The Sequela of Moving Inland for PCB Factories

Sketch of Suining PCB Industrial Park

In the last 20 years, the global PCB manufacturing industry transferred from Japan, South Korea and Taiwan to China mainland gradually. Now China mainland has becoming the biggest production base for PCB making. According to public data: the production value of China PCB industry of 2018 was 32.7 billion USD, increased 10% than 2017. Forecast the number in 2020 could reach 35.6 billion USD, will share 52.4% of global PCB production value.

Especially in the year of 2019, quite a number of PCB manufacturers's new manufacturing plant start production, the speed of increasing production value will increase and the share will rise in a higher speed. However, in the past fews years of rapid expanding, the pressure of manufacturing cost and enviorment protection has been increased synchronously, in the other hand, inland China local government has offered attractive policy on investing and return, thus this has accelerated the process for the manufacturers moving from Cantonese area and Yangzi river area to some of the inland places where has good hardware and software conditions.

Moving inland, production start

Early in 2016, as the demanding of Li battery increased, the production capability of copper clad was shared in a big percentage. The market became demand exceed supply, price go up without stop. In the mean time, copper clad, as the basic material of CCL (copper clad laminate), under the pressure of upstream market, the price increase of PCB is inevitable.

In 2016, copper foil price increased 50% ~ 60%, CCL price increased 40% ~ 50%, PCB price increased 5% ~ 15%.

From copper foil to PCB, manufacturers bear part of the pressure. But, for those numerous small PCB factories in Shenzhen, Dongguan, Huzhou, etc...they have very limited ability to hold the situation, when they look back, they found the government of Hunan, Jiangxi, Hubei gives heart moving conditions, they have no choice but to go adventure of inland.

PCB factories in Canton mainly moved to Ganzhou city, Jiujiang city, Jishui city of Jiangxi province, Huangshi city in Hubei province and Yiyang city of Hunan provinces.

Till 2017, the strict execution of pollution control policy starts from Kunshang city in Jiangsu province to Shanghai, Zhuhai and Shenzhen. From 2018 on, the enviorment tax is effective, PCB manufacturers are faving 3~5 times taxs which made them hard to live.

The government, to reduce the side effect on PCB manufacturing industry, has set a route from "strict to relax" from coastal to inland provinces.

If we look back, we can see the PCB price at that time has gone up 20% max, the industry has met a point where changes must be done.

Now three years has passed, PCB factories in inland China has been spreaded like star in the sky. Till 2019, there are nearly 100 PCB manufacturing plant in Jiangxi provinces, with capability of HDI PCB to plated thru holes.

Among Jiangxi province, Longnan area developed its strategy as a high-value and high-level area for electronics and information industry. They have planned and yet realized nearly all types of manufacturers in the industry including electric materail, electric components, CCL, HDI PCB, SMT, High precise component, OLED and intellegent end electronics.

The process of moving to inland and start production requires about 1.5 to 2 years. in 2019, most of the factories has finished phase 1 construction and started manufacturing. But we have to see, even many PCB plants started production, they will face "money lossing" in the first three years, furtherly, some companies who live on government subsidy may close while not able to continue.

Dynamic change period

The PCB manufacturing industry transfer process is time based and in-depth. At this moment, the key is investment on production line automation and equipment buying.

A PCB factory's investment mainly belongs to its equipment, most of the PCB factories who move to inland, having a investment about 1 billion CNY. The construction normally devided into 2~3 phases, so about 3~6 billion CNY the first phase can be finished and then production can start.

3~6 billion isn't easy to ingore, this has given the company a big pressure on money return, but the fact is most of the companies are loosing money rather than earning.

Watch this side, the PCB price is going lower and lower, so the more a PCB factory invested, the more money it loss, for example a factory focus on HDI PCB, with 3~6 billion invest, the input-output ratio can achive only 50%~60%.

Although some famous PCB factory with high capability, can realize input-output ratio about 1:1, but consider equipment depreciation and labor cost, it still faces money loosing.

Yes, then some PCB factories you feel it is alive, but touch it you can see they are already dead.

Inno Circuits, as the biggest PCB manufacturer in western China, welcome your inquiry at all time.

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