High-end HDI Emerges Suddenly, Supply And Demand Will Be Tight Next Year

"Science and Technology Innovation Board Daily" reported that Ultrasonic Electronics, which is mainly engaged in the business of printed circuit boards and touch screens, has risen by the limit twice in the past three trading days. On the 16th, the Dragon Tiger List showed that Zhongtai Securities Shanghai Jianguo Middle Road Securities Sales Department made a large net purchase. The company's 30.1 million yuan, far exceeding the sales of the top five seats. Another institutional seat bought the company 19.13 million yuan. In addition, the Dragon Tiger List on the 12th showed that an institutional seat bought 40.67 million yuan from the company.

On the news side, the market demand of high-end HDI boards in the era of 5G mobile phones has recently been optimistic about the institutions. Ultrasonic Electronics is the earliest enterprise with HDI production technology in China, and it is also a leader in the field of high-end HDI. Guotai Junan's previous research report pointed out that the company's product quality is extremely competitive, and it is a long-term supplier of world-renowned companies such as Apple, Bosch and Valeo.

Mobile phone innovation and upgrading have spawned HDI demand

According to the research report of China Merchants Securities, at the current point in time, the innovation and upgrading of mobile phones in all dimensions have an impact on the technical route of the motherboard: the increase in the number of chip I/Os leads to a reduction in the PCB pad pitch, diameter, and trace density (increase in number), compression The line width and line spacing of the PCB; the upgrade of the internal functional modules takes up more space; the signal transmission requirements are increased, such as the increase in the number of frequency bands, the increase in the number of required RF components and the increase in the number of pieces per unit area. The above changes all require higher-end motherboards to implement.

Historically, Apple has led the technical route of mobile phone motherboard upgrades. At present, most HDI PCBs use the subtractive ELIC (arbitrary layer) technology electroplating process, and the line width and line spacing cannot be reduced to 30mm. Therefore, SLP that can achieve smaller line width and line spacing is expected to be the mainstream solution for the next generation of HDI. 4G era (Android) mobile phone motherboards are 2-3 levels of HDI, 8-10 layers, 5G will be upgraded to 4-level HDI with at least 8-12 layers, and some require any layer (anylayer) HDI, and the average price can increase for each level of upgrade. Large 800-1000 yuan. It is estimated that the 5G mobile phone HDI motherboard market demand is about 0.1/5.7/630 million US dollars in 19-21, and the SLP market is about 9/19/1.9 billion US dollars.

Chuancai Securities pointed out that the increase in 5G mobile phone shipments will drive the demand for high-end PCB boards such as SLP and high-end HDI. The agency predicts that the proportion of global mobile phone SLP output value in the total mobile phone PCB output value will increase from 11% in 2018 to 22% in 2023. The revenue of manufacturers with FPC as their main business and SLP and high-end HDI production capacity will usher in new growth.

HDI industry is relatively concentrated, supply and demand will be tight next year

HDI is a relatively concentrated circuit in the PCB field. The market share of leading companies can exceed 10%. The barriers to entry are relatively high and the historical structure is relatively stable. In addition, the long-term stable technical support of major customers is crucial for industry chain companies to maintain leadership. Importantly, it also strengthens the moat to a certain extent.

China Merchants Securities predicts that next year, high-end HDI production capacity is expected to be in a state of tight supply and demand, and domestic-funded enterprises that meet high-end requirements and are undergoing technological upgrading of production lines, such as ultrasound and Dongshan, are expected to benefit. In fact, some customers based on next year's high-end HDI projects have already accepted the supplier's price increase request.

From the perspective of supply and demand, most of the companies with large capital investment and annual investment of more than 1.5 billion in the past three years are companies that take into account other heavy-asset businesses (such as packaging substrates, panels, etc.). HDI is only its auxiliary business, not a major business. Scale expansion. In addition, due to the overall weak demand for smartphones, two major industry giants have withdrawn from the high-end HDI market since 2019, and the supply side has been cleared.

Although Huatong, TTM, AT&S, etc. have invested in the past three years, their Apple business needs continuous capital maintenance. Even if HDI expands and the peak season comes, there is not a lot of spare capacity that can be used to undertake the motherboard upgrade of the Android camp on a large scale. need. Although domestic enterprises have continued to invest in recent years, the short-term technical threshold is difficult to overcome.