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Published: 2019
Author: D.Y.
Flexible Printed Circuit Part 3
Hundreds of contending FPC manufacturers
Part 1 explains the types and uses of FPC; Part 2 explains the overview of FPC and the supply chain situation; this article will focus on Taiwan FPC manufacturers as the main object of introduction, while introducing global manufacturer competition and key customers. The global FPC manufacturers are concentrated in four countries. Japan, which has always been the leader in the past, followed closely by Taiwan and South Korea, and China, which shows the strength of the red supply chain, are all rushing to grab this $14 billion pie.
Major FPC Manufacturers in Various Countries
nation
1. Japan
It has a complete supply chain, especially the most upstream PI raw material polyimide or LCP raw material. With raw material control and technical advantages, it creates a leading position. In 2019, the Japan-Korea trade war controlled a number of key semiconductor raw materials, causing many Korean semiconductor manufacturers to be out of stock. Japan also has this advantage in the soft board industry. Most key raw materials are controlled by Japanese manufacturers, so raw materials are out of stock At that time, Japan was able to provide stable supplies compared to other countries. In recent years, there has been a trend towards the development of niche-type products with a small number of high unit prices, and the market share has remained above 40%. However, due to the continuous expansion of other business areas in Japan’s flexible PCB manufacturers, there has been no continuous large-scale investment in capital expenditures in flexible PCBs. As a result, the market share of Japan's overall FPC industry has declined year by year.
2. Taiwan
With a high degree of flexibility and coordination, it can quickly meet customer needs. The technical capability has been improved to the level similar to that of Japan, and it has successfully entered the supply chain of large electronic products such as Apple with the cooperation of the complete electronic industry supply chain. In addition, many soft board factories and key electronic component assembly factories are subsidiaries. , It is easier to grasp the trend and supply and demand inventory. In recent years, because the raw materials are highly controlled in Japan, they have gradually begun to develop raw materials by themselves, but there is still no substantial effect.
3. China
With a large amount of capital and expansion of production capacity, technology has been continuously improved in recent years, and the market share has gradually increased. China has a big advantage ─ ─ close to downstream assembly plants. In addition, there are a large number of mobile phone brands in China, ranging from high-end to low-end. All are covered, and it is an excellent training ground for companies that are new to FPCB, but it has not yet penetrated into several major supply chains, and it is worth paying close attention to in the future.
enterprise
1. Zhending Technology
Zhending was established in 2006. It is a relatively young company with Hon Hai as its shareholder. Zhending’s subsidiary is Pengding, a Shenzhen listed company in mainland China. Pengding is also the main production company of Zhending. The strength of Zhending cannot be underestimated. Boards account for about 80% of its revenue. Zhending is actively developing hard and multi-layer boards. Recently, when the international flip-chip packaging (COF) is seriously out of stock, Zhending has also put into mass production. At the same time, Zhending continues to invest in R&D in the field of soft boards, and its products include MPI and LCP. In recent years, it has also begun to develop raw materials to reduce its dependence on Japan. Although it is still not in actual use, there should be opportunities to improve its own production in the future. Proportion is not absent in several important needs in the future. In terms of 5G FPC, Zhending has leading technology and is also actively deploying high-end automotive FPC. The strategy of investing in high-end applications can also prevent the threat of continued expansion of the red supply chain. Compared with other competitors, Zhending has the broadest product line and has the opportunity to get rid of the risk of a single customer in the future. At present, it has become the world's largest FPC factory. Customers include Apple, OPPO, VIVO, Xiaomi, Huawei.... It is reported that among many FPC manufacturers, Zhending has been able to grab more than half of the iPhone's FPC quantity, which indirectly proves that Zhending Ding's strength in making soft boards.
2. Taijun Technology
A company established in 1997 that produces MPI And LCP, like Zhending, Apple is its most important customer and currently ranks second in Taiwan. In 2018, it will still focus on communication products, that is, antenna soft boards, with antenna soft boards as its strengths. It is expected in 2020 The launch of 5G LCP antenna soft boards is among the top in the timeline. When the 5G demand breaks out, Taiwan County's revenue will be very promising, because 5G will have higher performance requirements for soft boards (see Part 1 for details) . In 2019, we will increase capital expenditure and continue to expand production capacity and production technology, hoping to enter more fields of products. Among the various opportunities in the future, Taiwan County chooses to invest in Mini LED backlight modules. It is a big demand, but at present, Mini LED is still relatively unclear about the official mass production time. It may be in the foreseeable future or it may be in the past few years.
3. Jialianyi Technology
Jialianyi, the third largest FPC factory in Taiwan, was established in 1992. Compared with the first two, the product types are less. Only LCP FPC is produced. Important customers include Apple, Samsung, Xiaomi, and Huawei. Jialianyi has worked closely with the Academia Sinica to strengthen the automation of the production line, especially due to the rising labor costs in mainland China, giving priority to automating the production line in mainland China. A while ago, I also entered Apple’s supply chain and was responsible for the production of iPhone XR. The stock price rose sharply. However, due to poor yield and poor sales, it was unable to meet expectations. The stock price fell sharply and even triggered layoffs. With relatively concentrated resources, it should be possible to enhance R&D strength and improve yield in a short period of time in the future. Jialianyi’s revenue is relatively diversified, and there is no risk that a single customer has an excessively high proportion. Of course, this is also the result of not obtaining a large Apple order.
