Driven by the demand from the 5G+ automotive electronics market, domestic high-frequency CCL production capacity is gradually coming online.

Currently, China’s epidemic situation has continued to improve, but the global epidemic is still spreading, inevitably impacting economic development both nationally and globally. Under these circumstances, the national government is calling for accelerated development of 5G infrastructure, data centers, and other related projects to boost economic growth.

Driven by market demand in areas such as 5G base stations, mobile communications, automotive electronics, intelligent manufacturing, and the Internet of Things, China’s copper-clad laminates are gradually upgrading and iterating toward higher frequencies, higher speeds, greater thermal conductivity, and enhanced reliability. At the same time, the localization of high-end and specialty copper-clad laminates and their raw materials is being accelerated.

Following last year’s fundraising and production expansions by several domestic CCL manufacturers, China’s CCL industry has gradually risen to prominence. At a time when demand for CCL is surging, the industry is closely watching whether current CCL production capacity can meet the demand for high-frequency, high-speed CCL required for 5G infrastructure, automotive electronics, and next-generation server upgrades.

5G communications and automotive electronics are driving demand growth.

In early March, the three major telecom operators successively launched pre-qualification reviews for the procurement of wireless main equipment for new 5G SA networks, with an expected addition of 500,000 base stations. According to forecasts by the China Academy of Information and Communications Technology, 5G network construction will enter a phase of large-scale investment, and by 2025, China’s investment in 5G network infrastructure is projected to reach 1.2 trillion yuan.

Among them, in 5G base station equipment, high-frequency communication materials are the key foundational materials that enable the functionality of base station antennas. Due to the high and widely varying communication frequencies, PCB substrates predominantly use high-frequency copper-clad laminates. Meanwhile, the number of 5G base station antennas has increased significantly, greatly boosting the demand for high-frequency copper-clad laminates.

Meanwhile, in the automotive electronics sector, as vehicles become increasingly intelligent, automotive PCBs are transitioning toward higher integration and smaller form factors—HDI designs. At the same time, with heightened emphasis on safety performance, there are growing demands for PCB substrates. High-frequency copper-clad laminates, with their excellent heat resistance and low-loss characteristics, have emerged as a new key requirement in automotive electronics.

Meanwhile, driven by the impact of the pandemic, remote working has become a necessity for everyone, leading to a sharp surge in demand for data centers and servers. Coupled with the upcoming replacement cycle for next-generation server CPUs, demand for high-speed copper-clad laminates has shown a clear upward trend.

Against this backdrop, demand for high-frequency, high-speed copper-clad laminates in China continues to rise, making capacity output critically important.

Industry insiders analyze that the development stage of copper-clad laminates in China is highly correlated with the growth of the PCB industry. As China has gradually become a global powerhouse in PCB production capacity, the Chinese copper-clad laminate industry has also steadily risen. The share of global copper-clad laminate production attributable to China has increased from 58.97% in 2012 to 80% in 2019.

However, among domestic CCL manufacturers, companies such as Kingboard Group, Shengyi Technology, Jinan Guoji, and Huazheng New Materials each hold less than 20% of the global market share. Shengyi Technology is currently the relatively most competitive company in China’s high-frequency CCL sector, yet its market share stands at only 10%; the market shares of the other companies are similarly modest.

Among these, the proportion of factories invested in by foreign-funded manufacturers or foreign enterprises is relatively high. In particular, in the field of high-frequency copper-clad laminates, companies from the U.S., Japan, and Taiwan, China, essentially hold a monopolistic position.

At present, with the significant surge in demand for high-frequency, high-speed copper-clad laminates in China, coupled with breakthroughs made by copper-clad laminate manufacturers in developing high-frequency substrate products—earning them the favor of major equipment manufacturers such as Huawei and ZTE—the domestic capacity situation for copper-clad laminates is drawing considerable attention.

High-frequency copper-clad laminate production capacity is gradually coming online.

Since last year, driven by the demand for 5G infrastructure development, the copper-clad laminate industry has experienced multiple rounds of price increases, prompting some manufacturers to expand their production capacity.

Western Securities stated that, given the disruption caused by the pandemic, the PCB industry as a whole will reflect macroeconomic pressures, meaning there is no fundamental basis for price increases in upstream materials such as conventional copper-clad laminates. However, on the expansion front, copper-clad laminate manufacturers are still accelerating their production capacity expansion efforts.

According to incomplete statistics, the production capacity of high-frequency and high-speed copper-clad laminates at companies such as Shengyi Technology, Jinan Guoji, Huazheng New Materials, and Gausbell has gradually begun to come online.

It is reported that Shengyi Technology had already begun gradually ramping up its high-frequency CCL production capacity in the first half of last year. With additional production capacities coming online at factories in various regions, the company’s total CCL production capacity is expected to exceed 100 million square meters per year. Currently, the production capacity of Jiangsu Shengyi, the subsidiary responsible for manufacturing high-frequency CCLs, has fully recovered, and the company now offers high-frequency, high-speed CCLs suitable for 5G infrastructure development.

Last year, Huazheng New Materials completed the construction of an industry-leading dedicated production line for high-frequency copper-clad laminates, and Phase I of its Qingshan Lake facility has now reached full production capacity. Currently, some high-speed copper-clad laminates used in telecommunications have been certified by major domestic telecom companies, and certain products can already serve as substitutes for imported high-end alternatives. It is reported that in 2019, Huazheng New Materials produced 14.2284 million copper-clad laminate sheets, an increase of 40.23% over the previous year.

In addition, Jin'an Guoji resumed construction of a copper-clad laminate production line with an annual capacity of 2.4 million sheets last July. Currently, the project has been completed and is undergoing trial production.

Gosber, which has shifted from the digital television sector to high-frequency CCLs, also stated on an interactive platform that the first-phase production capacity of its CCL project could reach up to 1.5 million square meters per year at full capacity. After the completion of the second-phase expansion of the CCL project, the planned annual production capacity will be 1 million square meters. Currently, high-frequency CCLs have entered mass production and are being supplied in bulk to several communication application companies. Moreover, several of these communication application companies have already moved into the sample evaluation or small-batch verification stage.

Notably, the 2019 annual reports of several publicly listed copper-clad laminate companies have now been released. Thanks to an optimized sales structure and increased sales volume of copper-clad laminate products, both Shengyi Technology and Huazheng New Materials have seen an improvement in their revenue performance.

On the other hand, Jin An Guoji stated that due to intensifying competition in the copper-clad laminate industry, both the unit sales price of its products and its gross and net profit margins declined year-on-year. The company sold a total of 38.8518 million sheets of various copper-clad laminates, representing a slight year-on-year increase of 1.31%, but this increase made only a modest contribution to the company’s net profit.