IC substrates will become the most sure-growing sub-industry in the PCB industry

IC substrate is the most valuable consumable in the packaging process: IC substrate is an important material used to connect the chip and PCB in IC packaging. It accounts for 40-50% of the material cost in low-end packaging and 70- in high-end packaging. 80% is the most valuable material in the packaging process.

Since the second half of 2020, the semiconductor boom has continued to rise, and IC substrates, which are important materials, are no exception. Due to the long-term insufficient expansion of the carrier board manufacturers, the superposition IC carrier board manufacturer Xinxing Electronics Shanying Factory twice hit the IC carrier board supply, causing the IC carrier board supply to fall short of demand from Q4 in 20 years, and the delivery time continued to be elongated. According to the Hong Kong Circuit Board Association, the prices of ABF and BT substrates have increased by 30%-50% and 20% respectively. In the long run, due to the shortage of upstream substrates and the long expansion period, it is estimated that the tight supply and demand of IC substrates will continue until at least the second half of 2022.

Revenue and profit continued to grow, and the industry chain was booming. IC carrier boards and semiconductor test boards are key materials for chip manufacturing and testing. They also benefit from the high prosperity of the chip industry chain, and the visibility of orders is currently high. In 2020, the global IC substrate industry will reach 10 billion U.S. dollars, an increase of 25%. Prismark predicts that the global IC carrier industry will reach 12 billion U.S. dollars in 2021, an increase of nearly 20%, and reach 16-17 billion yuan in 2025, with a compound growth rate of 9.7%. At that time, IC carrier boards will surpass soft boards to become the largest and most sure-growing sub-industry in the circuit board industry.

At present, the domestic-funded carrier board factory will have a scale of 400 million US dollars in 2020, with a market share of only 4%, while the domestic packaging and testing factory has a global market share of more than 25%, and the domestic supporting rate is only over 10%. China's PCB production capacity accounts for 80% of the global share, and domestic PCBs account for more than 50%. The industrial chain from equipment to materials is very complete, and the global transfer of production capacity is the background of the times. In the future, the continuous investment of domestic wafer and packaging and testing capacity is a guarantee for future growth. At present, only three domestic companies have mass production capabilities and stable customer resources, such as Shennan Circuits, Xingsen Express, and HOREXS.

Demand side: The semiconductor industry continues to prosper, and the demand for chip packaging and testing has surged, accelerating the clearing of substrate production capacity. The landing of new applications and the increase in shipments of electronic devices such as PCs and 5G millimeter wave mobile phones have promoted the continued boom in semiconductor prosperity. The strong demand for chips also led to a sharp increase in IC substrate shipments. Specifically: ABF carrier board: The demand for downstream high-performance computing chips is growing, and heterogeneous integration technology expands the amount of single-chip carrier board. The downstream of the ABF carrier board is mainly used in high-performance computing chips such as CPU, GPU, FPGA, and ASIC. PC shipments have rebounded for five consecutive quarters year-on-year, and the construction of data centers and 5G base stations has accelerated, driving the demand for high-performance computing chips, and the demand for ABF carrier boards has increased. In addition, the heterogeneous integration technology increases the packaging area of a single chip and the amount of carrier board. The maturity and wide application of this technology will further increase the demand for ABF carrier boards.

BT carrier board: 5G millimeter wave mobile phones promote the rise in demand, and eMMC chip shipments are steadily increasing. 1) AiP is currently the preferred packaging solution for 5G millimeter wave mobile phone antenna modules. The BT carrier board perfectly meets the AiP packaging requirements in terms of function. With the increase in the penetration rate and shipment volume of 5G millimeter wave mobile phones, the demand for BT carrier board is increasing. . 2) Storage chips such as eMMC are currently the main downstream applications of BT substrates. eMMC chips have been growing steadily in the medium and long term, and the booming IoT and smart car markets have further driven the new demand for eMMC chips. And at the moment, domestic storage manufacturers such as Yangtze River Storage and Hefei Changxin have entered a capacity expansion cycle. It is expected to achieve a million-piece monthly production capacity in 2025, driving the increase in demand for domestic replacement of BT substrates.

Supply side: The IC substrate industry has high entry barriers, insufficient capacity expansion, and material and yield factors restrict the supply climb. The high capital investment, strict technical requirements and high customer barriers in the IC substrate industry have restricted the entry of new players in the industry to a certain extent; factors such as insufficient upstream raw materials and low manufacturer yields have seriously affected the progress of capacity expansion .

ABF carrier board: Upstream materials are monopolized + yield decline, expansion may be lower than expected. The ABF film, the key material for ABF substrates, is monopolized by Japan's Ajinomoto. At present, although Ajinomoto has announced that it will increase production of ABF materials, the downstream demand for the increase in production is more conservative than the surge, and the output CAGR is only 14% by 2025. , Resulting in the annual capacity release of ABF carrier boards can only reach 10%-15%. In addition, the increase in the area of the ABF carrier board has caused a decrease in the production yield of the carrier board, resulting in a loss of production capacity. With the trend of increasing downstream chip packaging area, it means that the actual production capacity expansion rate of the ABF carrier board will be lower than market expectations. BT carrier board: product life cycle is short, leading manufacturers have low willingness to expand production. The life cycle of BT substrate products is usually only about 1.5 years. Therefore, leading overseas manufacturers are generally conservative in the expansion of BT substrate production capacity. At present, the expansion plans disclosed by major overseas manufacturers have increased their production capacity by less than 10%. In addition, the rise in the price of ABF substrates has led to the conversion of some BT substrate production lines, and BT production capacity has been squeezed out, further exacerbating the state of insufficient supply.

The explosive demand side and the limited capacity expansion on the supply side have driven the price of IC substrates to skyrocket, and substrate manufacturers have directly benefited. The board factories Shennan Circuit and HOREXS also performed well. In the medium and long term, with the continuous expansion of domestic fabs, which directly promotes the continuous expansion of the IC substrate market, the current IC substrate market is still mainly occupied by Xinxing, etc., with a domestic matching rate of about 10%, accompanied by downstream discourse With the increase in power and the continuous improvement of the product quality of domestic carrier board manufacturers, domestic carrier board companies will have a higher growth ceiling in the future.