TPCA: Cross-strait PCB output totals NTD 209 billion in 1Q22

Taiwanese PCB manufacturers maintain about 63% of production in Mainland China. As the macro-environment keeps changing, the 2Q22 output value is projected at NTD 209.2 billion, an increase of 14.8% YoY.

According to TPCA, benefiting from the value-added advanced application market in 1Q22, Taiwanese PCB manufacturers will experience an annual growth in all PCB products, particularly the IC substrate alone with an annual growth up to 39.9%, when revenues are boosted by the fully booked capacity and product price increase due to the ongoing under-supply of substrates. 

A growth of up to 20% is also expected in HDI products due to the rigid demand from the expansion in the application of end-user products. The 1Q22 growth of flexible printed circuits (FPC) also reached 17.9% due to the increasing demand from smartphones, laptops, consumer electronics and automotive applications. It is noteworthy that although rigid-flex PCB sales dropped when consumption declined after an advanced TWS design change, an increase of 12.3% was noted in 1Q following the hot sales of the low-price AirPods and the sales increase in various end-user products.

Looking further into 2022, the 5G digital dividends and EV penetration are expected to put global economic development back on the track as the COVID-19 curve is flattening, and alongside the substrate capacity of Taiwanese PCB manufacturers, a great opportunity is presenting itself for Taiwan’s PCB industry. 

Unfortunately, when Mainland China imposed maximum crowd and materials control under the “dynamic zero-COVID” policy in early 2Q22, the electronics industry either lowered or suspended capacity utilisation, leading to another global undersupply of electronic components. Alongside the interest hike for suppressing inflation that has brought negative influence on the global economy and the faith of consumers, there is increasing concern that the stock of end-user products will be raised in 2Q22 by the downfall of the purchasing power. 

Despite the support of current chip shortages, the demand of end consumers is expected to turn conservative due to various factors. Even though the trend of developing products of high value continues, the suppression effect on the PCB output value in 2Q22 still persists.

Although the geopolitical effects of the Russo-Ukrainian War, materials shortages, and high inflation seem to impact Taiwan’s PCB industry in 2022, the strong chain effect of the US Dollar is expected to bring good news to the NTD revenues. As the progressive rate hike cycle of the US Dollar will overturn the NTD appreciation trend in the last two years, the electronics industry that trades with the US Dollar is expected to offset the unfavorable impacts of this exchange rate hike. 

Benefitting from the ongoing global semiconductor demand, TPCA says that a promising future is foreseeable in substrates. Following the expansion of the three giants and the entry of newcomers in the PCB industry, new substrate capacity will start operations progressively in both Taiwan and Mainland China this year to increase the global substrate market share of Taiwanese PCB manufacturers. Additionally, when competitors in China, Japan and South Korea keep entering the substrate market, it is necessary to keep an eye on the changes in the global supply and demand of semiconductors and substrates. 

A positive annual growth rate in the quarterly output value for 12 consecutive quarters is noted in the Taiwanese PCB industry. Despite the crises from geopolitics, materials shortages and the pandemic, manufacturers could overcome difficulties one after another with technological advantages, mass production capability, balanced portfolio and application structure, capacity dispatch and management capability. Additionally, the added value from technological upgrading is the key to the success of Taiwanese PCB manufacturers. However, manufacturers are advised to keep track of the stock consumption speed of end-user products and inflation trends as the short-term indicators of market changes. In the long run, manufacturers should pay attention to the effect on the supply chain structure and global deployment of the intensity of customers’ demand for carbon neutrality of the supply chain.

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