New Change 1: High End Trend
In car entertainment, new energy vehicles, and millimeter wave radar will drive an increase in the proportion of HDI, thick copper plates, FPC, and high-frequency plates. In 2018, the proportions of HDI board, thick copper board, RF board, and flexible/rigid flexible board were 7.5%, 4.9%, 4.8%, and 12%, respectively. In 2020, the proportion has increased to 11.5%, 6.5%, 7.0%, and 15% respectively, and the total proportion has rapidly increased from 29.2% to 40%. In the future, with the increase of information and data transmission speed, HDI and flexible/rigid flexible combination products are expected to further penetrate into in car entertainment systems; The millimeter wave radar uses high-frequency materials, and the demand for high-frequency PCBs will continue to increase; The demand for high current and high voltage in new energy vehicles is increasing, and the demand for thick copper plate products and FPC products will increase with the penetration of new energy vehicles.
New Change 2: Tighter Binding, More Important Customer Resources
The certification threshold for automotive PCB customers is high and the order cycle is long. Automobiles have high requirements for reliability, and their entry threshold has become a barrier for advanced entrants. The certification cycle is generally 2-3 years, and manufacturers generally do not easily replace PCB factory suppliers. The order cycle can last for more than 5 years. Enterprises that have already achieved mass production and shipment or passed certification in major automotive customers have a clear competitive advantage.
The safety requirements for automotive electronic systems have increased, and PCB manufacturers and downstream customers are more closely bound. In the field of electronic control and ADAS, the relationship between electronic systems is related to driving safety. The performance and stability of electronic systems are prominent, and the degree of integration of automotive electronics is improved. As a customized product, PCB boards need to participate in the design process of vehicle manufacturers in the early stages and be more tightly bound.
The business format of automobile PCB large customer small orders will develop towards large customer large orders. In the past, the value of automotive PCB boards was extremely dispersed, and most of the on-board media boards were in the aftermarket. Taking FPC as an example, it was applied to more than ten parts of the car, and the value of each part was not significant. Even if entering large customers, it is difficult to form a good scale effect. The newly added electric control system in electrification has the characteristics of large PCB usage in a single field and high stability requirements. Entering the large customer supply chain means having products that can be quickly scaled up, that is, large customers mean large orders. In addition, we believe that prioritizing software may lead to a decrease in car models, and more importantly, software level updates through OTA will result in more significant hardware product scale effects.
New Strategy: Technology Drivers to Key Customers
In the future, technology driven will be superior to cost driven. We believe that the driving forces of PCB factories can be divided into two categories. One is the technology driven type that binds to major customers, which is closely related to their product sales volume; The other type is cost driven, with downstream customers dispersed and mainly relying on cost control to achieve endogenous growth. We believe that as PCBs enter the automotive research and development process in advance, vehicle manufacturers tend to reduce the number of suppliers, especially electronic control system PCB suppliers. Cost driven companies may find it difficult to enter the core supply chain of automotive manufacturers and cannot enjoy the largest incremental market of electronic control PCBs.
Key account strategy: scale effect and demonstration effect.
1. In the context of large customer and productization, entering a large customer means a significant increase in product volume, especially when the value of individual electronic control system products is high. As a customized mass-produced product, PCB has a significant scale effect, which is beneficial for enhancing profitability;
2. Software defined cars will bring about hardware convergence, and it is expected that various car manufacturers will reduce personalization at the hardware level and pursue more supplier supply capabilities and product performance and stability. Entering a major customer can establish a good reputation in the industry, which is more conducive to customer expansion.
In summary, we believe that in the new industry of automotive PCB, price advantage will no longer be the core advantage of PCB manufacturers. The depth and breadth of customer binding, product technology level, and stable supply capacity will be the core competitive advantages of future automotive PCB manufacturers.
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