New technologies beef up printed circuit board margins
PCB margins near inflection point
Smartphones are increasingly adopting high-density interconnect (HDI) and anylayer PCB, and we expect this trend to accelerate in 2020/21 with growing shipments of high-spec 5G mainboards. This is causing some tightness in HDI industry, with suppliers running at above-seasonal utilisation since 2Q19, and there should be limited new capacity across the industry throughout 2020 and possibly longer. As such, we expect undersupply of HDI to persist in the year ahead.
ABF substrate story continues
The ajinomoto build-up film (ABF) substrate industry’s prospects remain promising as we are only in the early stages of a demand upcycle, and there should be much more to come as semiconductor-chip architecture evolves. We expect the revenue of ABF suppliers to grow more than 20% in 2020 as demand for multi-chip modules (MCM) in computing applications rises and a strong 5G infrastructure buildout with massive MIMO (multiple input, multiple output) and mmWave technologies takes hold. New supply from Japanese players will only start coming online in late 2020, and most of this capacity is tied up for Intel, so there should be a negligible impact on overall ABF demand-supply dynamics, at least until the end of next year.
FPCB antenna upgrades
The rollout of 5G smartphones will support a long-term ASP and shipment uptrend for flexible PCB suppliers as modified-PI/liquid crystal polymer (LCP) replace PI and the number of antennas increases to support high-speed and high-frequency 5G radio bands.