Global electronics industry takes off while COVID-19 is still in the dark

         COVID-19 jeopardized the global economy in 2020, leading to a recession of up to 3.5%. Despite the impacts on the PCB’s end-user products, the pandemic has stimulated demand for related end-user products like laptops, game consoles, and video equipment due to the lifestyle change, such as work/school from home and the homebody economy. Most importantly, as the development of 5G remains unaffected by the pandemic, the growth of 5G-related end-user products and infrastructures continues. All these factors have enabled Taiwan’s PCB industrial chain to shine in the dark, with an overall scale, combined domestic and overseas outputs, reaching a new high in history to NTD1.0386 trillion (note 1: although the 2020 output of Taiwan’s PCB industrial chain is calculated alongside the output in Taiwan of foreign materials manufacturers and the output of chemicals, the net PCB output still exceeded one trillion to NTD1.0136 trillion, up by 5.1%), making the PCB industry one of Taiwan’s three electronics-related industries with a 2020 output exceeding one trillion NTD, and creating a new milestone in the development of Taiwan’s PCB industry. According to Prismark estimates, the 2021 growth of the global market is 8.5%. In addition to high performance computing (HPC) which will continue to drive the demand for various chips and substrates, the demand for various electronic products, such as smartphones, laptops, wearables, servers, EVs, and network components is expected to rise, bringing overall growth in the post-pandemic period.

Intensifying competitions urge for strengthening industry resilience

         2020 combined output of cross-strait PCB industries increased by 5.1% from NTD662.4 billion in 2019 to NTD696.3 billion, with a growth for four consecutive years. In terms of individual PCB products of Taiwanese manufacturers, except the rigid-flex board, growth is seen in all other products, such as the IC substrate, HDI, multilayer board, and flexible PCB. In addition to the demand for end-user products due to lifestyle change (work/school from home and the homebody economy) and 5G development mentioned above, the demand for advanced processes driven by HPC chips and high-speed memory products, the brilliant shipping performance of US mobiles with delayed launches and shipping, and the recovery of the global automotive sales since 2020 Q2 were all factors bolstering Taiwan’s PCB manufacturing industry. When the pandemic begins to slow down, the economic recovery is on its way, the realization of 5G applications, and the continuous growth of all end-user products, the 2021 output is optimistic. Despite the promising market demand in 2021, a keen competition with Chinese PCB manufacturers is foreseeable for the following reasons. Although Taiwanese PCB manufacturers can maintain 3-5 years ahead in IC substrates thanks to the strengths of Taiwan’s semiconductor industry, Chinese PCB manufacturers have become keen competitors in products including the HDI, flexible PCB, and multilayer board through frequent capacity expansion with abundant capital, particularly in the HDI after defeating Japanese and South Korean rivals. Hence, Taiwanese PCB manufacturers must focus on upgrading advanced technologies and smart manufacturing, restructuring domestic and overseas deployment, and strengthening corporate resilience with the advantage in the complete PCB industrial chain, in order to face future challenges.

Capturing key materials for greater influence

         Benefitting from PCB industry growth, Taiwan’s PCB materials industry has seen a winning streak in recent years. The 2020 combined output of cross-strait PCB material industries reached NTD287.7 billion (note 2: although the 2020 output of the PCB material industry is calculated alongside the output in Taiwan of foreign materials manufacturers and the output of chemicals, the net PCB industrial chain output still reached NTD262.7 billion, up by 5.9%). Particularly, the development toward advanced processes driven by 5G business opportunities and advanced substrates also increase the demand for advanced materials. In terms of rigid PCBs alone, foreign manufacturers still dominate the advanced CCL market, such as high-frequency and high-speed products, Panasonic of Japan and Doosan of South Korea still lead the low Dk high-speed CCLs, and Rogers of the USA and ACG of Japan continue to dominate the high-frequent materials market. In terms of flexible CCL, the mass demand for high-frequency, low-transmission loss FCB antennas in response to 5G telecommunications development, the MPI and LCP are still the focused substrate materials. In the demand for low-frequency (Sub 6) materials, such as the MPI flexible CCL, although Taiwanese manufacturers are actively developing and introducing related products, DuPont is still the market leader. Although the LCP flexible CCL is the key material of mmWave antenna, Murata and Kuraray of Japan dominate the LCP film. Facing the future applications of B5G and low Earth orbit satellite with UHF (>40GHz) communication that may raise the demand for fluoro-based flexible CCL, Taiwanese manufacturers should make early deployment.                    Although Taiwan’s PCB materials industry had a brilliant performance in recent years, facing the foreseeable significant growth in the high-frequency and high-speed product market, besides ensuring steady materials supply for global customers, it is necessary to consider that the 2020 output of Taiwan’s PCB industrial chain is calculated alongside the output in Taiwan of foreign materials manufacturers and the output of chemicals, Taiwan’s PCB industry is at risk of supply disruption due the ban from the technology war. As this suggests a hidden crisis in the future develop of Taiwan’s overall PCB industry, how to achieve self-sufficiency of advanced materials has become an issue requiring immediate solution for Taiwan’s PCB industrial chain.

Mutual support for the common good and common strong

        The 2020 combined output of cross-strait PCB equipment industries increased by 1.5% from NT$53.8 billion to NTD54.6 billion. Despite the investment heat in PCB plants in recent years, as witnessed by over NTD100 billion in 2020, the output of PCB equipment was unable to rise accordingly because the PCB process is complex and requires diversified equipment combinations. Overall, Taiwanese PCB manufacturers use about 50% Taiwan-made equipment, compared to the 75% Taiwan-made materials consumption, the gap of equipment self-sufficiency is rather big, particularly the dry process which uses nearly 80% of imported equipment. Although most Taiwanese PCB equipment manufacturers also engage in the semiconductor and panel industries, as the scale of individual enterprise is small and the resources for development is limited, compared to Chinese equipment manufacturers which are 3-10 times bigger, the competitive gap is diverse. When Taiwan’s semiconductor and PCB industries are at the turn toward advanced manufacturing, if advanced equipment cannot provide corresponding support at this turn, stagnation is likely to occur in the industrial upgrading.

Hitting the nail on the head: Toward advanced process of PCB industry