4. Nippon Mektron
Nippon Mektron is a global leader in FPC. Its customers also include Apple. However, in recent years, in order to diversify the risk of over-concentration of products in mobile phone applications, it has increased the proportion of FPC products in various markets, targeting automobiles, industries, and wearables. Device application market, develop a variety of products, and achieve product leadership through differentiation. Advantageous technical capabilities enable Nippon Mektron to develop a small number of diverse products with high unit prices and enter multiple niche markets, becoming a great weapon for it. In addition, entering high-end automotive soft boards can effectively increase gross profit and escape the Red Sea market. The fate of fighting.
5. Sumitomo Electric Industries
Sumitomo Sumitomo is a Japanese super-large group with abundant resources. It has the key upstream chemical material LCP resin in the soft board industry. Therefore, when producing high-tech soft boards such as LCP, other manufacturers are concerned about the lack of raw materials. Sumitomo can ensure that the raw materials are safe, and the integration of upstream and downstream also has good bargaining power. In addition to the aforementioned Apple and Huawei, customers also grab orders from Samsung, a major Korean mobile phone manufacturer.
6. Young Poong Group
It is a South Korean FPC manufacturer. Although it has a low global share, it includes South Korean customers Samsung and LG. In the past, it mainly supplied South Korean manufacturers. It also entered Apple's supply chain list this year.
7. Jingwang Electronics
It is a listed company in mainland China, which initially focused on hard boards. Later, through the merger and acquisition of Zhuhai, it has greatly improved the soft board technology, production capacity and top customers. It has also actively developed the application of soft boards in the automotive sector, and has also broken the predicament of weak R&D in the past few years. At present, the company's revenue is still dominated by hard boards, but the proportion of soft boards is increasing year by year.
Soft Board Price ASP
From the figure, we can see the annual sales and average prices of the three main FPC manufacturers in Taiwan. It is not difficult to find that Zhending’s sales volume and sales are several times higher than the other two, which also proves Zhending’s position among the soft boards. In 2018 In 2011, the price of FPC generally increased, only Tai County declined slightly. The capacity utilization rate of Observation Tai County decreased slightly compared with the previous year (80% → 77.8%). It is speculated that the capacity utilization rate may have decreased and the capacity utilization rate decreased slightly. The price keeps customers. It is also worth noting that Zhending and Taijun are MPI and LCP factories, while Jialianyi is an LCP factory. It should be that LCP is a higher-end product. The price is higher than MPI. The ASP of Jialianyi is higher than the other two. However, the truth is that the ASP of Jialianyi is only about 50% of other companies. The possible reasons include that the capacity utilization rate of Taiwan County is about 80% (not announced by Zhending), but Jialianyi is only about 60%. Second, FPC is a capital-heavy industry, and capacity utilization rate seriously affects gross profit. Therefore, Jialianyi lowers prices in order to increase capacity utilization. Another reason is that Zhending and Taijun have launched integrated FPCs, so the price is higher and the integration is soft. For example, the iPhone’s antenna (UAT) integrated ultra-wideband (UWB) and low antenna (LAT) integrated dock (Dock) will help increase the unit price. It is estimated that the total value of the new machine’s soft board will grow by 10-20%; the third The reason is that the above data only uses the number of pieces and price to calculate the ASP, but the factors that affect the price are the size of the flexible board, the number of layers of the flexible board, etc., so it is difficult to compare in detail unless there is more information.
R&D investment & gross profit margin of each company
Since FPCB is an industry with a high technical threshold, R&D energy is extremely important. Therefore, we compare the R&D investment amount of various manufacturers. Due to the largest revenue of Zhending, R&D is also the highest in Taiwan; Sumitomo's R&D expenses are much higher than other manufacturers. This is why The cost is that the R&D expenses of the entire group are not limited to FPC. However, it can be seen that the proportion of R&D investment in the entire group is still relatively high. If Taiwanese manufacturers continue to develop in the high-end field of FPC in the future, they must increase the proportion of R&D investment in order to expand their strength. That is, it is possible to be surpassed by a powerful rising star.
It can be seen from the figure that the soft board gross profit is about 20%, unlike many electronic component factories. After all, in the entire mobile phone industry chain, the soft board requires relatively high technology, and the competitors are also relatively high. In order to reduce production costs, Zhending transferred production to the mainland subsidiary Pengding through production line automation and cross-strait division of labor. In addition, it increased capacity utilization and increased its gross profit margin from 16.3% in 2017 to 22.1%. Jialianyi is the most actively engaged in automated production among the three companies in Taiwan. It also hopes to reduce labor costs through automation and increase gross profit margin. Compared with Taiwanese factories that mostly produce in the mainland, a large proportion of Japanese manufacturers produce in Japan, so they have to face more serious labor cost issues. Even if Japanese manufacturers strive for niche markets, their gross profit is still lower than other factories.