a 50:50 basis over the domestic capacity. In 2020, the proportion of Japan’s PCB products was FPC 46.4%, IC substrate 33.8%, and HDI and PCB 19.4%. After two years of decline, the Japanese PCB industry regained growth in 2020 after increasing the proportion of IC substrate output. To deal with the global substrate shortage, besides expanding IC substrate capacity, Ibiden and Shinko have also reduced uncompetitive product lineups to retain advanced products with higher added value. For example, due to the stagnancy of FPC demand for smartphones and the keen external competition, FPC plant Mektron under NOK announced labor cuts of 27% in 2020. Compared to the Chinese and Taiwanese PCB industries, although the Japanese PCB industry is not as superior as it was, materials for making advanced PCBs are still controlled by the Japanese PCB industry. This will favor its transition toward niche products for a transformation into a small but excellent model. Due to the return of COVID-19, Japan declared an emergency control in 2021H1, challenging the production momentum and pressurizing the supply chain of the PCB industry. Although the PMI in 2021H1 of 49-54 suggests an ongoing trend, further observation is required to determine if Tokyo Olympics 2020 will affect Japan's pandemic condition and industrial development.

Korean PCB manufacturers sized the substrate market with a highly independently supply chain 
The Korean PCB industry was ranked fourth in 2020 with a market share of 11.3%. The 2020 product production was substrate 60.5%, rigid-flex board 14.8%, and FPC 13.3%. Strategically, the Korean PCB industry also coped with the market changes by centralizing investments in products with higher added value in the last year. In 2019, leading Korean PCB manufacturers such as Samsung and LG ended the HDI business with low profit and turned to the substrate market, raising the 2020 substrate output by 10% over 2019. Further observation is required to determine if over-emphasis on a single product will hinder the development of the Korean PCB industry. However, it is certain that the rises and falls of leading Korean manufacturers of terminal electronic products will affect the competitiveness of the Korean PCB industry. PCB development in South Korea will focus on smartphone-related products, and the substrate will plan a more important role. Benefited from the strong export and domestic demands in 2020H1, South Korea maintained a PMI of 52-56. However, whether or not the Korean government can effectively control the second outbreak of the pandemic in July will become an important variable affecting the economic and industrial development of South Korea.

Taiwan’s PCB industry must hit the nail on the head when each of the four Asian PCB layers has its own way
As a result of international trade competitions, COVID-19, and the deployment of 5G business opportunities, the top four Asian PCB layers with influence over nearly 90% of the global PCB supply will continue to influence the development of the global PCB industry. While each of them has drawn up plans for next-generation deployment, except for China which will seize the HDI market by increasing the market share in related products with its production advantage and turn to more advanced products by following the national policy of semiconductor development, Taiwan, Japan, and South Korea have turned to niche products, customization service, and advanced technology in addition to consolidating the existing markets. The substrate is the prime target. Stimulated by 5G, IoT, and PC, the market substrate demand is thriving, particularly in the global chip shortage that substrates play an even more important role. Although the Taiwanese PCB industry can maintain its strength for 3-5 years thanks to the geographic advantage brought by the semiconductor industry, it is hoped that the government can plan and implement projects to transform Taiwan into a “global advanced PCB technology center” and establish systematic policies to foster Taiwan’s PCB industry to continue with advanced manufacturing and materials and equipment autonomy to develop the hard power in advanced manufacturing for Taiwan’s PCB industry.