Artificial intelligence, Beijing is not far behind!
On March 30, 2024, the 2024 Beijing AI Native Industry Innovation Conference was held, which has become another boost to promote the progress of domestic artificial intelligence technology.
In order to promote the rapid development of artificial intelligence, the Beijing artificial intelligence data training base was opened, and 3000P intelligent computing power was put into use, exceeding the computing power resources of one million computers.
In the development of artificial intelligence and large models, computing power is the core foundation, and behind the computing power is the huge demand for AI servers, which will also drive the entire upstream components, and PCB is an important part.
So, what are the important roles of PCB in the electronics industry?
PCB is the abbreviation of Printed Circuit Board, which is usually a circuit board that forms a circuit connection according to the design on the general base plate material.
PCB is not only the base plate for the electrical connection of electronic components, but also can assist components to achieve corresponding functions, so it is also an important factor that directly affects the quality of electronic products.
According to the number of circuit layers, PCBs can be divided into single-sided, double-sided, and multi-layer boards. The higher the performance of electronic products, the more high-end PCB products with a higher number of shelves are needed.
With the development of products in the fields of communications, consumer electronics, and automotive electronics, the demand for high-end PCB products such as high-end multilayer boards, high-end HDI boards, and packaging substrates has further increased.
It can be said that although PCB is not as high-end and high-grade as chips, it can be widely used in home appliances, consumer electronics, computers, communication equipment, automobiles and many other electronic fields, and is a well-deserved "mother of electronic products".
From the perspective of the global market, the three most widely used areas of PCB are communications, computers, and consumer electronics, accounting for 32%, 24%, and 15% respectively.
From the domestic market, the situation is similar, the top three application areas are communications, computers, automotive electronics, accounting for 31%, 23% and 17%.
Overall, the 3C industry and the automotive industry are the most important application fields of PCB, and they are also the industries with the fastest technological development in the world, which are expected to drive the overall performance of PCB.
So, what is the future of the PCB industry?
Judging from the current PCB market pattern, the communication industry and computer are still the largest PCB downstream application markets.
However, from the downstream point of view, benefiting from the rapid development of the field of artificial intelligence, the global server application field has the fastest growth rate, and the compound growth rate is expected to be as high as 9.87% from 2021 to 2026.
The second is the field of automotive electronics applications, benefiting from the future development trend of automotive intelligence and electrification, the growth rate of the global automotive electronics field is second only to servers, and the compound growth rate is expected to be as high as 7.91% from 2021 to 2026.
In the field of artificial intelligence, since OpenAI launched the ChatGPT large model in November 2022, domestic and foreign technology giants such as Google, Meta, Alibaba, and Baidu have also launched their own large models.
On the one hand, the competition for global AI large models is very fierce, and the parameters of large models of various companies are constantly upgraded, resulting in different increases in the demand for computing power.
On the other hand, the application of large models is very fast, and the demand for inference computing power in the application stage will also be very large. The domestic Kimi large model once crashed due to the lack of server computing power.
Therefore, the expansion of computing power is something that all large model manufacturers must do, and AI servers, as the core infrastructure of large model training and pushing, have seen rapid growth in shipments.
According to the data, global AI server shipments in 2023 will be 1.25 million units, a significant increase of 45% year-on-year, and it is expected to ship 2.369 million units by 2026, with a compound growth rate of 23.75%.
The rapid growth of server shipments has also greatly stimulated the growth of PCBs, and compared with traditional servers, the main increment of AI server PCBs lies in GPU components.
In addition, AI servers have high requirements for transmission speeds, requiring 20-30 layers of HDI boards, and ultra-low loss materials are also considered as materials, further increasing the proportion of PCB value.
At present, the price of PCB boards with 8-16 layers is $456/square meter, and the price of PCB boards with more than 18 layers is as high as $1538/square meter, and the output value of server PCBs is expected to reach $12.5 billion in 2026.
So, how big is the domestic PCB market?
With the changes in the past two decades, the current global electronics manufacturing capacity is mainly concentrated in Asia, especially the PCB industry, which dominates Asia.
In 2022, the PCB output value in Asia (mainland, Taiwan, South Korea, and Japan) will account for 86.81% of the global output value, a significant increase of 34.30% compared with 2000, completely controlling the PCB market.
Among them, the PCB output value in mainland China has increased the fastest, and the global market share has increased significantly from 8.15% in 2000 to 53.24% in 2022, becoming the world's largest PCB manufacturing base.
At present, the domestic market is still dominated by low-end multi-layer boards below 8 layers, accounting for as much as 49%, and high-end products such as high-end multi-layer boards, high-end HDI boards, and packaging substrates still account for a low proportion.
However, major manufacturers are also actively developing high-end products, and related products have been gradually landed, and the proportion of high-end products is expected to further increase in the future.
So, how is the PCB industry chain distributed? What are the outstanding companies in China?
From the perspective of the industrial chain, the upstream of PCB is mainly the raw materials and equipment required for production, and the key raw materials are mainly copper clad laminates, prepregs, copper balls, copper foils and other products.
From the perspective of the cost composition of PCB finished products, these material costs account for the highest proportion, accounting for more than 60% of the total cost of products.
Among them, copper clad laminates are the mainstay, which is mainly composed of copper foil, glass fiber, epoxy resin and other materials, so copper prices, glass fibers, and epoxy resins directly affect the production cost of PCB.
At present, domestic electronic grade epoxy resin suppliers mainly include Hongchang Electronics, Tozai Technology and other manufacturers.
At present, Shanghai Electric Co., Ltd., Shenghong Technology, Shennan Circuit, Shengyi Electronics, Guanghe Technology, Aoshikang and other enterprises are actively deploying in the field of server PCB, and related products have been shipped in batches.
In 2023, the company passed NVIDIA's product certification for data center servers and AI servers, and has achieved mass supply.
At present, the company has released a performance forecast for the first quarter of 2024, and it is expected to achieve a net profit attributable to the parent company of 460-520 million yuan, a year-on-year increase of 129.66%-159.62%, and the gold content of the product has increased significantly.
This is mainly due to the large increase in demand for high-multilayer printed circuit boards in downstream application markets such as high-speed computing servers and AI, and it is expected that the revenue brought by AI will account for more than 30%, which is also the main growth point of the company's performance in 2024.
The reason why the company can continue to make efforts in the AI field is because 70% of the company's revenue comes from the communications industry, and it is a core supplier of Huawei's servers, which makes it easier to catch the rapid development of the AI industry.
Shennan Circuit, the company's data center business will grow slightly in 2023, mainly because the company's downstream is more in the field of automotive electronics, the communication industry accounts for a relatively low share, and it will take some time to expand server-related business.
On the whole, with the rapid development of artificial intelligence and new energy vehicles, the market demand for high-end PCB products is also further increasing, becoming a new performance growth point for industry companies in the future.
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Source: Flying Whale Investment Research