The impact of future copper clad supply on the whole PCB industry

Since the 1970s, when PCB became an industry, we have seen little change in the way it is manufactured, but the format around the industry is changing. PCB Norsemen in PCB007 magazine in PCB007 magazine, he repeatedly mentioned the copper foil crisis and the component crisis that affected the PCB industry.Now, the industry is suffering from external factors such as brexit and trade friction between China and the United States, raw material delivery delays and frequent shortages due to the priority given to ensuring supplies to large factories.Growth in China's PCB market has been slowing steadily since the start of the year, due to trade frictions with the us and rising tariffs, as well as the fact that the automotive or electric vehicle industry has not grown as dramatically as expected.

Step back and look at the Numbers

There has been a steady stream of news about PCB factory moving out of China, given trade frictions between the us and China.

PCB production has increased in neighboring southeast Asia.However, in the next three to five years, China will remain the largest PCB board manufacturer, and the key reason is that the PCB ecosystem and the entire supply chain network that has been built and optimized in China over the past few decades will not disappear overnight.

From an industry chain perspective, let's step back and look at the supply of copper clad panels.The value of global copper clad plate production increased significantly between 2015 and 2016, from $24.3bn to $25.8bn.However, from 2016 to 2018, growth was sluggish, with $26.2 billion in 2017 and $26.5 billion in 2018.It is estimated that the output value of copper clad panels will reach about us $26.7 billion in 2019.

This year, we cannot ignore the impact of major players changing their supply chain strategies.Huawei technologies, one of China's leading global network and telecoms manufacturers, has seen its demand for us technology, including raw materials, severely hurt by us trade restrictions.U.S. trade restrictions and warnings to its Allies have forced huawei's products to face project bans, restrictions on commercial contracts, security reviews and even resistance in some countries.To this end, huawei will continue to change its corporate strategy to seek new directions for its business.

Global 5G competition

Huawei has been redesigning its 5G base station integrated circuit modules since June in an effort to wean itself off its dependence on us suppliers of related integrated circuit products, cutting CCL orders in its active antenna units from a leading us supplier while seeking other Asian suppliers.China has a huge domestic market and is competing to be one of the first countries to roll out 5G infrastructure.Huawei is the biggest supplier in China, and its demand for PCBS for 5G products has been growing.

As demand for 5G surges, PCB supply chains in Asia have been hit by a shortage of 5G high-frequency, low-loss materials, with major copper-clad manufacturers shifting production lines to produce such materials to meet 5G demand.Instead, the production of fr-4 materials is becoming less and less, and the need to wait for longer lead times has become the current problem.

Copper foil shortages: lessons to be learned

Having learned the lessons of the past few years, when a sudden shortage of copper foil caused an industry uproar, copper-clad manufacturers have moved quickly to adjust shipments by implementing production schedules, such as certain models of the fr-4 being produced only a few days a week. For PCB board manufacturer, this means that they cannot order and obtain materials in a short delivery time, lacking the flexibility to purchase. At the same time, copper-clad manufacturers apply the principle of quantitative distribution, in which the seller specifies the quantity that can be purchased by the buyer, to prevent any single PCB board manufacturer from buying all the products.

How does the industry need to overcome this difficult period?Again: plan, plan, plan!Use your time wisely, plan ahead, make accurate predictions, and involve your suppliers.You know very popular restaurants need to be booked in advance, why not do the same in PCB industry? We need to constantly remind ourselves that PCB's are not off-the-shelf, they are custom made and take time to produce.

Conclusion

In the past two years, PCB growth is likely to be driven by 5G products and automotive market segments.This column will focus on the current situation and emphasize that we recommend responding to PCB production in a timely manner to avoid untoward events such as delivery delays due to unexpected conditions.